YET Schemes Explained: Isle of Man Joins Flag States Offering Flexible Yacht Chartering

Readers will be aware that the Yacht Engaged in Trade (YET) scheme is a regulatory framework that allows privately-registered yachts to undertake limited commercial chartering without full conversion to commercial status. Joining the ranks of flag states offering YET schemes, the Isle of Man (IOM) launched its own YET scheme in September 2025.

What is YET?

YET is a use and ownership scheme open to larger yachts (of 24 metres and above) permitting commercial use (chartering to third parties) limited to certain geographical zones for up to 84 days per calendar year. The scheme allows a yacht to switch status between private and commercial with its flag registry, and imposes technical, safety, and manning standards equivalent to those for commercial yachts.

Key Requirements and Limitations

• Compliance: A yacht operating under the IOM YET scheme must be in Class, built to, and compliant with, the Large Commercial Yacht Code (LY1, LY2, LY3 or Reg Yacht Code Part A and Common Annexes) and comply fully with all commercial regulations applicable to a yacht of its description (including the Maritime Labour Convention 2006).
• Administration: Owners (or captains) must manage the administrative burden of switching registry status and ensure all documentation and inspections are up to date.
• VAT: The owning company must register for VAT and appoint fiscal representatives in each country where a charter starts. The VAT due on charter hire will be payable in the usual way. Unlike for yachts engaged in full-time commercial use, input VAT on supplies (such as fuel) cannot be deducted from output VAT collected on charters.
• Geographical Restrictions: The IOM Registry confirms that commercial charters under YET must begin in designated EU waters, including France, Monaco and Greece. In our experience, yachts operating under other YET schemes are also able to embark charter guests in Malta and Croatia. Any local requirements (such as charter licences, permits, etc.) will also need to be complied with.

Advantages

The YET schemes offer a degree of flexibility by allowing an owner to balance their yacht’s usage between exclusively private and limited commercial operations, permitting the owner to defray some of the costs of owning and running the yacht. In contrast to yachts used/registered as “full time” commercial yachts, owners of yachts operated under YET do not need to sign charter agreements and pay VAT for their own use, as such use occurs when the yacht is registered and used as a private yacht. A yacht which maintains an EU VAT-paid status is eligible for the YET scheme, offering greater flexibility for use by EU guests, including under charter contracts.

Disadvantages

Switching between private and commercial status under YET requires careful planning and imposes a degree of administrative burden. A yacht used under YET would be held to the higher standards of a commercial yacht in respect of its technical documentation, any inspections (for example in the case of a port state control) and certain day-to-day operations (such as maintaining commercially compliant crew). This can be expected to have an impact on running costs, including insurance premiums.

Comparisons and Market Trends

The IOM, Cayman Islands, and Marshall Islands flag registries all offer YET schemes with broadly similar requirements: compliance verification, temporary certificates for charter periods, and annual compliance checks. Each requires charter activity to be declared to the registry in advance and charter contracts to be submitted in order to arrange switches between a yacht’s private/pleasure Certificate of Registry, and its temporary YET Certificate of Registry.

Worth mentioning are a couple of other schemes (such as the “Dual Registration” scheme offered by Maritime Cook Islands, and the Isle of Man “Pleasure Yacht Charter Ready” scheme) permitting occasional chartering by way of quick switches between private and commercial use. These schemes are more of an unknown quantity, as it remains unclear what approach will be taken by the customs authorities of the countries through which the yacht passes, or indeed where the yacht may be used under such a dual use scheme, which are not official YET schemes. Further, any bank or finance provider involved in a yacht’s purchase and operation can be expected to have its own requirements around mixed commercial and private use and would likely require this to be managed within the framework of an official YET scheme.

Conclusion

The launching of the Isle of Man YET scheme reflects a broader trend towards regulatory innovation in the large yacht sector, and a desire by flag states to provide a flexible and user-friendly solution to reconcile private and limited commercial use, whilst also attracting and retaining tonnage. While the IOM has not yet published data on the number of yachts in its fleet taking advantage of its YET scheme, early anecdotal feedback suggests strong interest from both existing IOM-registered yachts and new entrants attracted by the scheme’s simplicity. Owners considering using their yacht under any of the existing YET schemes should seek specialist advice to ensure that such scheme aligns with their operational, fiscal, and regulatory imperatives.

Emma Triccó, Paralegal, assisted in the writing of this briefing.