Last Updated on Friday, 14 May, 2021 at 9:58 am by Andre Camilleri
Alison Vassallo is a partner within the Marine Litigation Department and heads the Yachting Department at Fenech & Fenech Advocates.
One of the leading industry publications in the yachting sector, Boat International, last week announced that the first quarter of this year has brought with it a record number of superyacht brokerage sales, up by 46% from the same period last year and higher than pre-pandemic years, following a strong end to 2020. Industry commentators and yard representatives are unanimous in their view that with the Covid pandemic remaining at the forefront of everyone’s mind, this surge in sales is the result of owners coming to the realisation that there cannot be a better time to buy and own a yacht, which offers a safe isolated haven for them and their families. This has led to a significant increase in first-time buyers approaching the market who perhaps would have limited themselves to occasional chartering in the past. The fact that the motor yacht sector reported the strongest number of sales in the 24-40m size range attests to the fact that more people than ever are entering the market for the first time. Furthermore, all indications are that with the gradual lifting of health measures by different member states across popular cruising grounds in the Mediterranean, the demand for yachts for charters will similarly increase.
This is undoubtedly welcome news for Malta as a yachting jurisdiction following a challenging 2020 for local service providers. The necessary closure of ports save for essential services in March 2020 – right at the onset of the peak of this highly seasonal industry – coupled with the inevitable reduction in incoming business from visiting yachts due to travel difficulties and restrictions, led to a direct hit to the various sectors that directly and indirectly rely on the yachting industry. These include provisioning companies, marinas, refit and repair facilities, ship chandlers, agents, fuel providers, generic service providers and subcontractors, quite apart from the corporate and legal service providers who provide support services to this industry.
Protocols for the controlled entry of yachts without guests and passengers on board wishing to call at Malta for particular services, such as the closing of delivery transactions, tendering of provisions and execution of refit and repair works, were at a later stage adopted on a practical level by the authorities with the intervention of the Yachting Services Business Section within the Malta Chamber. However, the yachting industry, which contributes an estimated €100m to the economy, excluding revenue from taxes and flag registration, suffered its share of losses as did many other sectors.
A significant rise in yacht sales and purchases on an international level, together with the easing of local restrictions in light of a remarkable vaccination programme and drop in infections, translates into renewed vigour and activity for the various services offered by the island, both logistically and also as regards legal, tax, corporate and advisory services.
The beginning of the pandemic in March 2020 coincided with the publication by the Maltese authorities of updated guidelines regarding the hiring of pleasure yachts for VAT purposes which was followed by the welcome news of the EU Commission’s formal withdrawal of its action against Malta regarding yacht leasing on 30 October 2020.
Furthermore, streamlined importation procedures were introduced at the time, rendering the importation of commercial yachts into the European Union for the chartering season in the Med more efficient and attractive.
Malta has built a strong name in the international yachting sector over the past 15 years. Several factors have led to this, starting with the significant inroads made by the Malta Flag Registry and the private sector into this niche industry, which have achieved results that amply speak for themselves in terms of numbers. At the end of December 2020, the number of Commercial Yachts over 24m registered under the Malta flag was 306, while the number of private (pleasure) yachts registered under the Malta flag over 24m stood at 553. A strong legal system, the protection offered to financiers by our law, years of experience in servicing clients with concrete solutions in this highly sensitive and competitive industry and service providers dedicated to providing unparalleled legal and logistical services are all factors that have contributed to placing us in an enviable position to service this important sector.
With a proven resilience of the market in this most challenging of times, a strong array of legal tools and logistical services, our geographical location and an excellent relationship between the authorities and the industry, there is every reason to look forward to the brighter days ahead in which we will continue servicing clients with in-depth technical, practical and legal knowledge of the industry.
Alison Vassallo’s main area of practice involves advising owners and financiers in the acquisition and sale of private and commercial yachts on registration, financing, importation, chartering, leasing and fiscal requirements. Alison chairs the Yachting Services Business Section within the Malta Chamber and is also a Council and Executive Board member of the Malta Chamber