Benefits of Owning a Charter Yacht

11 November 2015

Chartering your yacht is a good way to help reduce the yearly costs of boat ownership. Generally speaking you won’t make money above that, unless you own a yacht larger than 115 feet with an efficient yacht manager/charter broker capable of securing around 90 days of charter a year.

Indeed, everyone who wants to own a luxury yacht and have the cost of ownership reduced by charter income, should consider putting his boat out in a broker’s rental program. This program gives the yacht owner not only charter income, but also guarantees that the yacht will be properly maintained by a full-time crew and ready to cruise at all times.

Will charter income cover all my yacht’s expenses?

As a general rule, charter income should cover most of the cost of berth & mooring, insurance and routine maintenance expenses, but not all. Anyways, charter yacht ownership produces income that is simply not there under private ownership.

What are the costs of owning a rental boat?

Some expenses are different than of private yacht ownership. While berth, mooring, and maintenance are fixed costs, other expenses will vary:

  • A permanent crew being mandatory (not all of it but partly), the payroll expense will be higher.
  • Your insurance will need to cover the P & I, so slightly higher as well.

Generally, when owning a charter boat, you will have to consider owning through a company, hence, however minor, Legal and Statutory costs like yearly surveys, domiciliation fee (for both yacht and company), company registration fees, annual fees for maintenance, class and safety equipment revisions, fiscal domiciliation etc… will need to be upheld.

In these cases, we recommend to entrust your yacht to a Professional Yacht Manager whom will naturally charge you a monthly fee for their services, but they’re often offset since you will benefit from their professional discounts and equal to you accountant’s fees!

Costs such as advertising, marketing, etc, should be covered by your appointed charter broker or Central Agent.

Yes, there will be additional fuel, transit mooring and provisioning expenses (food & beverages), but they will be covered by the charterers in their Advanced Provisioning Allowance (A.P.A.).
YACHTS INVEST will be happy to provide you with a projection of revenues and expenses for the size and type of yacht that you choose.

For more detailed information on boat owning costs, please refer to our article What are the expected costs of owning a yacht in Europe in our FAQ section.

What will my charter income be?

You will receive slightly over 70% of the gross charter revenues on your yacht.

There are 20% commissions you will need to pay your charter broker(s) or appointed Central Agent and you need to leave them up to 10% negotiation room on the advertised rate, in order to allow them to be more efficient at booking charters (in particular the long-term ones which are more interesting).

Will I have tax benefits?

Most charter yachts in the EU benefit from various tax advantages:

Firstly, if you can show you’re running a business and effectively chartering every season to different clients, you will not be required to pay the EU VAT on your boat.

However, you will need to declare and pay the applicable VAT on every charter by having a fiscal domiciliation in the country of declared permanent mooring of your yacht.

Despite the changing legislation, you will still have most consumables VAT-free (mainly fuel) and you won’t have to leave the EU every 18 months.

There are still other significant tax advantages to owning a charter yacht: Your charter revenue is offset by deductions for operating expenses, depreciation and interest deductions.

Do I have to purchase a new yacht?

Whether you plan to purchase a new or previously-owned yacht for placement in our charter program, we will work closely with you.

When acting as your broker in handling your purchase, YACHTS INVEST will insure that the boat you are purchasing will be marketable from a charter perspective. We will need to make sure that the boat can be coded and fully equipped for charter service.

Additionally, we will also insure that you will be getting the highest charter revenue possible.

What if I already own a boat that I want to charter?

The first step is to inspect the yacht to assess its charterability, equipment and overall condition.

The second is to hire a certified surveyor in order to assess whether the boat can be coded for charter within a reasonable budget.

You will then receive a proposal concerning coding fees and expenses as well as necessary maintenance and additional equipment (mainly safety and security) which will be required for charter service.

What happens when I want to use the boat myself?

Not a problem, simply give us a call. We’ll have your yacht ready for you. Please give us as much advance notice as possible. Should we receive a request for a charter during your planned vacation time, we will advise you of that request and let you decide if you want to change your cruising plans in order to maximize your charter revenues.

There is no limit on the amount of time you may use your yacht each year. However, we suggest you avoid peak charter weeks such as holidays or the ones comprised between July 14th and August 15th, during the Western Mediterranean summer season.

Please note you will need to rent the boat form your owning company and prove payment for this charter in order to avoid EU customs issues and your charter certification being revoked.

What if I want to sell my yacht?

This is not a problem either, in fact a charter-coded yacht represents for many prospective clients, an added value, mainly because of the tax benefits and especially if the buyer is a non-EU resident.

Moreover, you will be able to provide every buyer complete maintenance records and class surveys.

Your yacht’s charter certification may also be transferred with the sale of the boat, by just transferring the owning company, should the new owner choose to leave the yacht in charter service.

Furthermore, your yacht can continue to earn charter revenues while she is being marketed for sale.