Superyachts and vessels: Maritime legal support in Thailand
The building, buying, selling, owning, operating and managing of a superyacht or vessel in Thailand
Thailand, the “Marina Hub of ASEAN”, is a center of shipping and maritime activities, especially for pleasure yachts during the European off-season. Apart from the major commercial ports Bangkok Modern Terminal, Laem Chabang, Map Ta Phut, and Sattahip Commercial Port, there are currently smaller ports in Phuket, Krabi, Kantang, Ranong, Rayong, Songkhla, and Sriracha Harbour.
Superyachts start in Thailand with more than 30 meters (instead of the standard 24 meters) but not more than 12 pax. It is a high-value asset, often built, owned and operated in different jurisdictions. It is subject to different domestic and international rules, legislations and jurisdictions. It operates in a complex regulatory, customs, VAT and other tax environment. Its high loss risk requires a carefully designed contractual risk allocation between the owner and other participants.
Owning a yacht or other seagoing vessel is the top-notch of a luxury lifestyle. The choice is to build a customized yacht, to buy from the shipyard or to acquire a pre-owned vessel. As a truly international investment, the choice of the flag state resp. the country of registration, the area of navigation, the place of residence of the owner, the nationality of the crew, and the tax status are of eminent importance. Relevant aspects cover taxation mitigation and liability protection, stable fiscal and legal system, the construction, inspection and regulatory compliance regimes, the confidentiality of ownership and others. The asset can be operated as a private yacht or commercial operated vessel.
— Kata Rocks (@KataRocks) April 26, 2019
Sale and purchase: The acquisition of a yacht from abroad, under a foreign flag, owned under an offshore corporate structure, located in- or outside of Thailand, with a place of delivery resp. completion of the purchase in a tax-haven has a broad scope of legal and tax aspects. It requires a smart investment structure, a comprehensive yacht due diligence, the negotiation of standard yacht acquisition contract templates, a successful sea trial and condition survey, a streamlined acquisition process, and a clear understanding regarding the process of owning and operating the yacht.
MYBA MOA: The Mediterranean Yacht Brokers Association Memorandum of Agreement is the industry sale and purchase standard for yachting transactions. It consists of 44 sections and is governed by and construed in accordance with the laws of England with arbitration in London. it can and should be negotiated in accordance with the parties’ interest, the particularities of the asset and the local practices and requirements.
Yacht charter: Thailand’s laws allow demise charter agreements and commercial charter agreements. In the first case of a bareboat charter agreement, possession, command, and navigation of the vessel are relinquished to the charterer. This includes crew selection, vessel operation, and management. In a crewed charter contract, the charter party rents the vessel for a specified time, but the owner remains in charge of the vessel operations and selects the crew. Under Thai laws, the type of charter agreement has influence for the owner’s liability, applicable requirements and regulations, tax implications, license requirements and more.
Foreigner legislation: Various laws and regulations restrict and limit foreign investments in superyachts and vessels which are operated in Thailand. The vessel owning company has to follow specific rules, the work of the foreign captain, engineers, and the crew are restricted by a strict regulatory framework. Other rules restrict the operations of foreign-registered and foreign-flagged vessels within the Thai territory.
Thai Temporary Charter License: Visiting foreign-flagged superyachts can apply for a license that enables them to enter, cruise, and depart commercially in Thai waters. This includes a complete charter without a Thai licensed captain and engineer, merely equal to Thai-flagged yachts. Visa, work permit, import-VAT, and customs issues have to be observed. An alternative is starting or ending the trip in international waters, for example in Langkawi, Malaysia as a pick-up or drop-off point for Phuket-based charters.
Maritime legal advice from Bangkok
PUGNATORIUS Ltd. is the Bangkok-based specialist provider of legal services and tax advice on foreign investments in Thailand’s manufacturing and service industries as well as property acquisitions and developments. The law firm advises and assists international clients on the legal and tax aspects of the construction, sale, purchase, registration, and operation of superyachts and vessels. It guides and handles the whole process, as well as coordinates and communicates with the Thai or international participants through the whole life cycle of the yacht.
Yacht acquisition: PUGNATORIUS Ltd. advises on the sale and purchase 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, seaworthiness, builder’s certificate, vessel documentation, etc. It drafts and negotiates domestic or cross-border vessel sale and purchase agreements and supporting documents.
Import and export of Thai yachts and foreign vessels into and out of Thailand. Customs duties, Customs Department procedures, VAT calculation, guarantee agreement of the importer. Utilization of temporary importation regimes to avoid customs duties and VAT. Private and commercial yacht registration under Thai or international flags and flags of convenience. Advice which flag to choose from the viewpoint of taxes, liability, operating requirements. Change of ownership, flag dismission, and reflagging issues. The registration is the most critical issue as almost all legal issues are determined by the flag.
Tax planning of ownership structure, funding and yacht operations including VAT optimization, income and excise tax issues, taking advantage of tax write-offs like interest deductions, depreciation, deducting expenses like berthing, insurance, maintenance, property taxes and more. Temporary importation regime for customs and import-VAT. Withholding tax on rentals and services, tax treatment of the charter, yacht leasing and other commercial contracts.
Repair: Drafting and negotiating of ship repair, maintenance and improvement agreements with Thai or international shipyards. Legal representation of vessel owners and repair yards and shipyards. Sea trial assistance.
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.
Restructuring: 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.