Pros and Cons for BVI Registration vs Canadian

[ford]

I am a Canadian in the process of placing a 45' Catamaran into Charter down in the BVI's.
I understand there is no taxes if I register the boat Canadian unless I bring it back to Canadian waters (unlikely), however is there any advantages to a BVI registration?
I plan to bring it to Florida in 7 years for us to winter on full time. Should I consider a Delaware registration?

[Nicholson58]

This only works if you deal through a shell company in Panama.

[boatpoker]

True (i deal in this all the time) you will not pay Canadian taxes, ever unless the vessel is brought in to Canadian waters.

Not sure you understand the difference between Canadian Registration (Federal) and Delaware registration which is is "State", very different things.

BVI registration may be beneficial if you set up a corporation in BVI to run a charter company. Too many unanswered questions here for an accurate reply.

[boatpoker]

Originally Posted by Nicholson58

This only works if you deal through a shell company in Panama.

call a few local politicians ..... they can help with that

[ford]

Originally Posted by boatpoker

True (i deal in this all the time) you will not pay Canadian taxes, ever unless the vessel is brought in to Canadian waters.

Not sure you understand the difference between Canadian Registration (Federal) and Delaware registration which is is "State", very different things.

BVI registration may be beneficial if you set up a corporation in BVI to run a charter company. Too many unanswered questions here for an accurate reply.

I guess I assumed registration in Delaware enables you to bring the boat to the USA tax free. But would income earned on the charters be declared as US income if the boat is registered in that state?
The BVI registration would allow me to set up a BVI company and income paid directly to that company may be tax free, I'm not sure

[boatpoker]

Originally Posted by ford

I guess I assumed registration in Delaware enables you to bring the boat to the USA tax free. But would income earned on the charters be declared as US income if the boat is registered in that state?
The BVI registration would allow me to set up a BVI company and income paid directly to that company may be tax free, I'm not sure

You need a lawyer and an accountant not internet advice.

[Boatguy30]

I suppose it depends of you plan to actually make a profit from the charters. I do believe you will not lay any tax if boat never in Canada but perhaps a corporate tax in bvi would be less if you are having profits.

[Maple Leaf]

Good Morning,

I am faced with a similar situation. My research indicates that there is no advantage to register a BVI company for registration. Yes there is the advantage of having all the net income earned taxed in the BVIs. (No tax...or very little) Yet as Canadians, you are required to report your world income. I relaize not everyone does but i don't anticipate there will be much of a profit on the Charter venture. Good luck.... Maybe I can charter your Cat using your owners time?

[boatpoker]

Originally Posted by ford

I guess I assumed registration in Delaware enables you to bring the boat to the USA tax free. But would income earned on the charters be declared as US income if the boat is registered in that state?
The BVI registration would allow me to set up a BVI company and income paid directly to that company may be tax free, I'm not sure

You can bring a Canadian Registered vessel into the US tax free under a cruising permit.

[Web Sailor]

I have no insights into your Canadian vs. BVI registration question, but my understanding is that you will get hit up for sales tax on your boat if it spends much time in Florida or its waters. Registering in Delaware--or any other non sales-tax state--will not deter Florida from demanding that you register your vessel and pay their sales tax. Most, if not all, other states will also try impose a sales tax on the boat if you cannot establish that sales tax has already been paid in another state. A state may also assess the difference if the sales tax rate paid elsewhere is lower than theirs. This all hinges on how much time the boat spends in a given state.
BTW, documenting your vessel with the Coast Guard also will not protect you from paying sales taxes if you stay too long in one state.
As already advised elsewhere, get some expert--if not legal advice before you move the vessel to Florida, or any other state. Call the appropriate state agency about moving your boat there. Things, of course, could change by the time you leave the BVI, but as old Ben Franklin once observed, taxes are one of only two things that are certain.
Good luck and keep us posted as to what you learn.

[deblen]

Additional info from our friends at CRA

Canadian snowbirds could face U.S. taxman if they stick around too long - Business: Tax Season - CBC News

You can run But....

http://www.cbc.ca/news/politics/cana...ent.ighome.com

[boatpoker]

Originally Posted by Web Sailor

BTW, documenting your vessel with the Coast Guard also will not protect you from paying sales taxes if you stay too long in one state.

OP is a Canadian. Unless he is willing to open a US corporation and hold the boat within the corporation he is not eligible for USCG documentation.

[Pete O Static]

Hi Ford!

I am in the same situation as you. A Canadian who owns a charter boat in the BVI.

When I purchased the boat, I hired a documentation specialist. We looked at the Delaware option, a UK option as I am from there but not a resident and the Canadian option as I am a resident in Canada.

Without a doubt, the Canadian option was the least expensive ( Tax Free ) the simplest and the most beneficial for us.

The Delaware option is basically a shameless smoke and mirror attempt and won't get you very far nowadays. It allows foreigners to own a dummy corp which owns your boat and then the Delaware Fishing and Wildlife department issues you a state license. There is no clear title to present to a customs officer. If you plan on clearing customs anywhere, this will become an issue for you as agencies are quickly becoming less tolerant of this. Also, as soon as you arrive in Florida, their state taxes will become due.

The Canadian option is a federal registry which provides clear title and ownership information making customs clearances much easier. No tax need be paid unless you physically import the boat to Canada. ( Very bad idea ) When you arrive in Florida, you simply apply for a cruising permit which can be renewed annually and allow you to sail in US waters without the need for a "permit to proceed" each time you leave port.

Believe me, I just about choked on my rum when the documentation specialist said that Canada was the best Tax Free option.

As for a BVI registration, I don't see the point when Canada is free. ( $250 registration fee and no survey required if less than 15 meters )

Attempting to hide money in the BVI will be more complicated than it is worth. Particularly if the amounts don't warrant the risk. Just being open to the CRA about what you have will allow you to sleep peacefully at night. I declare to Canada that I have an asset in the BVI and I even bank with the CIBC in Roadtown. That is the one benefit of owning a boat, it is much more difficult to show a profit than a loss! All of our revenue goes directly back into the boat in the form of maintenance, upgrades, new sails and boat toys.

I too plan to have the boat in Florida and the Bahamas at some point and when the day comes to sell her, I will simply pay the Americans their 1% import duty ( 1% of her depreciated value, not purchase ) vs the Canadians their 9.5% Or sell her back to the Caribbean.

[ford]

Pete, thank you for the clear advice. I think its my best option and spoke to Transport Canada today and it looks easy (less than 15m).

BTW are you maple cookie? Helia 44 with great you tube videos!

[Pete O Static]

Hi Ford

No I am not Maple Cookie. But thanks, I will check out their youtube videos!

I have been enjoying the videos of SV Delos and La Vagabonde.