Managing Yacht-Related Expenses with an Offshore Account14 min read

Managing Yacht-Related Expenses with an Offshore Account14 min read

To have a yacht is luxurious, an emblem of accomplishment, and a door to unbeatable adventure. Yet beneath the pearly whites and decks bleached with sun, there’s a truth to be faced: financing yacht ownership can be stressful.

That is where an offshore bank account can make things easier. Offshore accounts give a centralized hub for yacht money operations regardless of where in the world the yacht may be located. Here, we’ll learn how yacht owners and companies can make use of offshore accounts to help streamline their expenses.

Why Use an Offshore Account to Manage Yacht-Related Expenses?

Here are some of the primary benefits of using an offshore account for yachting:

1. Convenient currency exchange. The advantage of having an offshore account is you have access to good currency exchange rates from your bank. This eliminates the cost and stress of changing money every time you pay bills in different countries. The account handles multiple currencies in a single currency making international payments seamless.
2. Centralized record keeping. An offshore account enables you to see everything that is made or spent on your yacht in one place. This gives you a detailed view of how the yacht performed over time. It’s easier than having different local bank accounts and documentation across nations.
3. Secure online payments. Many offshore banks now provide powerful online and mobile banking services where you can make payments from anywhere. This makes it possible for yacht owners and managers to make payments and send money to sellers, crew members, marinas, etc. with a few taps. No more paper checks or wire transfers.
4. Global acceptance. Because offshore accounts are established to facilitate international trade, funds transferred from offshore accounts are instantly accepted all over the world. The buyers are much more inclined to work with a reputable offshore bank than with a foreign bank they’ve never heard of.
5. Tax advantages. Depending on the jurisdiction, keeping yacht funds offshore will help you defer or minimise capital gains tax on the yacht sale. Other jurisdictions also have preferential tax treatment for yacht repairs or crew salaries taken out of the account. Please make sure you consult a tax professional to know about any advantages.

For both owners and businesses who need to transfer funds between countries, the convenience and value of an offshore account makes it an ideal way to centralize yacht finances.

How Can I Use an Offshore Account to Manage Currency Exchange Costs?

Currency exchange fees are a major expense for yachts travelling abroad. By moving all yacht transactions to an offshore account, yacht owners can reduce these expenses in the following key ways:

1. Competitive exchange rates. Offshore banks such as The Kingdom Bank provide interbank rates, which means that you are almost at the actual market rate when you convert currencies without markups. This is cheaper than bank rates at the high street or locally traded exchanges in ports.
2. Single account for multiple currencies. Instead of multiple accounts in multiple currencies, an offshore account enables you to keep balances in USD, EUR, and GBP all under one roof.
3. Batch exchanges. By having regular larger money changes instead of several tiny sporadic ones, managers can lock in further discounts. The bank is more able to search for the best conditions in the market when carrying out bulk exchanges in larger volumes.
4. Forward contracts. For fixed-term, predictable future costs such as scheduled refits or crew salaries, enforcing predetermined exchange rates via forward contracts cushions owners against rate shocks. This gives budget certainty and helps avoid bad last-minute trends eating into money.

Is It Safe to Use an Offshore Account for Yacht Expenses?

Security and regulation are one of the issues with offshore accounts. But good offshore banks with the right to transact banking business offer similar protections and controls as the onshore banks.

The leading service providers such as The Kingdom Bank are under extreme scrutiny and regulation from financial institutions. Credit accounts are backed against theft or fraud, just like home banks. Secure web technologies such as two-factor authentication and transaction monitoring further reduce risks.

Offshore banks are also bound to international anti-money laundering rules. You perform massive know-your-customer verifications when setting up an account to verify identity and money flow. Every transaction is carefully reviewed for any alleged fraudulent activity.

Offshore places might have lower tax rates, but it isn’t the point of doing away with taxes. Genuine foreign trade is welcome and encouraged. With accounts primarily used for officially registered yachts, owners have nothing to fear from regulators.

If you vet an offshore provider and use the account in a manner that is safe and sound, then your account is just as safe and secure as any bank back home. Large offshore hubs also have reciprocal legal assistance arrangements to meet cross-border court cases. The economic and business benefits of an offshore account to yacht owners far outweigh minimal compliance risks when implemented correctly.

What’s the Best Way to Track Yacht Expenses with an Offshore Account?

Money moves in a foreign currency and you need to keep good records even with the organizational advantage of having an offshore account. Tips for tracking yacht expenses effectively:

1. Use spending classes on the web banking platform. The vast majority of offshore banks provide effective categorization options in their online banking interface. Label transactions with simple descriptions, such as “service”, “fuel”, “insurance”, to quickly categorize transactions as they happen.
2. Record non-monetary transactions too. Keep notes of things such as repairs completed, equipment repaired or supplies restocked even if no money had yet changed hands. This gives a comprehensive operational overview.
3. Pull periodic reports. Run custom reports categorizing transactions by category, date range, or crew/vendor to track budgets and expenditures over time. Identify areas for optimization.
4. Upload receipts and invoices. Digital copies of all documents can be found on the internet. This creates an audit trail backing the transactions, which makes expense claims or tax filing easier down the line.
5. Use accounting software integration. Most accounting programs such as QuickBooks meld well with offshore bank feeds. Filter automatically, reconcile accounts and generate high-level reports with a mouse click.
6. Review frequently but batch work. Use calendar reminders for the periodic review, say once per month, but make granular checks every quarter or every year to prevent making minute adjustments and messing up the cash flow all the time.

Staying up-to-date with the movements of the yacht’s money in an organized offshore account offers complete transparency and expense control.

How to Set Up an Offshore Account for Selling Yachts?

Offshore accounts make it simpler for yacht dealers and brokers with international clients to purchase and sell their vessels. Here are the basic steps:

• Choose a reputable provider. Check offshore banks and find one that is authorized to finance yachts such as The Kingdom Bank.
• Complete extensive KYC checks. Document your identity and income prior to the transaction.
• Deposit an initial minimum balance. Banks typically want $10-25k at first and can increase the amount if your business expands. Larger balances may also receive discounts on pricing.
• Set up online access. With the bank’s easy-to-use digital platform, you can safely control the account from any part of the world with internet access.
• Provide payment instructions. Make buyers and sellers from out of the country aware of where to send funds to buy/sell. Be sure to add bank details, account and SWIFT codes in the transaction reports.
• Use account for all yacht transactions. Deposit sales, settle vendors/crew, hold buyer deposits, receive loan repayments – operate the entire cycle in a single offshore hub.
• Maintain organized records. Store digitized copies of all contracts, invoices, receipts separated by vessel/client for compliance and tax purposes.
• Review finances regularly. You’ll be able to keep the cash flowing, detect any problems and make business decisions based on account history.

By establishing an offshore account geared towards yacht trade, brokers have access to a world-class global banking partner.

An offshore bank account offers an in-house solution to the many financial headaches involved in owning or operating yachts around the world. For yacht owners, operators and dealers, the ease and savings of an offshore service such as The Kingdom Bank simply offset the limited compliance burdens. Offshore accounts make it easy to manage yacht cash, keep a journal, and pay for things, no matter where the boat is based.