The Cayman Islands Shipping Registry (CISR) has announced the procedure that is to be followed by a pleasure yacht registered in the Cayman Islands in order to obtain Yacht Engaged in Trade (YET) certification. The certification enables yachts over 24m to charter up to 84 days per calendar year in European waters, currently limited to France and Monaco.
The programme, which has been in operation since December 2017, follows in the footsteps of the Republic of the Marshall Islands Yacht Registry (RMI), which implemented the YET initiative in late 2015. Many in the industry had initial reservations about the legitimacy of the scheme and questioned whether it would work in practice, but these concerns appear to have been dissolved.
“We have decided to launch now as it is evident that the process has been administered satisfactorily since it was tested on RMI-flagged vessels and there is some demand from our clients to use this facility,” explains Cayman’s Deputy Director Phil Noad, speaking exclusively to SuperyachtNews. “There is a market for it, not a huge market, but we felt that we needed to provide it as an option for the fleet.”
Previously, CISR offered yachts two means of registration: full registration ‘pleasure’ and full registration ‘commercial’. The YET programme has been developed as a new dual-use operation programme to offer a third means of registration for commercially-compliant yachts. This allows owners the flexibility they require to operate their yacht privately with the option to charter for a limited time per year.
In a Shipping Notice, CISR explains that the programme is applicable to all Cayman Islands-registered pleasure yachts that seek to charter in EU waters, which have a VAT paid status or operate under Temporary Admission regime in EU waters. Yachts must also be fully compliant with the requirements of the Shipping Notice, the Large Yacht Code and all other applicable national and international requirements.
Yachts meeting these requirements will be issued with a Cayman Islands Yachts Engaged in Trade Certificate of Compliance (YET CoC) and temporary Certificate(s) of British Registry for a Yacht Engaged in Trade (Temp COBR YET) covering the charter periods or periods of commercial promotion. As stated previously, these certificates then authorise yachts to charter for up to 84 days per calendar year in European waters (currently limited to France and Monaco).
“CISR is only dealing with the safety certification and registry designation aspects; both have been amended to permit the French safety and fiscal authorities to separate out the vessels operating under this facility,” clarifies Noad. “Once the yacht has templates on file in the agreed format, the authorities will then recognise them.”
There are some significant advantages for yachts registered under the YET scheme. Firstly, owners can use their yacht privately without losing the option of chartering the yacht on an occasional basis to offset running costs. This means that, contrary to a commercially-registered yacht, the owners do not need to sign a charter agreement when using their own yacht on a private basis. It also means that the owners do not need to pay VAT on their own use of the vessel.
Furthermore, the YET-registration option eliminates the need to switch between pleasure and commercial registration every time the yacht is to change its mode of operation and use. It eliminates the need to proceed to export/import formalities and the need to leave the EU and visit a third-country port each time the yacht is to switch between pleasure and commercial use. VAT exemptions will still be available on works for non-VAT paid yachts (via the inward processing relief regime) and the 18-month Temporary Admission allowance period is paused each time the yacht is used as a yacht engaged in trade and placed under Temporary Admission for Commercial Activity (TACA YET). Yachts certified under YET, however, are not entitled to apply for any VAT exemptions on fuel or supplies.
One possible downside to being registered under the YET scheme is that the yacht may have to comply with more stringent standards, as the yacht must operate in full commercial compliance at all times, whether engaged in trade or not. However, for most professionally-run superyachts, this is unlikely to be an issue.
“The majority of our large pleasure yachts are voluntarily compliant with the standards for commercial vessels and so switching a voluntary commercial yacht code certification to YET certification may just be a paperwork exercise in most cases,” assures Noad. “Of course, those pleasure vessels that voluntarily comply with safety requirements for a commercial vessel, but not security requirements, will need to meet those security requirements to be eligible for YET status.”
Additionally, pleasure yachts holding YET certification and operating under the temporary Certificate(s) of British Registry for a Yacht Engaged in Trade, should expect to be considered by Port State Control authorities as commercial yachts and, thereforem subject to inspection and control measures under the Paris Memorandum of Understanding.
This move from Cayman is significant for the industry. When the RMI first enabled its fleet to register with the YET scheme, take up was slow due to caution surrounding the legalities of such a flexible registration option. Now the scheme has Cayman’s backing, confidence in the initiative will grow. It is also good news for the French yachting industry, especially considering France’s year of bad yachting press. And, who knows, if the initiative provides the country with substantial revenue in the coming years, perhaps the authorities of neighbouring countries might sit up and take note.
The application procedure for Yacht Engaged in Trade Certification is detailed in a CISR Shipping Notice, which can be read here.
In issue 180 of The Superyacht Report, a cross-section of industry representatives offer their opinion on how the RMI YET initiative has change the charter landscape. Apply for your VIP subscription of the magazine here.