Buying Yacht as non-US resident - help !

[AndrewA2]

Hi!

First I am sure I am not unique in this, however I have not been able to find the answers to my situation here....

I am a UK Citizen, US Permanent Residence (MI). Looking to buy a yacht in the next few months, quite possibly outside the US (Caribbean area most likely).

Will be semi-located out of MS for 3-5 years (not FL as most people seem to be). MI still being my "home" address. After that period will not be based in the US.

Trying to find out what my best options are regarding tax, flagging etc for those US years.

As i understand I can apply for BVI flagged status as a British Citizen.
Another idea is to setup a LLC company in BVI (or else were if recommended) and buy yacht through that.
Also I can apply for US cruising permit and leave every 6 months for 15 days.

Or setup a US LLC and buy through that...

Some of these options are flexible (MS is right next to LA, AL, and FL if i needed to be based there)

What options are available minimizing my costs regarding sales/use tax, flagging (which may not be important in the end) etc?
Also what impact would that have if/when i where to land in a EU country (has Brexit effected this yet?)

Or just pay US/MS Sales/use tax?

I feel there are lots of options here, but looking for some advice!
(searching seems to hit specific examples, that does not quite cover all the aspects i need to consider.)

Thanks in advance !

[letsgetsailing3]

Where will you be keeping the boat for the next year?

The approximate price range might also be helpful. May not really worth making major adjustments if the tax liability isn't huge.

[s/v Jedi]

So where do you want to keep your boat? I’m not even sure you can US flag it as I learned one has to be a US citizen, not just resident, to do that. I think UK registration and flag is best for you (we’re Dutch and Dutch flagged). You can then do the cruising permit shuffle if you want to keep it in the US, or you can sail it elsewhere like Bahamas, Mexico, then visit US again.

[AndrewA2]

Price range $200-250k
Boat will be kept in MS - but happy to do the "cruising permit shuffle", or even keep in in LA, AL, or FL if it makes much more sense to do so.

[AndrewA2]

Originally Posted by s/v Jedi

So where do you want to keep your boat? I’m not even sure you can US flag it as I learned one has to be a US citizen, not just resident, to do that. I think UK registration and flag is best for you (we’re Dutch and Dutch flagged). You can then do the cruising permit shuffle if you want to keep it in the US, or you can sail it elsewhere like Bahamas, Mexico, then visit US again.

Thats my understanding to regarding US flagging as a non-US Citizen.
BVI is tempting for tax purposes (unless i am missing something).
Ideally would like UK or Red Ensign flagged vessel (if i have the terms correct). Would like to be able to call on the Royal Navy if needed

[s/v Jedi]

Originally Posted by AndrewA2

Thats my understanding to regarding US flagging as a non-US Citizen.
BVI is tempting for tax purposes (unless i am missing something).
Ideally would like UK or Red Ensign flagged vessel (if i have the terms correct). Would like to be able to call on the Royal Navy if needed

BVI is not tempting at all... high costs, have to prove that money is not laundered etc. With my Dutch registration I don’t have to pay tax at all... and I think it’s the same for UK.

[AndrewA2]

Originally Posted by s/v Jedi

BVI is not tempting at all... high costs, have to prove that money is not laundered etc. With my Dutch registration I don’t have to pay tax at all... and I think it’s the same for UK.

So is your plan to not return to EU, as unless i am mistaken you will have to pay TAX/VAT as soon as you hit those waters?
Thats why I believe Brexit might change that from EU to UK waters for us Brits....
Also why I thought the BVI was an option as it has no sales tax.

I could be wrong... hence asking for guidance

[fabgo]

A US LLC may also not be an option as the corp has to be majority owned by US citizens, and that includes a majority of the board members. At least that is my understanding.

[s/v Jedi]

Originally Posted by AndrewA2

So is your plan to not return to EU, as unless i am mistaken you will have to pay TAX/VAT as soon as you hit those waters?
Thats why I believe Brexit might change that from EU to UK waters for us Brits....
Also why I thought the BVI was an option as it has no sales tax.

I could be wrong... hence asking for guidance

When we go back to the EU (if we go, very unlikely) then we can bring our boat with us free of tax, vat and duties because it is part of our household. You must have been gone for10 years before this is allowed (we’ve been gone for 17 years already)

You will need to check that for the UK

[s/v Jedi]

Originally Posted by fabgo

A US LLC may also not be an option as the corp has to be majority owned by US citizens, and that includes a majority of the board members. At least that is my understanding.

The LLC works. You hold all the shares but hire director and secretary from the lawyers office that handles everything for you.

But when you are a permanent resident in one state, I think it is illegal to erect an LLC in another state with the purpose of registering boats, motor homes etc. in the LLC to avoid tax. When OP would not have been a permanent resident (we are seasonal residents, i.e. tourists) then this would work.

Laws are complicated... we own property in Florida, pay Florida tax and are Florida residents, can even buy guns in FL. But we’re still tourists for where the Federal Government is concerned. Our boat is our primary residence and it’s Dutch and mostly outside the US.

[AndrewA2]

I was thinking of setting up the LLC/LTD in the BVI (or Cayman, or anywhere else there is an advantage to do so), rather then in the US (unless i can and its worth my while)
But I am happy to hear all options. I feel there are a lot of ways to go about this, however what is the best for my situation I dont feel I know.

As a Dutch FL resident, with a Dutch Flagged vessel. Did you have to pay FL use tax, or do you leave every 6 months and play the Crusing Permit Game? If so any issues doing that over the years ?

Im not actually considering sailing to the UK. But do plan to sail the Med, ie EU waters, hence wondering if that would be a TAX/VAT issue?

[flyingfin]

Might need to work this problem backwards,,,,,,start with trying to get insurance quote as a permanent docked Southern state title/registration vessel. Then see who will write your insurance if not a US flag vessel that is berthed in the hurricane zone. Sales tax may be the least of your costs.

[s/v Jedi]

Originally Posted by AndrewA2

I was thinking of setting up the LLC/LTD in the BVI (or Cayman, or anywhere else there is an advantage to do so), rather then in the US (unless i can and its worth my while)
But I am happy to hear all options. I feel there are a lot of ways to go about this, however what is the best for my situation I dont feel I know.

As a Dutch FL resident, with a Dutch Flagged vessel. Did you have to pay FL use tax, or do you leave every 6 months and play the Crusing Permit Game? If so any issues doing that over the years ?

Im not actually considering sailing to the UK. But do plan to sail the Med, ie EU waters, hence wondering if that would be a TAX/VAT issue?

As long as you have a valid cruising permit (=federal document), it keeps you free from state duties and taxes. We get a cruising permit valid for up to 12 months and yes, we do leave as we like sailing in the Bahamas and Caribbean much more than Florida.

You’re gonna have to study the UK/EU thing, no idea how that’ll work out. I wouldn’t want to go the the EU anyway... to cold or too expensive for us!

[Audeamus]

Channel Islands or Langkawi. We chose Jersey, No LLC seemed the most affordable and straight forward compared with all the others we looked at including the Caribbean tax havens. Its good for 10 years. You do need to pay a token amount for a local address there (not required if you happen to know someone). Only other challenge we had is you need a tonnage survey by a surveyor recognised by them. The registration number has to be attached to the boat in approved manner but not a big deal We were able to find one is Thailand not sure about US. It was all done online with a couple of courier packs of documents. We had choices 3 passports between us and went this way. Dutch was also an option but probably not now for you with UK passport.

[Svsumurun]

As a Michigan resident , why not just register it there for the 3-5 years? That gives you time to look at all the options. As a Canuck living in Ohio ( before I got my citizenship here ) the boats were always just Ohio registered . I thought once about flagging as a Canadian vessel , and then I realized I could be opening a can of worms every time we went for a day sail ( even though te boat lives in the US, the CBP,USCG,etc wouldn't know that) .