Registering a vessel, purchased in Europe but outside EU

[Toffe]

Hello all!

I finally did it - I bought a sailboat, a lovely 28-footer. It's now ready for noodling around in the bay of Kotor in Montenegro while I get up experience to head across the Mediterranean, and eventually, the Atlantic?

One issue: the registration is lapsed. Its previous paperwork was Delaware registration. I could renew it, but I understand it's not quite kosher, though it's common here in Montenegro. I can't register it right away in Montenegro as it would require building in a septic tank and a pricey survey, plus it would have tax implications. Should I re-register it in a place like Holland? Would I have to pay the EU VAT in this case or will the vessel get ignored on this point as it's from the 70s? (the vessel has changed hands privately outside the EU at least once previously, which I believe means that it has lost VAT paid status, but, well... ) I know the answer is "speak to a lawyer experienced in this" but the lawyers I have found work for companies selling one of these solutions, so may be biased and are certainly overcharging. What are your opinions/experiences?

BTW I am an EU national but tax resident in Montenegro. I intend to live here for a while, but it would be nice to visit e.g. Croatia and Italy by boat. I only have documentation for the last two owners - no VAT receipt.

[Toffe]

Tempted to go for the Delaware registration renewal, just to have *something*. Might not make too much sense to switch to EU registration when I'm not in the EU. Is the Delaware registration process through brokers affected by the US govt. shutdown?

[hellosailor]

Delaware is a semi-sovereign state within the Federal Republic of the United States. The shutdowns of the Republic have got nothing to do with boat registration from any state.

I don't know how or why Montenegro tolerates sham registrations like that, but you may have other problems as you enter the EU or the US, with a state registered boat, no national flag, and your citizenship and residency both having nothing to do with Delaware.

[boatman61]

Originally Posted by hellosailor

Delaware is a semi-sovereign state within the Federal Republic of the United States. The shutdowns of the Republic have got nothing to do with boat registration from any state.

I don't know how or why Montenegro tolerates sham registrations like that, but you may have other problems as you enter the EU or the US, with a state registered boat, no national flag, and your citizenship and residency both having nothing to do with Delaware.

Theres a ton of Turkish owned boats with Delaware LLC reg and flying the US flag.. a few in the EU as well.
Kinda gets them out of national taxes, restrictions etc.
Its tolerated coz thats wot de Rich dudes do.. cant go closing ones own loopholes..

[Topspin]

Have you considered to register the boat in an asian loophole like Langkavi/Malaysia? There are agents who can do it quickly and at low cost.


VAT might be a problem because that is not connected to the flag status nor your nationality.

Montenegro is to my knowledge not yet part of the EU. But you bought the boat there and if you are tax resident there, you probably will have to pay VAT no matter what flag you register it with. But ask someone who is competent in Montenegrian tax law.



Regards,



-Richard

[hellosailor]

Delaware LLC: Ah, that's a different can of worms. An LLC is not quite the same as a human owner. And there's still the issue of "Who are you and what is your relation to this corporation?" at borders. And the Delaware LLC will, no doubt, require a corporate agent (at an annual fee) located in Delaware, which may be a waste of good money for an individual buyer of a boat, as opposed to a luxury motor yacht or a ship.

The world grow less tolerant of these dodges and evasions every year, and if you get caught when a loophole is being closed, that's no fun at all.

[belizesailor]

Originally Posted by Toffe

Hello all!

I finally did it - I bought a sailboat, a lovely 28-footer. It's now ready for noodling around in the bay of Kotor in Montenegro while I get up experience to head across the Mediterranean, and eventually, the Atlantic?

One issue: the registration is lapsed. Its previous paperwork was Delaware registration. I could renew it, but I understand it's not quite kosher, though it's common here in Montenegro. I can't register it right away in Montenegro as it would require building in a septic tank and a pricey survey, plus it would have tax implications. Should I re-register it in a place like Holland? Would I have to pay the EU VAT in this case or will the vessel get ignored on this point as it's from the 70s? (the vessel has changed hands privately outside the EU at least once previously, which I believe means that it has lost VAT paid status, but, well... [emoji2] ) I know the answer is "speak to a lawyer experienced in this" but the lawyers I have found work for companies selling one of these solutions, so may be biased and are certainly overcharging. What are your opinions/experiences?

BTW I am an EU national but tax resident in Montenegro. I intend to live here for a while, but it would be nice to visit e.g. Croatia and Italy by boat. I only have documentation for the last two owners - no VAT receipt.

Its totally "kosher" under the laws of Delaware...there are large numbers of boats world wide registered this way.

However, I have no idea how this plays out in regards to VAT and other EU/Montnegro regulations, but others here probably do.

[hellosailor]

"Its totally "kosher" under the laws of Delaware..."
Which only matters if the boat is located where Delaware laws apply. And that would be in Delaware.(G)
Delaware is prohibited under US federal law from invading and conquering Montenegro, so Delaware laws will, sadly, never rule what the Montenegron authorities wish to do. If they choose to honor a vessel flagged by the Duchy of Grand Fenwick, that's fine by me.
I was just reading last night that some lawyer, claiming to be operating at the instruction of his "Polish multi billionaire" client, was petitioning various agencies if the Norwegian government to set up a shipping registry company to be headquartered on Bouvet Island. Known to be the most remote and least habitable spot on earth, possibly.
You know, whatever ticks all the boxes...
(And btw, the Norwegians all unanimously slammed him and said "Take a hike".)

[Toffe]

Thank you all for your responses!

Originally Posted by hellosailor

I don't know how or why Montenegro tolerates sham registrations like that, but you may have other problems as you enter the EU or the US, with a state registered boat, no national flag, and your citizenship and residency both having nothing to do with Delaware.

Yes, I'm aware of these issues... though a fair number of the boats at the nearby super-marina Porto Montenegro are Delaware registered. I'm a Danish citizen, but my boat is too small to enter the Danish register. I have an address in Sweden, but I was given to understand by the Swedish authorities that I wouldn't be able to register it there either, as it would have to be for use in Sweden. I have a company in Montenegro, but the boat doesn't quite qualify for registration as a yacht here (needs septic tank and survey, and some documents lost to time). I asked a local specialist in yacht registration, and they suggested... Delaware

Originally Posted by Topspin

Have you considered to register the boat in an asian loophole like Langkavi/Malaysia? There are agents who can do it quickly and at low cost.

I haven't, would be worth a look! Any tips on where to start?

To be clear, I'm not trying to dodge taxes. I just want a registration, any registration, that will let me noodle around the bay and coast for the summer. I have budgeted for paying VAT on top if that's required - Montenegro doesn't require VAT paid for foreign-registered boats. Once I'm ready for more serious cruising I'll be trading up to a different vessel based in a different country anyhow (destination: tropics)

[BM2023]

When a vessel is registered in any of the EU ships registrar, with a Certificate of Withdrawal issued by a ships registrar from outside the EU, you are liable to pay import duties and VAT. Whether you are an EU passport holder living in or out of the EU, or not.

There are two scenarios one can follow:

1 . Clean and simple, you pay import duties and VAT. In the case of the Netherlands the import duties for a 28-foot vessel is 1,7% and VAT is 21%. The import duties for boats longer than 12m are 0%

2. Your vessel is imported temporarily and you are not subject to import duties and VAT. The boat does have to leave the EU territorial waters every 18 months, and that has to be proven, which should not be a problem in your case. The temporary importation option can only be used for a period of 10 years and one has to apply within 3 months after actually purchasing the vessel.

Do keep in mind that Montenegro is candidate member of the EU and if all goes well, will become formal member in 2025.

[boatman61]

Look at a Gibraltar registration.. you will fly a red ensign and have London on your stern.
Dont know what it involves but have known some who have gone that route..

Gibraltar Yacht - Gibraltar Yacht Registry

[Toffe]

Originally Posted by Lorrendraaier

2. Your vessel is imported temporarily and you are not subject to import duties and VAT. The boat does have to leave the EU territorial waters every 18 months, and that has to be proven, which should not be a problem in your case. The temporary importation option can only be used for a period of 10 years and one has to apply within 3 months after actually purchasing the vessel.

Do keep in mind that Montenegro is candidate member of the EU and if all goes well, will become formal member in 2025.

That all sounds ideal! I'm still within the 3 month period since purchasing. How and where would I proceed?

Originally Posted by boatman61

Look at a Gibraltar registration.. you will fly a red ensign and have London on your stern.
Dont know what it involves but have known some who have gone that route..

That also looks attractive - contacting them now, thanks a lot!

[Toffe]

I figured I should pop in and say that my problem is solved. While I was evaluating my options, the website of the Danish ship registry was updated with news. Boats under 20 tonnes can not be entered into the Danish ship registry, but are acknowledging that some paperwork may be necessary for foreign customs. Therefore, Danish yacht clubs and the sailing union are able to issue certificates of ownership (that's not new), and the Danish ship registry provides an English form letter explaining that small boats can not be registered, so it's all kosher (and this part appears to be new). As a Danish citizen, i'm therefore fully within my rights to fly the Danish flag and all my paperwork issues are resolved, now and forever. Well, there's the MMSI once I fix/replace my radio, but that's much more straightforward The certificate of ownership is in the post.

Thank you all for your help and suggestions!