Services

With our partner law firm, we take care of ship and yacht registration for clients, centrally in the following countries:

• EU: Malta, Gibraltar, Cyprus

• Offshore among others: United Arab Emirates (RAK), Panama, Belize, Seychelles, Isle of Man

As a rule, the ship registration is carried out by an owner company in the respective flag state. This means that a company (corporation) is first founded in the respective domicile state / flag state and the ship is assigned to this owner company. Without the establishment of a permanent establishment in the selected flag state / domicile state, only registration in the respective state of residence (country of residence) of the owner is actually possible or sensible.

However, when setting up an offshore company in the selected country of residence, numerous tax and corporate law aspects must be considered:

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• Avoidance of the assumption of an unlawful intermediate company. Such an unlawful intermediate company exists in the case of a pure letterbox company, without substance escape, and/or if the impression arises that the company is "remotely controlled" from abroad. These factors are often underestimated, especially in the case of yacht shipping companies in so-called "third countries" (e.g. UAE, Panama, Belize). Keywords are: tax crackdown (e.g. in the context of §42 AO), reversal of the burden of proof, CFC taxation, no positive effects of the EU freedom of establishment / EU legal protection, EU parent-subsidiary directive for affiliated companies, etc.

• Law of double taxation treaties, question of withholding taxation (affiliated companies or natural persons outside the country of residence)

• National regulations on CFC taxation, in Germany §8 AStG

• National regulations regarding the proper registration of the yacht/vessel

• The law of the yacht ship company (owner company) abroad should apply, also with regard to employment contract law (employment of foreign crew members, unit labour costs), liability law and asset protection

 

Yacht/Vessel Registration Offshore: Important Questions

• Technical data (manufacturer, model) ?

• Where and how will the yacht or ship be used?

• Who is the owner – private individual or company?

• Place of residence of the owner or registered office of the company (permanent establishment)?

• Who uses the yacht? Own use?

• Charter, Partial Charter ?

• Is it a new or used yacht?

• How was the yacht / ship financed?

• Are the ship's documents complete?

• Has the VAT/VAT been paid (only for EU clients) ?

• Is asset protection sought?

 

Yacht/Ship Registration / Registration of Container Ships Offshore: Partner of Shipping Companies

The switch to open ship registers is carried out for various reasons.

An important field is cost savings. Savings are mainly made on wages, taxes and duties. Lower wages result from the largely lower taxation in the flags of convenience countries, which generate lower wage costs for the shipping companies, but also from usually lower social benefits for the crew members (determined by the respective wage tariff system).

The proceeds of the registered ship are taxed less or not at all in flags of convenience countries and often lower taxes are incurred. The staffing standards of some of the flags of convenience are often simpler and therefore cheaper to meet. The occupation regulations of most first-register states (in Germany, for example, the Ship Occupation Regulations), which set a standard for the number and qualification of crew members, are relatively strict.

In addition, a shipowner under flags of convenience has fewer or no restrictions on the nationality of the crew. Security requirements and official supervision of many flags of convenience countries are lower than in first-register states. The owner has the option of remaining anonymous in many flags of convenience states.

Yacht/Ship Registration / Registration of Container Ships Offshore: Services of our Law Firm

Our law firm advises the "individual ship or yacht owner" as well as small to large shipping companies in the context of offshore vessel registration. The requirements differ, among other things, with regard to the "tax structuring strategies". Shipping companies are not only concerned with offshore ship registration. Rather, tax structuring strategies are implemented in the context of the affiliated companies.

Yacht/Ship Registration / Registration of Container Ships Offshore: Example Panama (representative of all third countries - Non-EU)

Objectives: Panama tax permanent establishment (low taxes), Panamanian law should apply.

An owner's company must be structured as follows:

• Incorporation of Panama INC or SA, entry in the Panama Register

• Substance Escape in Panama: Not a pure letterbox society. Minimum substance Escape would be the connection to a business center in Panama with a company sign, own telephone number, personal call acceptance with the name of the company, fax, mail forwarding AND permanent rental of a fully equipped office in the business center. In principle, the arm's length principles must be observed, with regard to infrastructure and employees. It therefore makes a considerable difference whether our client is an individual "ship owner" or a charter company or shipping company

• Article 5 OECD MA: Place of business management as place of permanent establishment: A local resident (in this case Panama) must clearly control the fate of the company. Solution: Trustee Director Panama or secondment of a person who becomes resident in Panama and acts as a director of the company

• Negative effects of national regulations on CFC taxation, in Germany §8 AStG: Only to be avoided if a business operation set up in a commercial manner is installed in Panama and the business management is recognizably located in Panama.

• Panama INC /SA becomes the owner of the yacht / ship / container ship

• Home port is Panama

• Registration of the yacht / ship / container ship according to the law of Panama

• Crew members: Employment contract with Panama INC/ SA

In contrast to owner companies in the EU, EU residents:

• Positive effect of the EU freedom of establishment, EU legal protection, EU Parent-Subsidiary Directive, no negative effects of national regulations on CFC taxation (in Germany § 8/2 AStG), provided that sufficient substance escape in other EU countries

• No taxation of hidden reserves when moving to another EU country

• The EU freedom of establishment even allows the targeted exploitation of the tax differential by setting up EU foreign companies (ECJ decision Cadburry Schweppes).

 

Yacht/Vessel Registration / Registration of Container Ships Offshore: Affiliates

In EU situations: Positive effects of the EU Parent-Daughter Directive.

Non-EU issues (e.g. Panama, UAE, Belize): Withholding tax on dividend distributions abroad. As a rule, e.g. tax-free receipt of foreign dividends (ship ownership) with the German parent company/subsidiary in accordance with Section 8.3 of the Corporate Income Tax Act. Prerequisite: Ordinary place of business abroad (arm's length principles), actual economic activity with the offshore owner company and business management can be proven in the country of domicile.