Registration of Yachts Under Convenient Flags

In international law, as well as in the legislation of the vast majority of civilized countries, river and sea vessels are immovable.

Like any other real estate, sea and river vessels are subject to state registration in the Transport Register of a certain state. Depending on the availability of the entry in the transport register, the nationality of this vessel shall be determined. It is important to remember that this is not the property of the state over this ship, but the registration under the flag of this state. This means that the laws of this state, including the international principle of extraterritoriality, must be in force on board the ship.

Unlike real estate, such as buildings and structures, river and sea vessels are not structurally attached to land belonging to the sovereign territory of any state and can therefore be moved without damaging them both in the territorial waters of another state. , as well as in neutral waters. Thus, unlike buildings and structures, it is not necessary to register a ship in the state register of any clearly defined state. Therefore, the country and place of registration of the shipping company, as well as the flag under which the ship will sail, are determined by the shipowner.

The main criterion for choosing the country of registration of the transport company and the country of the ship’s flag is economic. This is, firstly, the cost of registering a ship flying the flag of a particular country, secondly, the cost of keeping the ship below the chosen flag and, thirdly, the cost of all commercial operations with the ship: bail registration, arrest, ship transfer for unmanned rental, registration of the allocation of shares in the ownership of the ship, etc. Also important factors when choosing the country of registration (flag) of the ship are the speed of execution of all necessary documents, clarity of workflow, the presence of minimum requirements for the technical condition and documents of the ship. The flags (registers of state ships) of countries that meet all these criteria at the same time are called “convenient” flags in international maritime practice.

The “convenience” of the flag is also affected by the foreign policy factor. Namely, the absence in the present, the foreseeable past and, of course, in the future of the military operations of the state of a flag “convenient” with most of the world’s maritime powers. Under several international conventions, ships flying the flags of such states have always had the most favorable treatment of the nation in most ports of the world. Therefore, the “convenient” flags of very small countries that can not fight anyone (Panama, Cambodia, Belize) or countries that do not have access to the sea (Mongolia, home port – Ulan Bator) are popular among shipowners. A concrete case is the Republic of Cyprus, which has tried for many years to make its flag “convenient” and popular among shipowners. But since then, Cyprus is still at war with Turkey, whose shipowners flying under the Cypriot flag are constantly having trouble crossing the Bosphorus. There is no reason to talk about such ships in Turkish ports.

According to the international classification, all maritime flags in the world (ie state ship registers) are divided into so-called “open” and “closed” flags.

“Closed” flags are the registers of the state ships of the countries, whose flag can only register a ship belonging to a resident of that country (natural or legal person). Residents of other countries are not allowed to register a ship under the flag of a “closed” country.

“Open” flags are the registers of state ships of the countries under the flag of which the residents of any country may register their ships.

The advantages of registering yachts under “convenient flags”.

Reduction of registration costs and costs of maintaining a yacht under the flag, including the cost of registering other property rights: division of shares in yacht ownership (yacht shares + shares in the company’s authorized capital), pledge (shares in the company) etc.

Simplified and accelerated registration system.

Complete avoidance of taxes and customs duties on the purchase of a yacht, as well as the complete absence of any payments and taxes, including property tax, transport tax and other taxes.

Freedom to choose a classification society (register) for placing a yacht under supervision.

You do not need to place the yacht under the supervision of any classification society (USA).

The freedom to choose an insurance company when insuring a “Casco” yacht.

Possibility of obtaining temporary registration documents before receiving from the seller the sales receipt (ie the deed of purchase) and the certificate of deletion (certificate of removal of the ship from the register)

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