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When high-net-worth individuals (HNWI) and ultra-high-net-worth individuals (UHNWI) consider purchasing luxury assets like yachts, artworks, or aircraft, one of the first steps is determining the most effective structure for acquiring and holding these assets, according to Oliver Cross, London associate at law firm Conyers. A common approach is to use a Special Purpose Vehicle (SPV), particularly a British Virgin Islands (BVI) SPV, due to its numerous advantages.
An SPV is a corporate entity, often a BVI business company, created specifically to acquire and hold luxury assets. The primary benefits of using an SPV include financing flexibility, limited liability, and ease of transfer. SPVs allow for off-balance-sheet financing, meaning the asset's financing does not affect the wider financial structure of the individual or corporate group. In the case of a sale or transfer, the SPV itself can be sold as a self-contained entity, simplifying the process without the need to transfer permits or registrations (e.g., for yachts or aircraft). Moreover, SPVs typically offer limited liability, protecting the broader group or individual from financial risks associated with the asset.
The BVI stands out as a preferred jurisdiction for establishing SPVs due to its reputation, confidentiality, tax neutrality, and flexible legal system. The BVI imposes no income, corporation, or capital gains taxes, and there is no stamp duty on share transfers, making it an attractive and cost-effective option. The BVI's legal system is well-regarded, and its use of the US dollar simplifies banking. Furthermore, the jurisdiction is stable, with ultimate authority vested in the UK monarchy.
"Purchasers of yachts, artworks, aircraft and other luxury assets face important decisions regarding the structuring of such acquisitions," he concludes. "With multiple options available including various forms of SPVs in differing corporate domiciles, purchasers should seek out a jurisdiction that offers the best mix of quality, flexibility, administrative convenience, cost/ tax efficiencies and international acceptance. The BVI has and continues to lead the way as the jurisdiction of choice."
A growing reliance of companies on business aviation
The recent Opalesque INTERACTIVE with Chadi Saade, President of Airbus Corporate Jets "Private Aviation's Future: More Business, Philanthropy, Sustainability" also discussed a growing reliance of companies on business aviation, and changes in how they use their private jets.
The new generation of business jets, such as the ACJ TwoTwenty, offers twice the cabin space of similarly priced business jets, with 33% lower operating costs, the same airport access and parking footprint as competitors, a range of 5,650 nautical miles (12 flight hours), and the ability to use sustainable aviation fuel. The game-changing extra-large bizjet combines efficiency, comfort, and eco-friendliness, with superior long-term investment value with double (2x) value retention compared to other ULR (ultra long range) business jets.
Alexandra Asche from Global Jet Capital also discussed how to finance a private jet.
The user-friendly webinar replay is available here: https://www.opalesque.com/webinar/#pw73
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