Legal and tax advice in Thailand’s maritime and yachting industries

PUGNATORIUS Ltd. is the Bangkok-based specialist provider of transactional legal and tax advice on foreign investments in Thailand’s manufacturing and service industries as well as property developments and acquisitions. The law firm has a wealth of experience in providing advice and support in the yachting sector. This includes issues of cross-border acquisition, import, tax structuring, and commercial contracts in the maritime industry. There are ongoing working contacts with Thai and international shipbrokers and local authorities.

Thailand established itself as one of the primary Asian hubs in the global yachting arena. Phuket, as Asia’s premier cruising destination and maritime heaven for leisure boating enthusiasts, is targeting yachting aficionados and wealthy lifestyle enthusiasts from all over the region.

TYBA: PUGNATORIUS Ltd. is a member of the Thai Yachting Business Association, formerly the Thai Marine Business Association. The TYBA is a non-profit marine leisure industry association, serving yacht builders, yacht charter operators and brokers, marinas, yacht repairs and refitters, yacht management, and other yachting related companies throughout Thailand. 

Yachting law covers the whole life-cycle of a yacht, from signing a build contract from a shipyard, purchase of a repossessed vessel, the boat operation and crewing of the yacht, through to flag registration, warranties and payment schedules, till possible yacht litigations. When ownership, finance, tax, and flag considerations are addressed during a sale, it makes sense to have an experienced legal and tax advisor on board. During the last years, the law firm acquires hands-on experiences and special tax know-how regarding Thailand’s yachting industry and maritime sectors.

Cooperation: PUGNATORIUS Ltd. welcomes the cooperation with international legal practitioners, yacht-brokers and yacht managers concerned with the operation of professionally crewed yachts including financing, registration, chartering, insurance, compliance and casualty management. The law firm is available and willing to represent the legal and economic interests of yacht and superyacht owners, crew, underwriters, brokers, shipyards, surveyors, providers, insurance claim managers, and other stakeholders connected to Thai maritime and yachting transactions.

Professional services from the Bangkok investment law firm

Pleasure or sport yachts, as well as commercial vessels, qualify under various aspects as high-risk assets. To acquire first and to consider the various legal, tax and business issues later, is the way it is done by a pirate and buccaneer, but not by a prudent businessman. PUGNATORIUS Ltd. supports and advises new and current stakeholders in Thailand’s yachting industries. This includes the following legal and tax assignments:

International yacht acquisition: PUGNATORIUS Ltd. provides legal and tax advice on the acquisition or sale of superyachts and vessels in a multi-jurisdiction environment. The law firm designs protected marine ownership structures including the set-up of Thai yacht owning and yacht management companies. It carries out comprehensive vessel due diligence examinations regarding yacht title search, ownership history, builder’s certificate, vessel documentation, etc. PUGNATORIUS Ltd. negotiates MYBA-MA and its derivatives on behalf of the buyer or the seller. The law firm assists and supports in the offshore handover and completion of the transaction and the import, registration, and licensing of the yacht in Thailand or a flag of convenience.

Import and export of Thai yachts and foreign vessels into and out of Thailand are typically structured and managed by maritime broker firms. This covers customs duties, customs department procedures, and the CIF-value import-VAT calculation. PUGNATORIUS Ltd. supports on the client’s behalf in such processes and provides assistance and legal opinions on the utilization of temporary importation regimes to avoid customs duties and VAT, the registration of private and commercial yacht under Thai or international flags and flags of convenience from the viewpoint of taxes, liability, operating requirements. The registration is the most critical issue as almost all legal issues are determined by the flag. For the change of ownership, flag dismission, and reflagging issues a professional legal counsel and tax advisor in the deal team is of obvious benefit. 

Tax planning of ownership structures, funding and yacht operations including VAT optimization, income and excise tax issues belong to the area of competence of PUGNATORIUS Ltd. The tax counsel advises on taking advantage of tax write-offs like interest deductions, depreciation, deducting expenses like berthing, insurance, maintenance, property taxes and more. The law firm is familiar with the temporary importation regime as a visiting boat for customs and import-VAT. Also, it advises on withholding tax on rentals and services, the tax treatment of the charter, yacht leasing and other commercial contracts.

Maritime contracts: The drafting and negotiating of ship repair, superyacht refit, maintenance and improvement agreements with Thai or international shipyards require special maritime know-how regarding the practices and characteristics of this particular industry. The law firm provides legal representation and protection of interests for vessel owners, shipbuilders, and dockyards. 

Crew and charter: Drafting of crew agreements including crew screening regarding diplomas, compliance with the corresponding flag regulations, insurance, and working contracts, including contracting, salaries and social security issues. Legal advice and assistance on boat chartering issues for owner, charterer and charter broker or charter agent. The distinction between demise charter (bareboat charter) and crewed charter (time and voyage charter, commercial charter). Charter license requirements and application process. Charter brokerage agreement between owner and broker/agent.

Active yacht ownership refers to the business strategy of purchasing a yacht and placing it into a charter program to generate income, thus reducing the cost of yacht ownership. Generally, such programs allow for some personal use of the yacht at the discretion of the owner. The law firm guides through the legal and tax hurdles of boat-as-a-business ventures as material participation or passive activity.

Restructuring: A ship in harbor is safe, but that is not what ships are built for. The Bangkok law firm provides legal advice for the (re-)structuring of the current international ownership and operating structure for enhanced protection and privacy for the yacht owner and his personal assets as well as a more tax-efficient approach. This is not only relevant for new yacht owners, but also for existing owners who’s yachts are privately registered and for captains and owners representatives responsible for a new build project.

Repossession: To act as a repossession agency for superyachts and vessels requires a license. The marine repo man takes over the grab-and-dash job if a vessel has been stolen, its operators have defaulted on their mortgage, a ship has been fraudulently detained, or another type of maritime crime has taken place. If such yacht is spotted in Thai waters, this might attract local or international banks or creditors to foreclose and seize the boat as collateral. However, to hunt down yachts in recovery and repossession requires complex legal considerations. PUGNATORIUS Ltd. does not provide legal services for repo agents and yacht repossessions but advises on the acquisition of repossessed boats.

Each case is different. Telephone inquiries and ad-hoc email requests on Thailand’s legal and regulatory framework without details and documentation are not accepted by the law firm. Individual support and professional advice are available under a paid consultancy agreement only. Admiralty lawyer, maritime lawyer,  yachting lawyer