Ultra High Net Worth Individuals (UHNWI) do own yachts for tax reasons, but not because they are a modern replacement for palaces.
Most of the world runs residency-based taxation. As in, if you stay over 183 days somewhere you become a taxable base. The US is the outlier, as it taxes you regardless of where you live, based on citizenship.
That difference produces two entirely distinct wealth architectures.
European UHNWI have a structural incentive to stay mobile. Not being in one place too long is itself a tax strategy. Yachts happen to serve that lifestyle perfectly - flag-registered in favourable jurisdictions, moving between anchorages, never accumulating residency days (and benefiting from things like Cypriot 2 month stay non-dom status). The tax regime does not cause yacht ownership, but it makes yachts a remarkably efficient asset class for people whose wealth depends on being nowhere in particular.
This is why European UHNWI do a yearly circuit - Wimbledon one week, Cannes another, the WEF, the Biennale. The social calendar is not separate from the tax strategy. They are the same thing. This also mirrors the itinerant courts of the past, where the aristocracy would move around from one part of the kingdom to another throughout the year, according to king's mood.
American UHNWI face the opposite constraint. Citizenship-based taxation means mobility cannot solve the problem. So they optimise differently - dynasty trusts, LLCs, state domicile arbitrage. They are not less sophisticated. The same economic incentive just produces a completely different behavioural output when the underlying regime changes.
It’s why they all own yachts