Ship registration and flagging a ship is used to document ships for ownership in order to provide definitive evidence of nationality for international treaty purposes. For example, ships flying under certain flags may be allowed into the territorial waters of a nation while other nations' ships would not be. 

International law requires that every merchant ship and most large pleasure yachts be registered in a country, called its flag state. Ship registration is similar to a person receiving a passport. A ship is bound to the law of its flag state. A ship's flag state exercises regulatory control over the vessel and is required to inspect it regularly. The organization which actually registers the ship is known as its registry.

There are currently over 30 nations that have open ship registries known as flags of convenience. Flag of convenience is the business practice of registering a yacht or merchant ship in a sovereign state different from that of the ship's owners and flying that state's civil ensign on the ship. Ships are registered under flags of convenience to reduce operating costs or avoid the regulations of the owner's country. Choosing a country that has an open registry for flagging ships will reduce a ship's tax and operating costs by as much as 50% or more.