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Old 25-10-2018, 12:07   #1
AST
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Join Date: Oct 2018
Posts: 1
Buy sailboat in Med for Med cruising.

Hi
I am close to retiring and thinking about buying a sailboat to cruise the Mediterranean (Spain <.....> Turkey). The boat is most likely will be monohull in the range of 60 k USD.

I am a US citizen and currently live in the US. I don't mind traveling and living abroad while shopping for a boat.
I appreciate anyone with some experience in the following
1- Should I try buying the boat in the US and sail it to the Med? Is that better than trying to shop for something in the Med area?
2- I heard buying a boat in Turkey can save on taxes. Is that true? Any issues buying a Turkish boat by the US citizen? Will I be able to sail across the Med?
3- Any other country to search within?

Thanks,
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Old 05-12-2018, 03:21   #2
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Re: Buy sailboat in Med for Med cruising.

I'm interested in informed opinion on this topic, too. Why? I've been studying it.

QUESTION 1 "Should I try buying the boat in the US and sail it to the Med? Is that better than trying to shop for something in the Med area?"

All things being equal, likely, yes to the latter; no to the former. It's faster, less trouble. Sailing the North Atlantic can be rough - often unpleasant to difficult in a 30-something foot boat, not that it can't be the same in a 40-something foot vessel.

But things are seldom "equal." For one thing, the available makes in the market are very likely different. Thus, if you are intent on a North American make, you are unlikely to find it in Europe - and vice Versa. On the other hand, if you're flexible, then 'no problem, mon!'

The first key to boat buying, I've decided, is how to hold the boat, ie, individual ownership versus corporate (including LLC). Buy it and be personally sue-able in any collision damage! Or have a legal entity own it and retain asset protection for your house and bank account? Ergo - in general, and at 60K or above-invested value - company ownership is better.

The point is that corporate ownership gives the owner more flexibility to self-insure as well as asset protection. Why self-insure? Because you intend to travel the Pacific or Mexico and the Sea of Cortez where traffic is infrequent and the odds against harm are with you. On the other hand, if you intend to always home port your yacht in the state you live in, laws may restrict your options (Check Them Out)! And tax consequences, especially in Florida and California, are likely very consequential.

Debates on the latter question in other threads here give one the option to hold the purchase in an international corporation (IBC or LLC). But the cost of this is five to ten times US corporate ownership.

For example, incorporation abroad costs significantly more. $1600 or so up to $2,000 (near the low end) - and around half for annual maintenance. I favor the Marshall Islands, with well-recognized yacht registry services and a good discount for a prepayment for 3 years.

Therefore, let's look at the US. Incorporation in Delaware and boat licensing is fast and easy. But two states offer two important advantages: one-time permanent boat licensing and lower low-cost incorporation (or LLC), Montana and New Mexico. (And remember: you need a separate boat license for your dingy or tender - this is important because recovery of stolen property is far more likely to happen with that than your yacht.)

Rock bottom maintenance for incorporation - the state requires an official in-state address to contact you; this, your incorporation provider does for you - is $35 in New Mexico or $50-something in Montana. The initial outlay is $300 for the first, $500 for the latter. Providers charge somewhat more for an incorporation with a TIN, or Taxpayer Identification Number (although one can do it yourself, but it takes longer). You need this to get a bank account for the company.

Bank of the Ozarks had the best, low-cost offer, the last time I looked for an inexpensive, lowest volume bank account. As a single owner of the corporation, one expected to run at a loss (and hence LLC is probably best since it is 'pass through' on profit and loss, ie, personal income tax form). Thus, be sure to pour your purchase money and deposit and annual expected costs into that new corporate bank account.

Now, in order for a US-owned boat to pass international customs, you need to have your boat "documented" by the US Coast Guard.

There are interesting threads on this topic. Here's the short version. USCG Documentation was one of the first functions for the US government as an independent nation. States license vessels, but the federal government recognizes its ownership (admiralty courts have an international function, here - something few of us concern ourselves within our time, but this was highly important as an 18th C trading nation). You cant do it online (and likely the mails...details), for a fee running $250 or $300 - and here's the best part - it is only done once. One and done!

Where do list your home port? (Remember, in radio communications, you are ID'd as "Sailing Vessel" or SV" such-and-such and your home port.) It can be ANY city in the US! I've seen "Las Vegas" and "Denver" listed. Neither has navigable waters. Amazing, but legally, it doesn't matter.

Personally, I'm expecting to list either Houston, Texas or San Juan, Puerto Rico - places I may later reside. You can pick your own - or even a sentimental - rationale. (Of course, if you give up and sell your boat when you go to land, will it matter then? No.)

Now, to Europe. If your company buys a boat there, do you owe tax? On new buy's YES. As a used vessel, however, there is no VAT (Value Added Tax). There are owner and years of use details at the margins. I forget what they are. Since I'm looking at 10 to 18-year-old vessels, these are not taxed under VAT rules of the EU. (Turkey surely has different ones. Consult noonsite.com for advice.) Furthermore, since a US ownership is likely, I'm not even sure that that is taxed in Europe, anyway.

Now, I think the EU requires vessels to have insurance. Is US boat ownership/registration a "out?" I don't know. (As before, consult noonsite.com for advice.) As a US citizen and on a US documented vessel, you may fall outside the EU regulation dragnet.

Are you going to just travel the oceans and keep your US home? Or are you going to live abroad? I expect to live in Hungary for some of the year. If I get residency there, which is easy, then even this US citizen gets subject to some EU rules, even on a US-owned vessel...I think. (Gotta check.)

Insurance rules? I know the EU requires it for EU citizens and residents. But consult noonsite.com for advice.

The EU does require a certification to skipper a vessel. Much debate here rages on whether it is required. I say it is not - because the US has no such requirement foisted by the UN and no "official" such certification.

But you teachers do offer an informal version of the EU requirement, and it is basically the ASA (American Sailing Association) program plus a "hands-on" sailing "exam," eg, instructors watch you perform and then write a letter showing that you are competent at said tasks.

The alternative is to have the prep, instruction, and key performance passing exam done there in Europe - mostly done through the services of the British RSA Royal Sailing Association - which, of course, as the EUs English Speaking arm, renders the service internationally within the many, diverse EU member nations, as well.

When you enter a new nation's port, there are flagging traditions (eg, hoist "Q' flag on the vessel, then the host nation's flag after you have passed customs), and formal legal entry procedures, and finally fees. Mostly, the latter are not steep. Costly exceptions are Greece and Croatia where fees run 600 to 1200Euros for long-term, eg, many months to a year. But a week or so is not too bad and much less.

As for legal entry procedures, noonsite.com has current info. But I ran across a video at youtube by Nick (from London), Sailing Lady Rose, on this. Highly informative - and his overall message: dress up, be quiet, be respectful, be prepared, take your time, and be patient. These are important offices and procedures for many on the other side.

Recently, the SV lady Rose has been doing the Med. This 'entry procedure' video was done while they were in the Med. In all those tiny nations? How could that be useful in the Med?Sure, but various Carib islands are also in the EU like the BVI (still in the UK), and other French and Netherlands possessions. so do search it out - very compelling and, I expect, useful for 'doing the Med!'

So that exhausts my knowledge and even helps me to define my current limitations. One last point: "I heard buying a boat in Turkey can save on taxes. Is that true?" Yes, but I think it's mostly an EU/VAT thing. Not of consequence to us.

But Turkey is less expensive because the cost of living is low and local incomes are low. And the boating area (locals plus mostly EU traffic) is expansive. Thus, simply supply and demand make buying there often less expensive there. Yachts are luxury goods. They are costly to not just buy but to maintain. Plus, these luxury goods, unlike great art, seldome appreciate.

All of these are good reasons to focus on Turkey - especially outside of the few elite yachting areas (where the richer Turks go). See noonsite.com for up-to-date advice!

Good boat buying for you, AST, and fair winds soon!
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Old 05-12-2018, 04:36   #3
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Re: Buy sailboat in Med for Med cruising.

Quote:
Originally Posted by Orson View Post
I'm interested in informed opinion on this topic, too. Why? I've been studying it.

QUESTION 1 "Should I try buying the boat in the US and sail it to the Med? Is that better than trying to shop for something in the Med area?"


Now, to Europe. If your company buys a boat there, do you owe tax? On new buy's YES. As a used vessel, however, there is no VAT (Value Added Tax). There are owner and years of use details at the margins. I forget what they are. Since I'm looking at 10 to 18-year-old vessels, these are not taxed under VAT rules of the EU. (Turkey surely has different ones. Consult noonsite.com for advice.) Furthermore, since a US ownership is likely, I'm not even sure that that is taxed in Europe, anyway.

Now, I think the EU requires vessels to have insurance. Is US boat ownership/registration a "out?" I don't know. (As before, consult noonsite.com for advice.) As a US citizen and on a US documented vessel, you may fall outside the EU regulation dragnet.

Are you going to just travel the oceans and keep your US home? Or are you going to live abroad? I expect to live in Hungary for some of the year. If I get residency there, which is easy, then even this US citizen gets subject to some EU rules, even on a US-owned vessel...I think. (Gotta check.)

Insurance rules? I know the EU requires it for EU citizens and residents. But consult noonsite.com for advice.

The EU does require a certification to skipper a vessel. Much debate here rages on whether it is required. I say it is not - because the US has no such requirement foisted by the UN and no "official" such certification.

But you teachers do offer an informal version of the EU requirement, and it is basically the ASA (American Sailing Association) program plus a "hands-on" sailing "exam," eg, instructors watch you perform and then write a letter showing that you are competent at said tasks.

The alternative is to have the prep, instruction, and key performance passing exam done there in Europe - mostly done through the services of the British RSA Royal Sailing Association - which, of course, as the EUs English Speaking arm, renders the service internationally within the many, diverse EU member nations, as well.

When you enter a new nation's port, there are flagging traditions (eg, hoist "Q' flag on the vessel, then the host nation's flag after you have passed customs), and formal legal entry procedures, and finally fees. Mostly, the latter are not steep. Costly exceptions are Greece and Croatia where fees run 600 to 1200Euros for long-term, eg, many months to a year. But a week or so is not too bad and much less.

As for legal entry procedures, noonsite.com has current info. But I ran across a video at youtube by Nick (from London), Sailing Lady Rose, on this. Highly informative - and his overall message: dress up, be quiet, be respectful, be prepared, take your time, and be patient. These are important offices and procedures for many on the other side.

Recently, the SV lady Rose has been doing the Med. This 'entry procedure' video was done while they were in the Med. In all those tiny nations? How could that be useful in the Med?Sure, but various Carib islands are also in the EU like the BVI (still in the UK), and other French and Netherlands possessions. so do search it out - very compelling and, I expect, useful for 'doing the Med!'

So that exhausts my knowledge and even helps me to define my current limitations. One last point: "I heard buying a boat in Turkey can save on taxes. Is that true?" Yes, but I think it's mostly an EU/VAT thing. Not of consequence to us.

But Turkey is less expensive because the cost of living is low and local incomes are low. And the boating area (locals plus mostly EU traffic) is expansive. Thus, simply supply and demand make buying there often less expensive there. Yachts are luxury goods. They are costly to not just buy but to maintain. Plus, these luxury goods, unlike great art, seldome appreciate.

All of these are good reasons to focus on Turkey - especially outside of the few elite yachting areas (where the richer Turks go). See noonsite.com for up-to-date advice!

Good boat buying for you, AST, and fair winds soon!
In Europe and Turkey you must have a boat liability insurance with a specific coverage for environmental damages. these insurances don't cost a lot per year.

Regarding registration. It doesn't matter, although if you want to sail in Turkey you can't be Cyprus flagged (or vice versa).

Regarding tax. On any boat bought after 1987 you need to pay VAT if VAT hasn't been paid before if you are an EU resident OR your boat spends more than 18 months in the EU. The way to deal with it is to get the boat out of EU waters before the time is up, get some proof the boat is out of the EU (for instance a Marina bill, or entry document) and return to the EU.
BTW there are a lot of secondhand boats in the EU without VAT paid. primarily ex-charter boats.

Regarding checking in:
Although I'm a EU citizen and resident, my non EU friends have told me that's it not a big thing, when arriving in a new EU (Schengen) country, just go to the port authorities with boat registration papers, proof of insurance, boating licence and passports. Same goes for Turkey.
However be aware that if you do not have a residency permit you, as a person, can only stay 90 days out of 180 days in the EU (Schengen). the same type of 90-180 day rule applies in Turkey for all non-turkish persons. There are various ways to get a residence permit in the various countries.

Regarding cost of living:
In Greece the new tax will apply to all boats, regardless of country of registration. However the tax has been postponed until April 2019 and if the online payment system is not ready at that time, there is a good change it will be postponed again. Although cost of living in Greece is not as low as it used to be, it's still a cheap place to sail, because municipal harbours (town quays) are very cheap (usually around 8EU/night)
Cost of living in Turkey is very low, especially now with the exchange rate of the Lira, however marinas are very expensive. They are usually first class, but expensive.
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