Where do we flag our boat?

[Dockhead]

Originally Posted by svlamorocha

I see lots of great info in this post but I clarify two points that may be misleading.

- Yes, the UK Registers will register boats owned by residents of the UK that are not British, but ONLY IF THEY ARE CITIZENS OF ANOTHER EUROPEAN COUNTRY (there is a more detailed definition).

- Yes, in the US a foreigner can set up a company and get federal "documentation" (US dialect for national registration), but the company needs to be "controlled" by US citizens. The detail of this is long, but basically you need to hire some "front men" who are US citizens to act as officers of the corporation.

Useful clarifications; thanks!

For UK: Yes, for Part I registration, a non-European citizen needs a UK company. There is no requirement of any kind of ownership or control by UK or European citizens. My UK company has a sole shareholder (me, a US citizen) and sole director (me), is exempt from tax filings, pays no tax of any kind, and requires only the filing of an annual declaration about its shareholders, directors, and legal address. Very simple, efficient, convenient, and cheap.

For Part III registration in the UK, any resident is eligible regardless of citizenship, but companies are not eligible (this is different from the German Internationaler Bootsschein, which companies can also use).


For US: For a pleasure vessel (not, however, for commercial fishing vessels and some others), a foreign citizen owning a boat through a company only needs US directors, which are provided by law firms/domiciliation firms. The phrase "front men" implies deception; this is not the case. This is normal and legal practice.

That is for Coast Guard "documentation". If you are doing only the Delaware state registration, you don't need even that. It's true that state registration without "documentation" has a questionable legal status in other countries, but it's fairly widely used AFAIK.



One more clarification: In Germany, there is something called a "Flaggenzertifikat", which is the more formal registry, probably analogous to Part I registration in the UK. Here indeed you need to be a German citizen, either a person with a German passport or a German or EU company. If you're a citizen but not resident, you need an official representative ("Stellvertreter") -- probably the cause of the problems of someone posting above. I had not known any of that. Always learn something new from these discussions.

The "Internationaler Bootsschein", however, should do the trick for the OP. It is not indeed valid only for coastal waters. See: http://de.wikipedia.org/wiki/Interna...r_Bootsschein; also Bootspapiere. It seems to be roughly equivalent to Part III registration in the UK, which means that some authorities, like the French, had not in the past considered it formal enough. The French do accept it now.

The Germans, naturally, have a whole code on flagging vessels. It makes for interesting reading for anyone who is able to tolerate reading legal German without going insane. Here it is: FlaggRG - Gesetz über das Flaggenrecht der Seeschiffe und die Flaggenführung der Binnenschiffe

Interestingly, Germans, including natural persons who are German citizens and are resident in Germany, and also German companies with a majority of Germans in either management or board, are required to flag their vessels in Germany, at least what concerns "zur Seefahrt bestimmte Schiffe (Seeschiffe)" -- seagoing vessels.

[CHAZ]

Originally Posted by Dockhead

Not being an EU citizen, Belgium won't work for Pashenkova without a Belgian company.

Sent from my D6633 using Cruisers Sailing Forum mobile app

Sorry Dockhead,
I guess we have a little misunderstanding here.

First: the Belgium solution was meant for "ingonoka". He is German citizen but living abroad.

Second: "Pashenkova" is US citizen but living in Germany, so he should have the choice between US or German registration.

Mast- und Schotbruch

Martin

[GoingWalkabout]

Originally Posted by GoingWalkabout

A non citizen can be a controlling party of a US Corporation. A corporation has its own personage. Re-confirmed by the US Supreme Court in a recent ruling concerning political donations. Many foreign non US citizens and in fact US non residents have Delaware or Maryland registration.

I do realize that US State registration is different to that of US Federal registration. Which raises other questions. Like do you need a US Federal registration if you have a US State registration? I know you can have a US Federal registration without a State registration as long as you don't stay more than 90 days in a given US State. Or pay the respective States sales or use tax.

Can you please cite the Federal US law that says you must be a US Citizen in control of a US corporation for that corporation to be allowed to register as the owner on the Federal Register?

Thanks.

I have found the answer on the US Government site. While it is only an FAQ answer and doesn't quote the specific law this is what they say.

"Citizenship is established by completion of form CG-1258. In addition to individuals, corporations, partnerships, and other entities capable of holding legal title may be deemed citizens for documentation purposes. Corporations must be registered in a state or the U.S; the chief executive officer and chairman of the board of directors must be U.S. citizens, and no more than a minority of the number of directors necessary to constitute a quorum may be non-citizens. In addition, at least 75% of the stock must be vested in U.S. citizens for a coastwise or fisheries endorsement."

I am a US permanent resident (Green Card ) but not a Citizen. I trawl too much around the world for my business to qualify for the 5 year staying in the USA requirement to become a citizen. I'm an Australian citizen but am a USA taxpayer. I was going to locate my boat in Florida and was prepared to pay the once off $18,000 Florida sales/use tax. Now that I can't get a USCG Federal registration I am forced to rethink the domicile of my boat.

I understand that the Federal Registry laws were written in the main part to control merchant vessels including commercial fishing craft. And they want to protect the fishing industry for US citizens. But to have no accommodation for pleasure boat registration by non US citizens is just dumb. And hell will freeze over before I give control of my company owning over a million dollar asset to a front USA citizen just because of the stupidity of the current US law.

So I will of need gave to stop looking for a waterfront property in Florida and look at a better country to park my boat in between voyages.

[Dockhead]

Originally Posted by svlamorocha

I do know that any idiot (including an "alien" idiot) can control a US corporation. I am a living proof of that, but that has nothing to do with boats. Not every corporation is deemed to have the "citizenship" to own a US-flagged boat.

Sorry, but here you are not correct. A US corporation is a US citizen. A US corporation is a person -- a legal person, as opposed to a natural person (a person of flesh and blood). It has nothing to do with the citizenship of its shareholders.

Where recreational boats are concerned, the citizenship of the shareholders is irrelevant.

For fishing vessels and some other commercial vessels, there is a requirement that a certain percentage of shares are owned by US citizens, but that does not apply to recreational vessels.

[Dockhead]

Originally Posted by GoingWalkabout

I have found the answer on the US Government site. While it is only an FAQ answer and doesn't quote the specific law this is what they say.

"Citizenship is established by completion of form CG-1258. In addition to individuals, corporations, partnerships, and other entities capable of holding legal title may be deemed citizens for documentation purposes. Corporations must be registered in a state or the U.S; the chief executive officer and chairman of the board of directors must be U.S. citizens, and no more than a minority of the number of directors necessary to constitute a quorum may be non-citizens. In addition, at least 75% of the stock must be vested in U.S. citizens for a coastwise or fisheries endorsement."

I am a US permanent resident (Green Card ) but not a Citizen. I trawl too much around the world for my business to qualify for the 5 year staying in the USA requirement to become a citizen. I'm an Australian citizen but am a USA taxpayer. I was going to locate my boat in Florida and was prepared to pay the once off $18,000 Florida sales/use tax. Now that I can't get a USCG Federal registration I am forced to rethink the domicile of my boat.

I understand that the Federal Registry laws were written in the main part to control merchant vessels including commercial fishing craft. And they want to protect the fishing industry for US citizens. But to have no accommodation for pleasure boat registration by non US citizens is just dumb. And hell will freeze over before I give control of my company owning over a million dollar asset to a front USA citizen just because of the stupidity of the current US law.

So I will of need gave to stop looking for a waterfront property in Florida and look at a better country to park my boat in between voyages.

No, you were right the first time. Read it carefully:

"In addition to individuals, corporations, partnerships, and other entities capable of holding legal title may be deemed citizens for documentation purposes."

It means that corporations and other legal persons are citizens for these purposes just like natural (flesh and blood) persons.

They just need to have US directors:

"the chief executive officer and chairman of the board of directors must be U.S. citizens, and no more than a minority of the number of directors necessary to constitute a quorum may be non-citizens."

So you just set up the company without any CEO, and hire two US directors from a company like this: Professional directors | Worldwide Corporate Services. You will be the third director and sole shareholder. You write the articles of the company so that the directors can't do anything without a unanimous vote, and/or consent of the shareholders.

Or just appoint two trustworthy Yankee friends as the two directors, then it doesn't cost you anything, other than, perhaps, a bottle now and then.

It's really not a problem and done by thousands of people -- completely legal.

[GoingWalkabout]

Originally Posted by Dockhead

Sorry, but here you are not correct. A US corporation is a US citizen. A US corporation is a person -- a legal person, as opposed to a natural person (a person of flesh and blood). It has nothing to do with the citizenship of its shareholders.

Where recreational boats are concerned, the citizenship of the shareholders is irrelevant.

For fishing vessels and some other commercial vessels, there is a requirement that a certain percentage of shares are owned by US citizens, but that does not apply to recreational vessels.

I'm thoroughly confused now. Just spent time on the UK Government site and I dont have to be a UK citizen. Added advantage would be easier European passage and the registration is for 5 years with a simple renewal process. I would have to have a UK company but that's no big deal. Easily done online. Have to check now about a foreign flagged boat being kept in Miami. I know I will gave to pay the Florida tax but I'm not sure what are the other implications with the USCG etc.

[Dockhead]

Originally Posted by CHAZ

Sorry Dockhead,
I guess we have a little misunderstanding here.

First: the Belgium solution was meant for "ingonoka". He is German citizen but living abroad.

Second: "Pashenkova" is US citizen but living in Germany, so he should have the choice between US or German registration.

Mast- und Schotbruch

Martin

Sorry, yes, I misunderstood you!

For Pashenkova, I guess the German Internationaler Bootsschein will be the simplest and most straightforward.

UK Part 1 through a UK company would also be ok for Pashenkova, I think, somewhat more complicated, but with a number of advantages.

In his place, I would not do US registration because of the extra hassle of customs clearances cruising EU waters, although there is no problem for him with taxes if for some reason he prefers US registration. For example, maybe he plans on bringing the boat back to the US at some point.


For Ingonka, I think he can do any kind of German registration as long as he has an official "Stellvertreter", which is where I think he got stuck. Belgian registration should also work perfectly for him.


Hope some of this has helped someone.

[GoingWalkabout]

Originally Posted by Dockhead

No, you were right the first time. Read it carefully:

"In addition to individuals, corporations, partnerships, and other entities capable of holding legal title may be deemed citizens for documentation purposes."

It means that corporations and other legal persons are citizens for these purposes just like natural (flesh and blood) persons.

They just need to have US directors:

"the chief executive officer and chairman of the board of directors must be U.S. citizens, and no more than a minority of the number of directors necessary to constitute a quorum may be non-citizens."

So you just set up the company without any CEO, and hire two US directors from a company like this: Professional directors | Worldwide Corporate Services. You will be the third director and sole shareholder. You write the articles of the company so that the directors can't do anything without a unanimous vote, and/or consent of the shareholders.

Or just appoint two trustworthy Yankee friends as the two directors, then it doesn't cost you anything, other than, perhaps, a bottle now and then.

It's really not a problem and done by thousands of people -- completely legal.

Thanks. In principle I don't like it. But as you say lots of people are doing it. They really should change the law for pleasure craft owners. Since I've been forced to read more on this the UK is looking good. Just have to see if I can keep a UK registered boat in the US and register it in Florida. In effect it would have two registrations. One UK which would be used for international sailing and would make sailing around the EU easier and a Florida registration that gives me the ability to park it in that State. Hope I'm not missing something.

[svlamorocha]

Originally Posted by Dockhead

Sorry, but here you are not correct. A US corporation is a US citizen. A US corporation is a person -- a legal person, as opposed to a natural person (a person of flesh and blood). It has nothing to do with the citizenship of its shareholders.

We are referring to recreational boats; I understand for other uses it is more complex.

I hesitate to argue with lawyers, but your are a good guy and you do not charge me $600 per hour , so let me highlight that for the "purpose of obtaining a registry or a recreational endorsement" there is a special citizenship requirement that is not only about the law of incorporation (point 1) but also about citizenship of chairman, CEO and directors (points 2, 3 and 4). I learned this the hard way when I was in the US and wanted to register an earlier boat there..

46§ 67.39 Corporation.
(a) For the purpose of obtaining a registry or a recreational endorsement, a corporation meets citizenship requirements if:
(1) It is incorporated under the laws of the United States or of a State;
(2) Its chief executive officer, by whatever title, is a citizen;
(3) Its chairman of the board of directors is a citizen; and
(4) No more of its directors are non-citizens than a minority of the number necessary to constitute a quorum.

[Dockhead]

Originally Posted by GoingWalkabout

I'm thoroughly confused now. Just spent time on the UK Government site and I dont have to be a UK citizen. Added advantage would be easier European passage and the registration is for 5 years with a simple renewal process. I would have to have a UK company but that's no big deal. Easily done online. Have to check now about a foreign flagged boat being kept in Miami. I know I will gave to pay the Florida tax but I'm not sure what are the other implications with the USCG etc.

I don't think you're confused -- I think you've got it down pretty well.

UK Part 1 will be much better for you if you are cruising in Europe. It's much simpler than US registration because the UK company is so easy to set up and maintain -- you can do it all online, and even the annual reports are done online. There is no requirement to have any native directors or anything. Your biggest challenge will be the tonnage survey if your boat has never been on the UK registry, but I am guessing there might be agents in the US able to produce the required documents for you. I know when I was messing with this, there was someone in Guernsey able to do it.


US registration will also work in the way described above, but you should be careful about taxes. You can avoid sales tax by registering in Delaware, Oregon, or a couple of other states, but Florida, AFAIK, will stick you with their tax just based on how long you stay there -- be careful.

If you are cruising in the US, a foreign flag is a big PITA, so here US registration might be an advantage.


I know nothing whatsoever about the Aussie registry, but presume you've considered and rejected that for good reasons.


Good luck.

[Dockhead]

Originally Posted by svlamorocha

We are referring to recreational boats; I understand for other uses it is more complex.

I hesitate to argue with lawyers, but your are a good guy and you do not charge me $600 per hour , so let me highlight that for the "purpose of obtaining a registry or a recreational endorsement" there is a special citizenship requirement that is not only about the law of incorporation (point 1) but also about citizenship of chairman, CEO and directors (points 2, 3 and 4). I learned this the hard way when I was in the US and wanted to register an earlier boat there..

46§ 67.39 Corporation.
(a) For the purpose of obtaining a registry or a recreational endorsement, a corporation meets citizenship requirements if:
(1) It is incorporated under the laws of the United States or of a State;
(2) Its chief executive officer, by whatever title, is a citizen;
(3) Its chairman of the board of directors is a citizen; and
(4) No more of its directors are non-citizens than a minority of the number necessary to constitute a quorum.

Yes, that's all correct

Note that there is not one word there about shareholders.

So you can set it up with three directors, two of whom are Yanks, or a single Yankish director, and you're good to go. Delaware allows a single director, and I don't think you're required to have any officers, or if you are, one person can fulfill all these functions at once, which practically nominal functions for a company with no business activity.

The director can be rented for a reasonable cost from one of the many companies which provide such services.

[BandB]

Originally Posted by svlamorocha

I do know that any idiot (including an "alien" idiot) can control a US corporation. I am a living proof of that, but that has nothing to do with boats. Not every corporation is deemed to have the "citizenship" to own a US-flagged boat.

Listen to Svlamorocha. He has it right. Now what he's living proof of I'm not sure. But to document a boat with the USCG the corporation must be controlled by a US citizen. Typically this might be an attorney or accountant or other professional you choose. Now you enter into a separate contract with them as to your relationship to them. It rarely leads to problems, but this set up could lead to major problems. Let's say the individual you give control to commits a major crime, faces bankruptcy, disappears entirely. Or say they fail to respond to notices or fail to take care of renewals. Just be very careful who you select. Again the problems are rare, but nightmares if they do arise.

Also some practical issues. Taking the boat to other countries the Captain or Master of the boat or you need a legal document from the owner, this corporation you do not control, that you have a right to have the boat. You can't just issue that document but have to have it issues by the Corporation.

When making any of these type decisions, please use the services of a good maritime attorney who can really give you all the pluses and minuses of each option. Otherwise you risk missing a simple, trouble free solution or you find one with a pitfall you never anticipated.

I personally would never give control of a corporation owning my house or boat to another person. But that's perhaps just my paranoia. But then I've seen things like that lead to major issues.

[svlamorocha]

Originally Posted by Dockhead

Yes, that's all correct

Note that there is not one word there about shareholders.

So you can set it up with three directors, two of whom are Yanks, or a single Yankish director, and you're good to go. Delaware allows a single director, and I don't think you're required to have any officers, or if you are, one person can fulfill all these functions at once, which practically nominal functions for a company with no business activity.

The director can be rented for a reasonable cost from one of the many companies which provide such services.

Great stuff, now let me ask you something for the future (US East Coast cruising). Can my wife and I (both "aliens") incorporate "La Morocha Corp" or LLC and appoint our 18-year old daughter (who cannot even drink in most US states) be "Chairwoman, CEO and Sole Director" of "La Morocha Corp" or LLC without using any nominees, etc. I am sure she would be proud of all those titles.

That would be more credible (than nominees) in other countries where to let you in as cruiser they want to see a link between owner and the person clearing in..

Thanks in advance!

[BandB]

Originally Posted by Dockhead

The director can be rented for a reasonable cost from one of the many companies which provide such services.

Yes he may and the board of directors can be one person in some states. Easy to have a one person controlled corporation. Still whoever it is, you have given them control of your boat. Many companies provide it. But they don't have 100% always trustworthy employees or 100% financial security of the company. Now if this is the only way to accomplish your goal, perhaps it's worth it. However, there is generally another way that might be better.

Something very common in the US is using major companies set up for the purpose as your registered agent of your corporation. That is primarily so any legal papers have to be served on them and not someone delivering them to your business. Actually they generally do a better job of it than your own staff or attorney might. However, if they do receive a notice and it falls through the cracks then you have no recourse as the legal notice was served to the required company. It's very rare that happens, but it does happen, and when it does is very complicated and costly.

[Dockhead]

Originally Posted by GoingWalkabout

Thanks. In principle I don't like it. But as you say lots of people are doing it. They really should change the law for pleasure craft owners. Since I've been forced to read more on this the UK is looking good. Just have to see if I can keep a UK registered boat in the US and register it in Florida. In effect it would have two registrations. One UK which would be used for international sailing and would make sailing around the EU easier and a Florida registration that gives me the ability to park it in that State. Hope I'm not missing something.

Very little in this world, alas, is set up to be convenient for people who, like you and me, wander from country to country.


If you flag in the UK, you can't register in Florida, and you will be subject to all of the reporting requirements for foreign vessels when you move from port to port. I have heard from English yachtsman that it is a huge PITA. You might need a cruising permit; I don't really know anything about it, but others on here can help. If you plan to cruise the US much, a US flag might be a big advantage.

One other thing I'm not sure anyone mentioned -- cruising in the U.S. involves lots of tax question. if your boat was brought in from outside the US, you can be forced to pay customs duty when you reflag or even if you stay over a certain period of time (I think). This is different from sales tax. Then you've got sales taxes upon registration (not applicable in Delaware), and various taxes the different states impose in certain circumstances -- Florida and Georgia are notorious. I don't really have any knowledge of all of this; you'll have to do some research.