It is common knowledge that a yacht or any vessel must comply with the regulations of the country in which it is registered. Conventional flags often impose strict regulations and restrictions on owners and their vessels, which prompts ship or yacht owners to have their vessels registered in jurisdictions that offer favorable tax regimes and legal environment.
If you are a regular yachtsman, you may have noticed that conventional flags on top of yacht masts are being gradually substituted with flags of various exotic countries. And there is no wonder why: registering a yacht under a flag of convenience, for instance, Panama, Marshall Islands, Seychelles, British Virgin Islands, Malta or Gibraltar, allows a significant reduction of registration costs and taxes.
Some flags may offer additional benefits for the yacht and ship owners like payment of reduced VAT rates, more flexible crew requirements, etc.