Advantages to US Citizens of Registering Offshore ?

[contravert]

Hi all,

I finally took the plunge and bought my long time dream - a Rhodes 41 which I intend to take on a long leisurely circumnavigation, say a decade or so. It strikes me that many cruising destinations, most of the Caribbean, French Polynesia, and of course Europe are EU members. I'm getting bits of info here and there that suggest fees and such are much less in those areas for EU flagged vessels. Given that I won't be back in the US for quite some time, is it to my advantage to register her in an EU country or colony (BVI, Caymans, etc)?

[Blue Stocking]

Welcome contavert, from a fellow Rhodes owner. Mine is a Reliant, hull # 1583, launched July 1965, and has lived here in Bermuda all its life, except for yearly trips South 1966 to 1976.
Have you visited the Reliant site (Rhodes in general) run by Ben Stavis.
Loads of friends up there.
If you get to Bermuda, we got a mooring for you.

[contravert]

Thanks, I might just take you up on that! Valkyrie is a 1963, Rhodes 41, Hull #3! She was there first 41 built with racing in mind. She has an extra 2000 pounds of lead in the keel and was the first yawl rigged 41. She was displayed at the 1963 New York boat show. (can ya tell I'm excited about this boat?)

I have been pouring over the Stavis site. Good info there. Not to further highjack my own thread but do you have a 1 inch propeller shaft? and if so do you happen to know the OD of your cutlass bearing? I have to change it before I can move her and the clock is ticking on that.

Thanks. Hope to see you in Bermuda!
David

[Blue Stocking]

Sorry, 1 1/4" by 1 7/8"

By the way, spend a lot of time on Rich's mountain at Brevard. Family there

[contravert]

I was afraid of that, but thanks for the info.

[osirissail]

Back to your original question - there isn't any advantage to "re-flagging" your boat in the E.U. in order to try to save money in the Pacific or Med. Hundreds, if not thousands, of US Flagged vessels sail around the world without any serious extra financial burdens. Even the highly publicized French Polynesia "Bond" is not really as bad as publicized. There are "exemptions" available at best and tricks on buying airfare via credit cards that negate/alleviate much of the financial burden. Since so many boats are doing the same thing, there are numerous "tricks of the trade" being used to make it a lot softer on your wallet in the Med/Europe/etc. You just need to do the research.

[Paul L]

One advantage is that if your boat is seized somewhere by officials or pirates, you will be protected by the full force of the EU Navy

Paul L

[ViribusUnitis]

But won't he have to pay the EU's 20something % VAT?

[contravert]

Well I guess they have to pay for that navy somehow Never could figure out VAT anyway.

Ok, so it sounds like there is no advantage. Yeah, I have been scared off by the French Polynesian bond stories, canal transit costs, etc. Plus I was under the impression that EU flagged boats could stay longer, but I guess that's more a function of whose passport you're holding than whose flag you're flying. I wanted to cruise to escape from paperwork. Beginning to look as though I was being a bit naive?

Thanks for the replies.

[maxingout]

When we were in New Caledonia, our passports determined how long we could stay. If you had an EU passport, you could stay without a problem. Our US passport limited how long we could stay, and the period of time varied each time that we visited New Cal.

[Tllee]

Keep the U.S. flag. A-lot of effort was made to ensure freedom of navigation.

[Zanshin]

No VAT needs to be paid on EU vessels unless they remain in the EU for too long. The advantages of a flag of convenience such as the BVI red ensign are:
a) Vessel ownership is not in your name, but in a company which, in turn, is owned by you
b) In the US there is no record of that property, so no demands can be made of it by third parties (think along the lines of a divorce)
c) No inheritance tax is applicable, just a small fee for transfer of your offshore company shares from yourself to your heir
d) No U.S. state or federal taxes or the like are levied
e) Licensing is dependant on the flag country, i.e. if your boat flies a German flag you'd need several licenses and have to adhere to German restrictions such as registering your VHF/SSB serial numbers to the boat and not being allowed to use hand-held VHFs; whereas a BVI flag requires you to adhere to British rules which enforce none of the above.
f) While I hesitate to open this political can-of-worms, I'll be circumspect and merely state my opinion that the image of the American flag is somewhat more tarnished internationally than that of many other countries.
g) Due to the boat being owned by company and not a person, liability can be limited to the assets of the corporation instead of including your other person fortune.

Realistically I think the only factor that can be a real advantage is being able to avoid inheritance taxes and sales taxes.

The chances of the U.S. navy interceding on your behalf in foreign waters are just about the same as those of your boat's flagged nation and neither are particularly high. Offhand I cannot think of a single instance in recent years of any country using a boat's flag (as opposed to the crews nationalities) as justification for action. Another point is that the flag nation can not only board your vessel anywhere and at any time, but can confiscate the vessel for use during times of war (I can visualize a Ma-Deuce being mounted to my foredeck); so looking at the past 100 years I see better odds in avoiding eminent domain by not flying a U.S. flag

[osirissail]

Originally Posted by Tllee

Keep the U.S. flag. A-lot of effort was made to ensure freedom of navigation.

Huh? what world is that on? Any "flag" from a major first world western country will provide easier processing in and out of most countries but even that is not particularly valuable. Your personal passport is more of an issue than your boat's nationality.
- - The major advantage to "flags of convenience" is to very expensive yachts and super yachts that can hire multi-national crews; and avoid luxury taxes and other perils of being filthy rich that we mere peons don't have to worry about.
- - On the other hand I do have a friend who is "hiding out" from certain liabilities back home so uses a "flag of convenience" on his boat.

[capt_douglas]

The virtue of foreign registration is either financial or safety as far as I can determine.

If you're buying a million dollar boat and the tax is 7% then looking for a nation state that allows you to register the vessel for $500/year makes financial sense even to me. There are legal fees and transfer requirements as well. It makes no sense as an American, but it's not my boat.

I don't know what you paid for your vessel (congrats by the way) but if you take the tax and divide it by $500-1000 you'll get and idea of when the cost of foreign registration exceeds the cost of US sales tax (and there are places in the US where you pay no sales tax). You can document your vessel, and if you meet certain requirements based on where the vessel is purchased, can avoid the sales tax. You might have to leave the US for a certain period of time or be allowed back in the US for a limited time but if you're sailing off into the sunset, that might not be a problem either.

VESSEL DOCUMENTATION: New Changes to an Old Service | Boat/US Magazine | Find Articles at BNET

USCG National Vessel Documentation Center, Home Page

EU VAT can be very expensive but there are ways to cruise the EU without paying the VAT. You can register your vessel in a non-EU country but if that country joins the EU (Croatia comes to mind as does Turkey), then things get interesting.

You've saved a few dollars by going offshore but if you come to the US then you're a foreign flagged vessel and the rules become very tough and onerous.

Pleasure Boat Reporting Requirements - CBP.gov

The safety issue has to do with the guys in the black hats seeing the US flag and deciding you're an easy or wealthy mark. That's why a number of boats have foreign documentation. The owner thinks that by flying the flag of some innocuous country they'll be safer.

The other safety issue is that some nation states have relaxed safety requirements. It may not apply to you but if country A has no safety gear requirements, doesn't that set off warning bells? While these safety requirements generally apply to commercial vessels (and vessels in US waters must have the equivalent safety items on board) you're going to carry them anyway.

The final safety concern is what happens if your boat or those aboard come into distress. Do you think a country with no Navy, Coast Guard, Rescue Service, or Lifeguard Service is going to come to your aid? Yes, you'll probably get the USCG or other nations states where they take the protection of those who live, boat, or transit their waters seriously to come and pluck you out of your predicament.

You act American, talk American, have American beliefs, and carry an American Passport; why wouldn't you fly the American Flag?

[tallyhorob]

well said Capt. Douglas