Registration of Foreign Yachts in Delaware

[Grees1896]

Could you please explain if registration of foreign yachts in Delaware is legal? According to the Handbook of Delaware Boating Laws:

Æ Page 37, BR-1, section 2:

Section 2. Application of Regulations
Unless otherwise specified, these regulations shall apply to
all vessels used on the waters of this State.

Æ Page 40, BR-2:

(29) “State of principal use” shall mean a state on whose
waters a vessel is used or to be used most during a
calendar year. It shall mean this State if the vessel is to
be used, docked, or stowed on the waters of this State
for over 60 consecutive days.

Æ Page 46, section 14:

Section 14. Validity of Certificate of Number.
(a) Except as provided in subsections (b), (c), (d) and (e)
of this section, a certificate of number is valid until the
date of expiration prescribed by this State.
(c) A certificate of number issued by this State is invalid if:
(1) The application for the certificate of number
contains a false or fraudulent statement;
(d) A certificate of number is invalid 60 days after the day on
which another state becomes the state of principal use.

The Delaware registration is legal for yachts used on the waters of the State of Delaware only. All other Delaware registered yachts are registered using false or fraudulent statement that the yachts are used on the waters of the State of Delaware.

If the yachts registered in Delaware are used on foreign waters for over 60 consecutive days, the Delaware registration becomes invalid.

However the Supervisor of Delaware Boat Registration Office claims that the laws "do not apply to vessels that are operated out of this country and were never meant to regulate vessels operating out of this country".

Is it correct? Who is wrong?

[Hud3]

Quite legal and much used by folks who want to avoid state sales taxes or who want to be able to fly the flag of the USA. Delaware has a reputation as a place to register "offshore" boats at a reasonable cost.

The info you've quoted is for boats that actually reside in Delaware. Google "yacht registration in delaware" and you'll see how many companies are willing and able to register an "offshore boat" with a Delaware registration.

[Grees1896]

Originally Posted by Hud3

Quite legal and much used by folks who want to avoid state sales taxes or who want to be able to fly the flag of the USA. Delaware has a reputation as a place to register "offshore" boats at a reasonable cost.

The info you've quoted is for boats that actually reside in Delaware. Google "yacht registration in delaware" and you'll see how many companies are willing and able to register an "offshore boat" with a Delaware registration.

Dear Sir,

Many thanks! I understand offshore matters and I work in offshore sector since 1990. Previously I registered "offshore" companies in Delaware. But later I had big problems with IRS because Delaware companies are not offshore in fact. Delaware companies are not subject to the State of Delaware taxes (if their businees is out of the state) but all Delaware companies are subject to Federal taxes (even if the companies do not do bussiness in USA).

The similar situation with Delaware Boat Registration. The Delaware Boating Law states that "these regulations shall apply to all vessels used on the waters of this State" If these regulation shall NOT apply to foreign boats, what regulations shall apply?

I try to understand if Delaware Boat Registration Office acts legally.

[Pblais]

Being registered in Delaware is to say you can operate in Delaware and keep the boat in Delaware. If you register in Delaware but then stays an inordinate amount of time in another state you may trigger invalidation of the Delaware registration not from the State of Delaware but from the state you spent too much time in. They will then demand you register with them.

State registration is not universal in that you can't register in Delaware them move the boat and keep it in Maryland. Suddenly Maryland will demand you be registered with them and pay all the fees owed to them. Maryland will say you boat now meets the requirements that it be registered with them and you Delaware registration is considered void to them. Delaware won't care. Maryland will damnd you unregister in Delaware first then register and pay them. Maryland is an expensive state. All states have their own different rules concerning use fees and sales taxes.

In sorting it out state to state don't confuse your resident status with the boat. You rboat can be perfectly legal longer than you can as a non US citizen. You get some limit exemptions as a foreign visitor on some taxes but there are time limits that vanaish if you state register. The rules concerning all the various time limits are your responsibility alone so check each state you plan to spend more than 60 days in.

Taxes in the US are presumed owed until you prove you don't owe them. It's not like a crime where you are innocent until proved guilty.

In summary if you keep a boat in any state long enough you MUST pay fees or move onn before the time limit expires. If you trigger the time limit and they find out they can and will come after you adding criminal charges on top of the rest. If the boat is foreign flagged then as a visitor you get a period where you are exempt under federal Immigration law of all state fees / taxes. Registering a boat in a state is legal for you as a visitor but your boat subject to all laws and taxes as any resident.

In states that charge sales taxes, use taxes or personal annual property taxes you can owe those even though you are not a US citizen or even a resident in that state. It's about the boats location not you. If a boat stays too long in one place it owes the tax and you must pay it.

For US citizens US documentation saves state title registration but does not save any state taxes and other fees some states may impose. Only a US citizen can get USCG documentation on a boat.

Personally, I think Delaware is not a good choice to keep a boat mostly because Delaware isn't that great a place to sail and the winter gets a bit harsh. So from my own point of view the savings in taxes are offset by a poor place to keep or use a boat. It's close to NE cities but not close to any place you might want to sail. At some level you want your boat where you want to use it the most. If you need to fly in and then take off offshore to all your destinations it could work. The Delaware River is not trvial with strong current and heavy traffic. Slip fees are not particularly cheap but they are not cheap any place that far north.

[Hud3]

Just to be clear, what I was referring to in my post, above, is the process of using an agent to register a corporation in Delaware that would own the boat, which would reside somewhere else, not in Delaware. That's completely different from registering a boat in Delaware (getting the sticker and numbers), which is for boats that actually reside in the state.

[dchwenk]

The big question about registration of a boat in Delaware is "why?" If you are doing it to use it there, fine. If you are doing it to avoid tax in the jurisdiction where the boat is actually going to be -- that won't work. Taxation is based on location of the boat, not location of the owner or location of the registration. If the boat is truly foreign (in the sense that it is flagged in another nation) then the correct step is to get a cruising permit from customs. If the boat is "foreign" in the sense that it is from another state of the United States, then it should not be registered in Delaware. All that said, many non-resident boats are registered to Delaware. Delaware does not really care about that -- but the state that finds your boat will.

Dirk