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Old 04-08-2020, 06:37   #1
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Does anybody have any experience registering a vessel in the BVIs?

I am thinking about doing it but it is an expensive and complicated process.


I would love to talk to anybody who has personal knowledge, Thanks :-)
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Old 04-08-2020, 08:25   #2
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Re: Does anybody have any experience registering a vessel in the BVIs?

I did it 10 years ago. It cost a total of $5k to set up the company and transfer the boat into it and get it registered. It's another $1500 for the resident agent and BVI corp and shipping fees - PER YEAR. So, after 10 years I've got $20k into a flag of convenience.

That is vs 6% sales tax (State of Residence) and 2% import tax if you were to bring an unimported boat to the US. For some reason I was thinking there was another 1% in there somehow to equal about 9% of the purchase price.

You can do the math for your boats purchase price but for Palarran, I'm still ahead. You can also form a Delaware Corp to avoid the State sales tax but then have to file corporate returns every year, which can be some $$.

As an FYI, when I sell the boat the best way to do so it to sell the shares of the company. Since the boat is the only asset, the purchaser ends up with the boat and doesn't have to do any of the original work or expense.
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Old 04-08-2020, 08:40   #3
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Re: Does anybody have any experience registering a vessel in the BVIs?

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Originally Posted by Palarran View Post
I did it 10 years ago. It cost a total of $5k to set up the company and transfer the boat into it and get it registered. It's another $1500 for the resident agent and BVI corp and shipping fees - PER YEAR. So, after 10 years I've got $20k into a flag of convenience.

That is vs 6% sales tax (State of Residence) and 2% import tax if you were to bring an unimported boat to the US. For some reason I was thinking there was another 1% in there somehow to equal about 9% of the purchase price.

You can do the math for your boats purchase price but for Palarran, I'm still ahead. You can also form a Delaware Corp to avoid the State sales tax but then have to file corporate returns every year, which can be some $$.

As an FYI, when I sell the boat the best way to do so it to sell the shares of the company. Since the boat is the only asset, the purchaser ends up with the boat and doesn't have to do any of the original work or expense.

Hey Palarran, thanks for the info. Were there any tangible perks to being registered in a Red Ensign nation, like free check in in other RE nations? Do you get to stay longer in other RE states? What about crew, does any of that extend to them? And were there any other perks associated with having a corp in the BVIs and a BVI registration?



I am kind of hoping it serves as some kind of covid insurance offering me a lot more nations that WILL accept me if lockdowns begin again so I don't get trapped again. :-)
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Old 04-08-2020, 09:02   #4
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Re: Does anybody have any experience registering a vessel in the BVIs?

Nope. The only perk is seeing Brit's try to figure out where the flag is from on a quay.

It's legal tax avoidance. That's why you see so many Cayman flags on Mega-yachts.
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Old 04-08-2020, 09:19   #5
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Re: Does anybody have any experience registering a vessel in the BVIs?

The only problem in selling the BVI company with the boat as its asset, is that the buyer would be liable for any debts on the boat or the company.
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Old 04-08-2020, 09:25   #6
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Re: Does anybody have any experience registering a vessel in the BVIs?

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Originally Posted by Palarran View Post
Nope. The only perk is seeing Brit's try to figure out where the flag is from on a quay.

It's legal tax avoidance. That's why you see so many Cayman flags on Mega-yachts.

Thanks again Palarran. It does seem like at the very least there must some built in path to permanent residency if you own a corporation there....
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Old 04-08-2020, 09:28   #7
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Re: Does anybody have any experience registering a vessel in the BVIs?

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Originally Posted by Stewie12 View Post
The only problem in selling the BVI company with the boat as its asset, is that the buyer would be liable for any debts on the boat or the company.

that could be a thing, or not.
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Old 04-08-2020, 10:48   #8
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Re: Does anybody have any experience registering a vessel in the BVIs?

Quote:
Originally Posted by Palarran View Post
I did it 10 years ago. It cost a total of $5k to set up the company and transfer the boat into it and get it registered. It's another $1500 for the resident agent and BVI corp and shipping fees - PER YEAR. So, after 10 years I've got $20k into a flag of convenience.

That is vs 6% sales tax (State of Residence) and 2% import tax if you were to bring an unimported boat to the US. For some reason I was thinking there was another 1% in there somehow to equal about 9% of the purchase price.

You can do the math for your boats purchase price but for Palarran, I'm still ahead. You can also form a Delaware Corp to avoid the State sales tax but then have to file corporate returns every year, which can be some $$.

As an FYI, when I sell the boat the best way to do so it to sell the shares of the company. Since the boat is the only asset, the purchaser ends up with the boat and doesn't have to do any of the original work or expense.
A couple corrections/clarifications. Forming a Delaware Corporation (or in any other state) does not avoid State sales/use tax. It depends on the rule of the state, but generally it is either your state of residence, or the state you purchase the boat. For example, as a non Florida residence, I had 90 days to get the boat out of Florida (a 90 day extension is available for a fee) or pay Florida state sales/use tax. My boat is owned by a Colorado, LLC (cheaper than Delaware). You are correct in selling your LLC, not the boat which is in the LLC, will avoid sales/use tax generally. As a California resident, I will not be paying sales tax there either as the boat, if it cruises for more than a year without entering California is exempt from sales tax. The Colorado registration fee was something like $150 if I remember correctly. It is $10 annually. You also need an agent for service of process which was a few tens of dollars more annually. I did have to pay duty of 1.5%, but in total much cheaper than the scenario you outlined.
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Old 04-08-2020, 12:35   #9
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Re: Does anybody have any experience registering a vessel in the BVIs?

I did it in 2018, and it was both a complete headache, and also potentially worth the effort vs. alternatives.



For each party the cost/benefits are going to be different based on a lot of variables... origin of sale, type and extent of existing documentation, where you plan to sail, and how many pounds of flesh you'd pay under a US alternative option.

For me -I bought in Europe intended to be sailing there at least a year or so, and wasn't sure about where the boat would be kept after... so U.S. registration was not a given. Many U.S. states also demand thousands and thousands, and while even if perhaps simpler... may feel not quite right for a vessel that hasn't even seen their country.


Process wise one must first find a local agent in the country where they intend to register (these firms advertise online). They walk you through the process and create a business entity (Ltd.) for you, and yes the agent can register your vessel for you with the BVI Ship's Registry. BUT.... OMG, the details of the documentation required, and the back and forth and the debates over what is requested/required took in my case months & months, tons of effort and thousands & thousands of dollars.


The time during which your registration is up in the air can make simple things like entering a marina or a country very challenging.



One thing to consider, though I do not yet have a clear picture of the specifics; the BVI is beginning to require business entities to have an "economic presence" - the details of this will perhaps be relevant to your decision, and should be addressed early on in the process. i.e. start with researching this. I wish I could recommend the agent I used, but I cant...
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Old 04-08-2020, 14:13   #10
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Re: Does anybody have any experience registering a vessel in the BVIs?

I bought (through my US LLC) a charter boat in the BVI (it's not the BVI's) which was US flagged at the time of its build in South Africa. I placed it in charter with a different charter manager for an additional three years. At that time (2016-2019) my only requirement was to maintain a BVI Ship Station License (VHF-FM radio) and a Small Commercial Vessel Certificate which I paid for annually (about $600). I believe longer term BVI certificates are available at a higher price. I only traveled there as a tourist (90 days I guess) to use the boat for short periods.

Subsequently I moved the boat to a new home in Puerto Rico. This boat, even though US flagged for its entire life, had never been imported into the US. This is common for charter boats who are moved directly from a foreign builder to their charter base outside the US.

With import duty (1.5%), EPA (make sure your engines meet EPA requirements) and "port" charges (whatever they are), etc., it was about $5,000 total. This is a real bureaucratic pain so I recommend hiring an agent ($300+).

Later I learned that had the boat been "imported into the US" at the time of its completion in SA it may have been duty free since SA is exempt from US duty on most manufactured products. It still could have gone into charter in the Caribbean and then moved to the US anytime after that. Note: French and other foreign built boats (Bennies, Lagoons, etc.) and many others, are not duty free.
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Old 04-08-2020, 16:12   #11
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Re: Does anybody have any experience registering a vessel in the BVIs?

A few implicit or explicit misconceptions being perpetrated here. If you never bring your boat into the U.S. and you document it with the Coast Guard you will never pay sales tax to any state. So registering in the BVIs to avoid sales tax is completely unnecessary. If you do bring your boat into a state where sales tax would normally be due, it's going to be due no matter if you're BVI flagged or not (ignoring the issues of importing to the U.S. and how long a foreign flagged vessel can remain in the U.S.), so again, a BVI corporation does nothing for you except cost you money.

A Delaware corporation likewise has no impact on if you owe sales tax or not; sales tax is based on where your boat is physically kept, not the home state of the owner. If you do decide to form a Delaware Corp or LLC the annual cost is $225 for a Corp and $300 for an LLC, no lawyers required or needed, it's a dead simple online form. But again, no benefit from DE specifically from a tax perspective, although as mentioned when you sell the boat to someone after you've paid sales tax they don't have to pay sales tax again if the agree to buy the Corp instead of the boat. I'm guessing 90% of buyers aren't going to grasp that concept so it's probably not going to impact the price you'll get for the boat much if at all, and in fact the few who do get the concept probably see the chance of unknown debts of the corporation as a bigger risk than the tax savings.

Bottom line question to the OP is why you what to do it?
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Old 04-08-2020, 16:38   #12
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Re: Does anybody have any experience registering a vessel in the BVIs?

redneckrob is correct. However, I do think most folks will understand the value of an llc for boats with a high enough value. Brokers certainly do. Not a lawyer but see no reason to do Delaware instead of other states such as Colorado which is $10 per year. Don't assume that a corporate entity will help you with liability. Given its only asset is the boat, anyone who sues will name both the corporation and you, the owner of the corporation and argue to "penetrate the corporate vail". Given that very few law suits ever go to trial the economic impact will likely be the same. Actually sorry for the post as this is one of the most common threads around.
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Old 04-08-2020, 16:43   #13
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Re: Does anybody have any experience registering a vessel in the BVIs?

Only other thought on LLC. I was always under the impression that you needed to file in both the state of incorporation (say Delaware) and then the state of residence (say California) doubling up some fees. According to my lawyer that is only true if you charter your boat or conduct other business with the boat (in California you will file a foreign corporation return). Not true, he says, if all you do is own the boat. Simple?
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Old 04-08-2020, 19:35   #14
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Re: Does anybody have any experience registering a vessel in the BVIs?

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Originally Posted by kleenbreeze View Post
Thanks again Palarran. It does seem like at the very least there must some built in path to permanent residency if you own a corporation there....

Unfortunately, that is not the case. It matters not at all.
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Old 04-08-2020, 20:25   #15
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Re: Does anybody have any experience registering a vessel in the BVIs?

This thread is another perfect example of what happens when you ask for advise on the internet. At least 50% is BS.
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