Flag of Convenience

[Captain Ludd]

Originally Posted by David_Old_Jersey

Btw I agree with your concerns on buying a s/h company.

The goood news with a boat at least starting with uscg documentation is that is absolute proof of title (unlike either the UK ssr or part 1). Plus it has a register of liens.

Imo if buying in the USA, but only intending on spending a few months / season in the USA then I would go with the ssr route (re reg as part of the purchase transaction) and make sure she was not in a state that had a sales tax and that she didi not stay anywhere long enough to get a state tax bill - a rolling stone gathers no taxes .

UK reg itself does not generate any vat bill - if the boat does not enter eu waters.

Regarding Delaware, iirc the state does not record beneficial ownership of companies (only shareholders) -unlike the offshore tax havens like Jersey!....... the irs only interested in whether the company is owned by a US citizen, you / the company gets to declare to the irs. As no US official has any reason or capacity to check the boats in Turkey then the boat reg not following the letter does not become an issue - but that not the same as being 100% kosher. .....personally I would avoid the Delaware route on simple cost reasons. If in the future you are no longer a UK resident (and need to not have any document signed by you saying that you are!) then I would go for Jersey reg (same as UK part 1 - including with the red ensign), as an eu citizen you can own the boat in own name - which will save a fortune on annual company costs.

Thanks David

I am very concerned about what I call "The VAT trap" (maybe a song in there), So can you tell me a bit about getting a Jersey flag, is it easy to get ?

I am trying to get away from as much bureaucracy and taxation as possible, maybe some of you will have ancestors who also thought that :-)

Thanks all, Lots of good advice

[David_Old_Jersey]

Originally Posted by Captain Ludd

Thanks David

I am very concerned about what I call "The VAT trap" (maybe a song in there), So can you tell me a bit about getting a Jersey flag, is it easy to get ?

I am trying to get away from as much bureaucracy and taxation as possible, maybe some of you will have ancestors who also thought that :-)

Thanks all, Lots of good advice

GBN is our vat guy lots of threads on the subject.

if boat never in the eu then vat not an issue......wherever boat reg, or owned by an eu resident or not.

As an eu resident not possible to avoid vat when you arrive with the boat.......wherever reg or how owned (company from abroad gets looked through).

Jersey boat reg same as UK part 1 reg...costs and procedure, except reg for 10 years and not 5...for both no annual costs or paperwork ......main pita for both is need a tonnage survey......the only additional requirement for Jersey is having a local representative (simply an official point of contact address- no authority over the boat. )..........cross my Palm with beer and I would put my name on the paperwork!


All that reminds me, us reg boats are subject to us boat equipment law. - And in us waters the uscg like to enforce those........including checking how you poop! At gun point!

[Captain Ludd]

Originally Posted by David_Old_Jersey

GBN is our vat guy lots of threads on the subject.

if boat never in the eu then vat not an issue......wherever boat reg, or owned by an eu resident or not.

As an eu resident not possible to avoid vat when you arrive with the boat.......wherever reg or how owned (company from abroad gets looked through).

Jersey boat reg same as UK part 1 reg...costs and procedure, except reg for 10 years and not 5...for both no annual costs or paperwork ......main pita for both is need a tonnage survey......the only additional requirement for Jersey is having a local representative (simply an official point of contact address- no authority over the boat. )..........cross my Palm with beer and I would put my name on the paperwork!


All that reminds me, us reg boats are subject to us boat equipment law. - And in us waters the uscg like to enforce those........including checking how you poop! At gun point!

Hmm Jersey flag, that'll look posh. Do they sell white trousers, pink shirts and yellow pullovers in all the shops there :-)
I may take you up on the kind beer offer.

[David_Old_Jersey]

Originally Posted by Captain Ludd

Hmm Jersey flag, that'll look posh. Do they sell white trousers, pink shirts and yellow pullovers in all the shops there :-)
I may take you up on the kind beer offer.

Full registration with the British Register of Ships in Jersey

You also don't need an agent to do the reg for you.

on boat flag you get to choose which to fly (according to whim - can change simply as the mood takes ya!), either the normal red ensign or the defaced version:



That a fairly new thing (5? / 10? years).....don't recall ever seeing one flown over here! (a red ensign is cheaper / more easily available!).

[Alenka]

If it's not impolite might I ask the question

"'What do you want to do with the boat... Cruise USA waters, use her as a floating holiday home in the US, cruise the Caribbean?????"

If we know what your intended use is you might get better, more targeted advice.

Just remember the more complicated you make it, the harder it will be sell on your boat when that time comes. A few years ago people were getting around VAT with offshore lease deals. Unfortunately, some are so complicated that Joe Average isn't prepared to take on the complex paperwork to make them legal for normal use.

[Alenka]

A Jersey flag won't get you around VAT liability if you are an EU citizen. The 18 month rule only applies to non EU citizens.

[Captain Ludd]

Originally Posted by Alenka

If it's not impolite might I ask the question

"'What do you want to do with the boat... Cruise USA waters, use her as a floating holiday home in the US, cruise the Caribbean?????"

If we know what your intended use is you might get better, more targeted advice.

Just remember the more complicated you make it, the harder it will be sell on your boat when that time comes. A few years ago people were getting around VAT with offshore lease deals. Unfortunately, some are so complicated that Joe Average isn't prepared to take on the complex paperwork to make them legal for normal use.

Thanks
That's partly the problem as I'm not sure exactly what I want to do. I want to go wherever the wind takes me as it were. That is likely to be the Caribean and US waters. What I don't want to do is sail from say Turkey through the Med and stop off in Spain and be jumped upon by Customs and served with a VAT bill :-)

Originally Posted by Alenka

A Jersey flag won't get you around VAT liability if you are an EU citizen. The 18 month rule only applies to non EU citizens.

Yes that is becoming apparent, there is by all accounts a 6mth grace period for EU residents who are having a re-fit done.

[Alenka]

I am not an expert but having owned a VAT free boat on Guernsey flag a few years ago and found that a C.I. flag was not without some problems it is not a route I would personaly go down again myself.

However, if you are buying in the US, where you can get a lot of boat for your money... Air-Con, electric winches, Genny's are more standard fit than in Europe then I would simply pay the local taxes (don't think they get as high as 23% like they do in the EU) and put the boat on the British SSR.

You won't be able to bring it back to the EU without paying tax and you won't be able to sell her in the EU with a certificate of compliance. All in all not worth the effort.

If you do want to travel in EU waters then maybe look for a boat in Croatia which has just paid the new VAT tax there of around 5%. You will have a proper VAT certificate and you can still put it on the British SSR. No need for a tonnage survey, etc.

[David_Old_Jersey]

Originally Posted by Alenka

A Jersey flag won't get you around VAT liability if you are an EU citizen. The 18 month rule only applies to non EU citizens.

For sure .

But I mentioned SSR (and then Jersey Reg) only as a way around USCG Doc (boat reg) not being legal for a non US citizen (in own name) and not 110% kosher (and also expensive) for the Delaware route.

The good news with EU Vat is that will be on the s/h value of the boat - if that is in a few years after purchase the bill will drop! (unless the tax rate goes up!).

Personally I would go with the UK SSR route on day 1, and if the boat later visits the EU (and I was still a UK resident and a UK Citizen) I would risk any EU custom official adding 2+2 together and coming up with.................5 (UK Boat Reg (Flag and Port name on stern) plus UK National plus UK Resident = not their concern)..........but not my money to risk, nor my place to encourage folks to commit VAT fraud .

You also raise a good point about a future sale in the EU needing the EU paperwork (RCD "stuff" ) which is not cheap to get, plus a rewire?!


At the end of the day it is all a trade off.......but that's boats for ya!

[Captain Ludd]

Originally Posted by David_Old_Jersey

......but not my money to risk, nor my place to encourage folks to commit VAT fraud …….

Blimey no mention of the F-Word please !!

I'm looking to buy in the most advantageous way possible, to minimise any potential Tax liability.
Even UK Customs (who I have just been on the phone for an hour with) agree that I should check the rules before purchase so i don't get a "surprise".

[boatman61]

I've bought 2 US flagged/registered boats.. one privately in NC and one from the Moorings Brokerage in Tortola... in both cases I was informed by customs/Imm that's a US built boat is always regarded as such.. ie no expiry like the EU.. it can come and go without coming liable for Federal import tax/VAT type stuff ever... (local State taxes are a separate thing..) unlike the EU where after 2yrs one has to re-import a vessel.
Another thing.. buy a boat that is CE certified.. my Hunter was not and if I wished to sell in the UK it would have cost me around £12K + the VAT back in '06.. the Bene was CE'd and only had VAT on my purchase price

[Captain Ludd]

Originally Posted by boatman61

I've bought 2 US flagged/registered boats.. one privately in NC and one from the Moorings Brokerage in Tortola... in both cases I was informed by customs/Imm that's a US built boat is always regarded as such.. ie no expiry like the EU.. it can come and go without coming liable for Federal import tax/VAT type stuff ever... (local State taxes are a separate thing..) unlike the EU where after 2yrs one has to re-import a vessel.
Another thing.. buy a boat that is CE certified.. my Hunter was not and if I wished to sell in the UK it would have cost me around £12K + the VAT back in '06.. the Bene was CE'd and only had VAT on my purchase price

That's interesting, thanks.
Are you an EU citizen may I ask.
What a minefield this is eh.

[twistedtree]

Two thinks I might add.

Keep in mind that when a US Documented boat is sold, it immediately becomes undocumented. Papers then need to be filed to re-document it under the new ownership. This is typically done simultaneously, but not necessarily.

If you buy the LLC, then technically the boat has not been sold and the documentation would remain in place. At renewal time you would need to reaffirm all the info in the documentation, and at that point the issue of LLC ownership would come up and have to be addressed.

I've heard that buying an LLC is not a taxable (as in state sales/use tax) transaction, where buying a boat often is, hence there can be a clear advantage to purchasing the LLC as opposed to the assets it holds. But I have also heard there are exceptions to this when the only asset held by the LLC is the boat. This whole aspect might be worth looking into.

[goboatingnow]

Vat is not a minefield , its the confusing info that makes it seems like

If you are a EU tax resident, you will pay VAT on the import of the boat into the EU Customs Union ( a particular territory) except where such territory is a part of the EU VAT free Area. The Channel Islands are not in the EU at all, except that they are in the EU Customs Union and are in the EU VAT free Area. ( see thats simple !!!) The flag of the boat is of no relevance , its the tax status of the "beneficial owner"

Technically the VAT is due in the country of "destination", i.e. its habitual home on import. In practice since this can't be easily checked, VAT can also be paid at the most convenient first country with the lowest rate. Vat is paid on the market value of the boat and is at the discretion of the customs official. Basically you have to convince him or her as to the value. The azores had a low rate VAT concession from Brussels but that has now changed

A few shibboleths

Unlike what boatman has said, re-importing the boat, i.e. taking it out of the EU customs union does not result in VAT being reapplied, Different countries have slightly different applications of the VAT RTR ( returned goods relief), in the UK its nominally 3 years , but that be extended upon application to you local customs office. The boat cannot be sold out the EU or substantially increased in value without VAT being due again if reimported that is.

In practice, once a boat has evidence of VAT paid at some time in its life and it has a EU flag registration, all customs authorities look no further (* if they look at all) as to where the boat has been as they cannot prove anything and " you wont be telling them"!

Remember the adage when dealing with customs, " no good deed goes unpunished"

If you do not intend ( as a EU tax resident) to vist the EU then VAT is simply not an issue and never arrises. If you do, even inadvertently., you need to be careful, VAT is not regularly inspected but of course you never know.

I would not recommend a C.I. registration , despite how pretty it is, for EU tax residents who are not C.I.s residents considering cruising in the EU. Im afraid it is regarded as a tax haven by many customs officials and its flag boats seem to be inspected more often, tho sis especially true in France in my experience.

SSR registration in the UK is simple and carries no VAT reporting issues. ( which is why its sometimes looked askance at by some knowledgeable foreign customs agents. like in Portugal, buts there fanny all they can do about it!!).

SO rules are simple

EU Tax resident + visiting EU = pay the VAT, Otherwise Forget about VAT.

simples as the meerkats say

dave

[s/v Jedi]

Originally Posted by twistedtree

Two thinks I might add.

Keep in mind that when a US Documented boat is sold, it immediately becomes undocumented. Papers then need to be filed to re-document it under the new ownership. This is typically done simultaneously, but not necessarily.

If you buy the LLC, then technically the boat has not been sold and the documentation would remain in place. At renewal time you would need to reaffirm all the info in the documentation, and at that point the issue of LLC ownership would come up and have to be addressed.

I've heard that buying an LLC is not a taxable (as in state sales/use tax) transaction, where buying a boat often is, hence there can be a clear advantage to purchasing the LLC as opposed to the assets it holds. But I have also heard there are exceptions to this when the only asset held by the LLC is the boat. This whole aspect might be worth looking into.

Wish it was that easy: the previous owner needs to de-register it and get the document that declares and proves this. The new owner needs that document in order to be able to register it elsewhere.

Then there's the issue of where the boat was built. If built in the US, you can always get and re-new the federal cruising permit which exempts you from state duties, taxes and whatever they like to attack people with.
If the boat is not built in the US, you can get the cruising permit for the first 12 months only, then need to leave the US for a while (don't know how long) before returning and getting a new cruising permit.
"Built in the US" can mean "built in China and finished in the US" which is what some manufacturers do in order to fall into this legal status.

If I were the OP, I would buy the boat for export from that LLC (you get a state sticker allowing 3 months to get out before they hunt you down) and use that time to register in the UK (or Belgium) and get the US cruising permit.
Just don't ever sail into EU waters, that's all. You can go to the French and Dutch islands in the Caribbean without trouble as they don't fall in the VAT area of the EU.