Yacht life is often seen as a decadent pursuit of the ultra-rich. And, with a growing number of billionaires — driven by a boom in AI and tech wealth — superyachts are the new status symbol of the elite, including Jeff Bezos, Larry Ellison and Mark Zuckerberg (1). Entrepreneurs can even run their business from a superyacht.
Yacht ‘season’ (2) typically runs from May to October in the Mediterranean, and November to April in the Caribbean and other tropical destinations such as Southeast Asia.
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And along with the six-figure parties (3) complete with champagne and caviar, there may be a practical reason for yacht life, too: tax breaks — especially for European ultra-high-net-worth individuals (UHNWI).
“European UHNWI have a structural incentive to stay mobile. Not being in one place too long is itself a tax strategy,” writes author and financial communications strategist Richard Amador on X (4).
Yachts are “a remarkably efficient asset class for people whose wealth depends on being nowhere in particular,” he writes. “This is why European UHNWI do a yearly circuit — Wimbledon one week, Cannes another, the WEF, the Biennale.”
Amador argues that the social calendar of the ultra-rich isn’t separate from tax strategy: “They are the same thing.”
But this isn’t as straightforward as it might sound.
“Most countries have regulations determining tax residency, which involves more than just physical location. Factors like income, assets, and connections to a country can affect your tax status,” writes Iven De Hoon, a lawyer and tax expert from Belgium, for No More Tax. “Attempting to avoid taxes by living on a yacht and avoiding tax residency could be considered tax evasion or fraud (5).”
As De Hoon points out, Americans in particular can’t escape taxes — even if they happen to live on a yacht — since they’re taxed on their worldwide income. “Additionally, Americans living on a yacht may need to pay state and local taxes, based on the yacht’s registration and where it stays for extended periods,” he writes.
So whether you’re moving abroad for a job, planning to retire in another country or choosing to live the yacht life, you’ll likely still be paying taxes to the IRS.
Why Americans living abroad can face complicated taxes
The U.S. taxation system requires Americans to pay taxes on their worldwide income based on citizenship — regardless of where they happen to live. The only other country that uses citizen-based taxation is Eritrea (6), although its model is a bit different.
The rest of the world uses residency-based taxation, which means you pay taxes based on where you reside, rather than your citizenship.
While the U.S. has tax treaties with 68 foreign countries (7) that can help Americans living abroad as residents avoid double taxation, it also means doing your taxes is a whole lot more complicated.
Typically, with residency-based taxation, if you stay longer than a certain number of days in a calendar year, you have to pay local taxes. A popular claim is that if you stay less than 183 days, you can avoid this. But that’s not entirely accurate.
Every country is different — even when it comes to their definition of a calendar year. And residency is often based on more than just the number of days you’ve spent in a country.
“A country may care far less about your travel spreadsheet than about whether you kept a family home, ran your business there, or kept the centre of your life there,” writes Adrian Blackwell, an international tax policy researcher, in the Tax Haven Directory (8).
For example, he writes, “Portugal can treat you as resident if you maintain a home there as a habitual residence, France can look at home, main professional activity, or economic interests, Australia can use the resides or domicile test, and Cyprus has a 60-day statutory route.”
That’s not to say the ultra-rich in the U.S. don’t have other options to shield their wealth. As Amador writes in his tweet, they “optimise differently” with such tactics as dynasty trusts or state domicile arbitrage (4), which refers to the practice of establishing permanent residency somewhere with favorable tax laws while still maintaining ties to other locations.
If you’re planning to move from the U.S. to another country, you’ll need a tax strategy. And it doesn’t matter how long you’ll be gone, whether it’s a short stint for work or a permanent move for retirement (or just hanging out on a yacht).
Thanks to regulatory and compliance constraints, not all U.S.-based financial institutions can serve clients abroad. Nor do their advisors necessarily have international expertise. Ahead of your move, find out if your financial provider, brokerage firm or advisor is qualified to serve you abroad. If not, you’ll need to switch providers.
You may even need to adjust your investment strategy if you’re making a permanent move (such as retiring abroad) — which is where a financial advisor or wealth manager with international expertise can help.
Every country has its own tax rules and, even if you’re moving to one that has a tax treaty (7) with the U.S., you’ll still need to file the right forms and claim U.S. tax credits or exclusions to avoid double taxation when filing your federal tax return. You may also have to file state taxes, too (depending on which state you previously lived in).
Local tax rules in your new home country could also impact your U.S.-based investments.
“For instance, although Roth IRAs are tax-free in the US, this benefit may not be recognized abroad,” writes Tom Zachystal, president of International Asset Management, in a blog (9). The same goes for estate planning. “Estate planning tools such as revocable trusts, which are effective in the US, might not be recognized or could create complications abroad (9).”
So, if you’re planning to move abroad, it’s a good idea to consult with a U.S.-based international tax advisor and possibly a local tax advisor in your new country of residence to make sure nothing falls through the cracks — whether or not you’re living the yacht life.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see ourethics and guidelines.
Boat International (1); AK Yachts (2); Business Insider (3); X (4); No More Tax (5); Taxes For Expats (6); Internal Revenue Service (7); Tax Haven Directory (8); I Am Advisors (9)
