UK Resident Buying in USA

[Bluewaters2812]

Forgive my ignorance, as I am new to this site and to purchasing sailboats (yachts). My wife and I are looking to buy a sailboat in the USA. We are UK citizens and residents but want to buy a yacht in the Caribbean or USA and then spend at least a year sailing the Caribbean.

I have a few questions which I hope someone can answer correctly:

1. Are the prices advertised inclusive or exclusive of VAT as a rule?
2. What is the VAT % rate (is that USA based or UK based and when must it be paid (especially with regard to our circumstances re our plans)?
3. I am also a South African citizen, so not sure if there is any disadvantage/advantage in that when it comes to paying VAT?
4. What are the VAT implications if we wish to sell the boat one day?

Would appreciate any advice, thanks.

[Vasco]

There is no VAT in the US. Most states have a sales tax that may vary from State to State. This tax may be avoided by removing the boat from State of purchase withing a specified time period. There is no VAT concern if you do not return to the UK with the boat. Buy the boat in the US, sell the boat in the US, no problem.

[skipmac]

Originally Posted by Bluewaters2812

Forgive my ignorance, as I am new to this site and to purchasing sailboats (yachts). My wife and I are looking to buy a sailboat in the USA. We are UK citizens and residents but want to buy a yacht in the Caribbean or USA and then spend at least a year sailing the Caribbean.

I have a few questions which I hope someone can answer correctly:

1. Are the prices advertised inclusive or exclusive of VAT as a rule?
2. What is the VAT % rate (is that USA based or UK based and when must it be paid (especially with regard to our circumstances re our plans)?
3. I am also a South African citizen, so not sure if there is any disadvantage/advantage in that when it comes to paying VAT?
4. What are the VAT implications if we wish to sell the boat one day?

Would appreciate any advice, thanks.

Hi Bluewaters2812,

Exact question was posed not long ago but I will see if I can summarize some of the main points for you.

1. Exclusive of VAT, called sales tax or sales and use tax in the US. Unfortunately this tax varies from state to state and can be quite confusing, even for US residents. In general most states charge about 6% sales tax on boat sales but a few have no tax. Rhode Island is one. However there is a question as to whether or not you would have to pay this tax.

As an example, in Florida (FL) if you are not a resident of the state and purchase a boat here you are exempt from paying the tax if you remove the boat from FL before a deadline date. Date is variable if the boat is in a yard for maintenance or repairs and there are other exemptions, for not US citizens. Most states have similar rules but you should check local regulations of the state where you buy the boat.

2. As noted above, rate in most states +/- 6%. The exact country of your citizenship doesn't matter, just that you are not a US citizen and may be permanently or temporarily exempt from the sales tax.

3. See #2.

4. If you sell the boat in the US it would be the buyers responsibility to pay the tax if required based on the conditions of his residency, boat location, etc.

Here is a link to the state of FL website that summarized the regulations in FL. http://dor.myflorida.com/dor/forms/2011/gt800005.pdf

One thing that will probably effect the sales tax is where you will flag or register the boat after you purchase. If you promptly register in the UK then you will likely be exempt in most if not all states. This introduces another potential confusion. In the US there are two ways to register a private veseel, state registration (again done in each state, costs and requirements vary in each state) and Federal/USCG documentation. The USCG documentation is most common for cruising yachts but is not allowed for non US citizens. The boat you buy will probably be documented so you will have to file a form to undocument the boat when you buy it. Have never done this but the USCG office in charge of documentation I have found to be very helpful. State registration on the other hand is very simple and they don't care if you come from Mars as long as you give them some money. However you will then probably have to pay the sales tax.

[Bluewaters2812]

Received two good answers, one being quite comprehensive, thanks folks. I gather that I could do the "state registration" thing and then sail to the Caribbean to avoid the State tax, however at 6 % that is not a major amount.

I do know that if I try and bring the boat to the EU and keep it there I have all sorts of problems with VAT etc. I just wonder what the situation would be if I sailed to South Africa with a US registered boat? Any ideas?

At this stage the plan is to buy a US yacht, "state register" it there and perhaps somewhere in a few years time, sell the yacht in the US or sail it to South Africa and maybe sell it there. Time will tell but for now my wife and I just want to buy a US boat and sail the East Coast from Florida to the Caribbean. I hope that won't be too complicated. I remain upbeat and positive that we will be able to live our dream soon. We just have a daughter to get into University next year, a motorhome to sell, get rid of all our worldly possessions and sell our house. Those bluewaters are beckoning very strongly with each day that passes!

[skipmac]

One thing to be aware of, state registration of a boat does not seem to be as "offical" as the USCG documentation. I have heard comments that some countries question registration papers vs the documentation. Countries closer to the US like the Bahamas and northern Caribbean usually don't seem to have a problem, probably because they are closer to the US and more familiar with the paperwork but it might be a concern further afield.

If you do choose to register the boat in one of the states, even if you leave the country you would have to pay their sales tax. The registration process makes you a resident of that state at least for sales tax purposes so the physical location of the boat becomes moot.

Only exception I know is Rhode Island which doesn't have a sales tax on boats at all.

[Bluewaters2812]

Originally Posted by skipmac

One thing to be aware of, state registration of a boat does not seem to be as "offical" as the USCG documentation. I have heard comments that some countries question registration papers vs the documentation. Countries closer to the US like the Bahamas and northern Caribbean usually don't seem to have a problem, probably because they are closer to the US and more familiar with the paperwork but it might be a concern further afield.

If you do choose to register the boat in one of the states, even if you leave the country you would have to pay their sales tax. The registration process makes you a resident of that state at least for sales tax purposes so the physical location of the boat becomes moot.

Only exception I know is Rhode Island which doesn't have a sales tax on boats at all.

Thanks skipmac, I have just seen that RI does not have a sales tax. Maybe buy one in RI or in another State then sail it to RI? Then once registered in RI sail to Florida and then on to Caribbean?

[skipmac]

Originally Posted by Bluewaters2812

Thanks skipmac, I have just seen that RI does not have a sales tax. Maybe buy one in RI or in another State then sail it to RI? Then once registered in RI sail to Florida and then on to Caribbean?

Well this is kind of a catch 22. If you buy a boat in FL with the plan to move it temporarily to another state, register there and then come back to FL to avoid the sales tax then FL says you still owe them the sales tax.

But, if you buy a boat in FL with the plan to move it to another state to keep it and use it there and then later decide to move to FL just because you like it here then you will probably not owe them the sales tax.

If you do innocently decide to move to FL after living elsewhere for a while you have to live elsewhere for at least 6 months or you will have to pay the sales tax no matter what.

If you register the boat in the UK then you are pretty much cleared of any FL liability but you may get dinged for the EU VAT. That I can't help you with.

[Bluewaters2812]

Originally Posted by skipmac

Well this is kind of a catch 22. If you buy a boat in FL with the plan to move it temporarily to another state, register there and then come back to FL to avoid the sales tax then FL says you still owe them the sales tax.

But, if you buy a boat in FL with the plan to move it to another state to keep it and use it there and then later decide to move to FL just because you like it here then you will probably not owe them the sales tax.

If you do innocently decide to move to FL after living elsewhere for a while you have to live elsewhere for at least 6 months or you will have to pay the sales tax no matter what.

If you register the boat in the UK then you are pretty much cleared of any FL liability but you may get dinged for the EU VAT. That I can't help you with.

I was reading up on all of that and I think you have hit the nail on the head. My understanding is that I cannot return within 6 months or else they will nail the 6% to my butt lol. No problem, I am sure that it will take much longer than 6 months to get through all of the Caribbean lol. I think I can stay 90 days after purchase in Florida though (and perhaps ask for an extension)? That should give plenty of time. I doubt I have the inclination to get nailed with the EU/UK VAT, so I will make sure we stay right there in the Caribbean (I guess it has proven to be "slightly" warmer than the UK ).

My wife and I just can't wait to get out on that ocean (we were married in Antigua so am looking forward to returning to the Caribbean).

[MarkSF]

I read a thread where it was suggested that a UK citizen can purchase a boat abroad, flag it as a UK vessel, but the VAT only becomes due if the boat is imported physically into the EU. So you would have the benefit of a UK flagged vessel (vs. a US state registration) when entering other countries, but not have to pay theVAT.

Don't take my word for it though, check with UK Customs and Excise.

I am a UK citizen and bought a US flagged vessel and re-registered it as a state one. I used a marine titling company to do it all for me, they made it super easy.

[Bluewaters2812]

Originally Posted by MarkSF

I read a thread where it was suggested that a UK citizen can purchase a boat abroad, flag it as a UK vessel, but the VAT only becomes due if the boat is imported physically into the EU. So you would have the benefit of a UK flagged vessel (vs. a US state registration) when entering other countries, but not have to pay theVAT.

Don't take my word for it though, check with UK Customs and Excise.

I am a UK citizen and bought a US flagged vessel and re-registered it as a state one. I used a marine titling company to do it all for me, they made it super easy.

Which State did you register in if I might ask and was it costly?
Not sure that you can simply place a UK ensign on a boat and sail it like that because the paperwork would be lacking?

[MarkSF]

When I say flag it, I meant you can register it with the UK authorities, officially, and the VAT is only due when the boat enters Europe.

I registered it in California. Yes, because Use Tax is 8.25% and then there is yearly property tax of about 1.25%.

[Bluewaters2812]

Originally Posted by MarkSF

When I say flag it, I meant you can register it with the UK authorities, officially, and the VAT is only due when the boat enters Europe.

I registered it in California. Yes, because Use Tax is 8.25% and then there is yearly property tax of about 1.25%.

Oh ok, tks for that. If you do that is there any problem if you keep it say in the Caribbean and then sell it in years to come without returning it to the UK?

[savoir]

You will have to know how long the state you buy in gives you to pay their tax or leave which should be in the 30 - 90 day bracket. The only exception that I know of is Rhode Island which doesn't tax boats. Another way to avoid the tax is to register in any country outside USA and then apply for a cruising permit which runs a maximum of one year and can be renewed. You have to leave USA for 15+ days to renew.

The place where you register has no connection at all with taxes. They are based on where the boat sits. If you enter any EU country you will become liable for VAT no matter where you register because (I assume) you are an EU citizen and taxpayer.

[Vasco]

Originally Posted by savoir

You will have to know how long the state you buy in gives you to pay their tax or leave which should be in the 30 - 90 day bracket. The only exception that I know of is Rhode Island which doesn't tax boats. Another way to avoid the tax is to register in any country outside USA and then apply for a cruising permit which runs a maximum of one year and can be renewed. You have to leave USA for 15+ days to renew.

.

Cruising permits only can be issued for pleasure boats flagged in certain countries, not all countries..
Here's the list.

Argentina
Australia
Austria
Bahamas
Belgium
Bermuda
Canada
Denmark
Finland
France
Germany
Greece
Honduras
Ireland
Italy
Jamaica
Liberia
Marshall Islands
Netherlands
New Zealand
Norway
Saint Kitts and Nevis
Saint Vincent and the Grenadines
Sweden
Switzerland
Turkey
United Kingdom and the Dependencies
the Anguilla Islands
the Isle of Man
the British Virgin Islands
the Cayman Islandsthe Turks and Caicos Islands

[skipmac]

Originally Posted by MarkSF

When I say flag it, I meant you can register it with the UK authorities, officially, and the VAT is only due when the boat enters Europe.

I registered it in California. Yes, because Use Tax is 8.25% and then there is yearly property tax of about 1.25%.

An advantage to registration in Florida. Sales and use tax only 6-7% (varies by county) and no yearly property tax.

Fee for the registration depending on the age and value of the boat would only be $50-$200 range per year.