Ship registry

[MartyB]

Hey guys! I need some advices.
We are new sailors and just purchased a new FP cat. The idea is we are going to take delivery in La Rochelle somewhere at the beginning on 2022 and then we plan on sailing the Med for the summer of 2022. We will then cross the Atlantic in December 2022 and bring the boat into the Bahamas where it is going to stay in a charter fleet for 3-4 years before we retire... We are Canadian citizens. We don't intend to sail the boat to Canada. We would have to pay a 15% sales tax if we did.
The plan is to sale the US east coast and the Caribbean.
So my question is where should we register the boat ? What implications goes with this ? Does it make any differences for insurance ? What about taxes ?
Any help would be appreciated. Thanks!

[psk125]

The answer to your questions is that it depends. Where you register the boat affects everything else, along with other things you don't mention. European VAT can make the 15% Canadian sales tax look like small change. Registering the boat in France will require certain safety equipment. Bahamas requirements would be different. Canadian regulations are different from the other two. Some of the requirements are expen$ive. Some - like radios - require licenses to operate. How long you're able to stay in the Euro-zone for your Med cruise may also depend upon where you're registered. Having to leave by a certain date could be a problem if a Medicane or other nasty weather was forming across your path. There are many variables. Starting your research now for 2022 is a good idea, but be aware that things could also change between now and then, (e.g. Brexit) and you might need to be flexible. Bon vent!

[s/v Thea]

It is my understanding you can register it in canada, you only have to pay tax and duty if you bring it into canada.

[boatman61]

Seeing as your not planning on sailing to Canada because if you do you'll be subject to 15% tax.. on arrival I presume.
Why not register it there anyway.. just never take it there.
Aussies register their boats in Oz but don't have to pay anything till if or when they arrive, does Canada not act in the same way.???

[nmuir]

Having done something similar I can confirm that Canada does not charge the tax (and duty if it is not a NAFTA boat) until it is in Canada.

Our Canadian registered yacht is in Spain. No Canadian tax paid.

For a prior boat we purchased we had to pay the tax when clearing into Canada for the 1st time, 1/2 a year after we purchased it. Paid over the phone with Visa when we cleared in Victoria - easy!

Being a Canadian boat in international waters you do need to *register* it for $250 (ie not *license* it), get a Canadian Station license for the radios, radar, etc. (Costs $36 per year from memory.) and get a Canadian MMSI number.


As far as insurance etc I don't have much experience with a foreign registered boat. The initial search before we registered our in Canada for finding insurance was proving difficult, so we went ahead, registered it, and got insurance as a Cdn boat. YMMV.


Nothing was too difficult, just takes some time. PM me if you want any more specifics. Happy to share experiences.

[goboatingnow]

You would be best advised to register it in Canada if at all possible

You will then have as non EU tax residents 18 months of temporary admission of the boat to sail the Med without VAT issues etc , assuming you have appropriate visas , the crew can stay 90 out of a rolling 180 days.

[NaClyDog]

We basically did this same thing (Canadians, boat purchased in France). In order to qualify for insurance we ended up using Jersey as our flag of convenience. If it wasn't for the insurance headache, we would have registered in Canada.

[Montanan]

Originally Posted by MartyB

Hey guys! I need some advices.
We are new sailors and just purchased a new FP cat. The idea is we are going to take delivery in La Rochelle somewhere at the beginning on 2022 and then we plan on sailing the Med for the summer of 2022. We will then cross the Atlantic in December 2022 and bring the boat into the Bahamas where it is going to stay in a charter fleet for 3-4 years before we retire...

You are Canadian so you could readily pursue Canadian registry and flagging.

You are purchasing the vessel in France but it seems you are intending to stay in the EU after the purchase which seemingly could invoke VAT that otherwise could be waived as you are non-residents of the EU and could instead promptly export the boat from the EU. Check with FP about arranging for a temporary importation of the vessel so as to avoid the VAT and flag the vessel in a country other than an EU territory.

Since VAT is only assessed one time on a vessel, rather than being assessed each time it is purchased as with a sales or use tax, such a boat will never again be liable for a EU-related VAT assessment by any EU member, current or future. Especially if you prefer purchasing a new boat, VAT will add significant cost (roughly 20% +/- of the full purchase price), so this may not prove sensible if you plan to sail back to your home country. However, another option is to inquire about taking formal delivery of the boat in one of the EU countries where VAT is lowest, thereby minimizing the VAT payment while still having VAT-paid status. Why would anyone choose to pay VAT? Don’t overlook the fact that, within the EU, most of the value of VAT paid on a vessel ends up being folded into the equity value of the boat. Consequently, if you plan on later selling this boat within the EU after your European cruise, much of the VAT cost will be reimbursed as part of the sale price and, meanwhile, you won’t VAT-based time restrictions on your cruising plans.

Further reference: European Commission's Frequently Asked Questions on: Rules for private boats
https://ec.europa.eu/taxation_custom...ats-faq_en.pdf

Snpet there from:

"Whereas, Non-EU vessels which are intended for re-export may be temporarily be brought into and used for private purposes in the EU, or more strictly in the 'customs territory of the Union, (which includes our territorial waters) without customs duties or Value Added Tax (VAT) needing to be paid.
The boats concerned have to be placed under the 'temporary admission procedure' (TA) with Customs and the period of use in the EU is limited in time. When the time is up the boat has to leave,
which in official jargon means that 'the procedure must be discharged'. The re-export of the goods from the customs territory of the Union is the usual way of ending or 'discharging' a temporary admission procedure. If the boat does not leave before the end of that time then customs duty and
VAT become due.
A boat is temporarily admitted into the EU and not into one of the constituent Member States. Thus it can move from one Member State to another with no further customs formalities during the 18-month period allowed."

Further reference: https://www.ionianyachtsales.com/use...fo/vat-yachts/


Temporary importation relief from VAT is available to yachts beneficially owned and used by non EU residents provided such non EU resident does not become ordinarily resident in the EU.

Boats owned by non-EU residents and registered outside the EU are entitled to tax free temporary importation into the EU for a total period of eighteen months. The EU Common Customs Tariff provides for relief from VAT liability for up to 18 months (Article 562(e) as referenced above) when the boat is owned by non-EU residents and where the boat will subsequently be removed from EU waters (Article 561). The permitted period, or temporary importation, applies to the entire EU area and therefore at the end of the period the boat must be sailed to a country outside the EU or VAT must be paid. The temporary importation period may be extended, at the discretion of local customs, for various bona fide reasons, such as if the boat is left unattended and unused, if the owner leaves the EU, or if the boat is left in the care of a boatyard for repair.

Those who wish to remain longer in any one EU country must deposit the ship’s papers with the local customs office, who will put the vessel under bond. The clock will then be stopped until the owner returns on board. During the period the vessel is in bond, the boat must not move from its berth, and the owner or crew are not allowed to sleep on board.

Non-EU boats remaining inside the EU for over the permitted period must be imported and VAT paid on the value of the boat. Anyone intending to do this would be well advised to import the boat into one of the EU countries with a lower VAT rate, such as Cyprus, Madeira or Malta.

There has been a harmonization of formalities concerning VAT in recent years, but there are still certain inconsistencies so the owners of boats from outside the EU should treat the matter with utmost caution and avoid being caught out. It must be stressed that the above 18-month VAT relief applies only where the boat is owned and sailed by a person not resident in the customs territory of the EU. The relief is invalidated if the boat is hired, sold or put at the disposal of a EU resident.

It is essential to ascertain on arrival in a new country the exact situation concerning VAT. As non-EU boats are required to contact immigration whenever crossing a border between EU countries, this may be the time to make such enquiries.

The legal provisions on temporary importation are found in: Articles 137 to 144 of the Customs Code (Council Regulation (EEC) N° 2913/92 of 12 October 1992 establishing the Community Customs) and in particular Articles 553 to 562 of the implementing provisions of the Customs Code (Commission Regulation (EEC) No 2454/93 of 2 July 1993).

Customs Procedures in the European Union

Departure from a EU port to another EU port: no formalities required. Arrival in a EU port directly from another EU port: no formalities for EU vessels and EU citizens. Immigration must be contacted if there are non-EU citizens aboard. Customs must be notified if there is anything to declare, such as firearms.

Departure from a EU port to a non-EU port: customs and immigration must be notified. Arrival in a EU port from a non-EU port: Q flag must be flown when entering 12-mile limit. Customs and immigration must be contacted on arrival.

Yachts must carry their original registration document, insurance policy and ship’s radio license. One member of the crew must have a radio operator’s certificate of competence. For EU boats, proof of VAT status is also required. It is also very useful to have a typed sheet containing the name of the boat, port of registry, and the crew list.

As to planning your 2022 sojourn in the EU / Schengen countries, you will need to plan your trip around your short term visa-free waiver restrictions.

The rule states that non-EU/Schengen visitors can only spend up to 90 days out of any 180 day rolling period of time in the EU without applying for a long stay visa or residency. So over the course of a year you can spent 180 days in the EU, but not all in one go, that being achieved as two sets of upto 90 days in any 180 day rolling period.

Reference as to visa details. https://eeas.europa.eu/sites/eeas/fi...er_faqs_en.pdf



Beneteau guidance titled: What you should know before buying your new boat in Europe and importing into North America https://www.beneteau.com/us/news/pit...ew-boat-europe

Enjoy your new boat and your voyage. All the best.

[goboatingnow]

Since VAT is only assessed one time on a vessel, rather than being assessed each time it is purchased as with a sales or use tax, such a boat will never again be liable for a EU-related VAT assessment by any EU member, current or future. Especially if you prefer purchasing a new boat, VAT will add significant cost (roughly 20% +/- of the full purchase price), so this may not prove sensible if you plan to sail back to your home country. However, another option is to inquire about taking formal delivery of the boat in one of the EU countries where VAT is lowest, thereby minimizing the VAT payment while still having VAT-paid status. Why would anyone choose to pay VAT? Don’t overlook the fact that, within the EU, most of the value of VAT paid on a vessel ends up being folded into the equity value of the boat. Consequently, if you plan on later selling this boat within the EU after your European cruise, much of the VAT cost will be reimbursed as part of the sale price and, meanwhile, you won’t VAT-based time restrictions on your cruising pla

While much of what you say is true , this paragraph contains errors

Vat is in essence a transaction tax , it must be “ accounted “ for on
Sale
Purchase
Export
Import

And may be paid several times throughout the course of the lifetime of the product , for example technically , I as a EU tax resident , export my boat every time I exit the EUs territorial waters and therefore vat is due when I arrive back, but I can automatically avail of the RGR exemption to not have to pay vat again , however returning back after 3 years can result in me paying vat again.

Hence there are several situations where vat can legally become due again. ( certain aspects of 2nd hand commercial resale for example )

If you are not EU tax resident you cannot avail of EU RGR , hence even if vat paid , if you sail out of EU territorial waters vat paid status is lost, you would then renter only under the temporary Admission Procedures , ie 18 month vat clock

As such it makes very little sense for a non tax resident to buy a vat paid boat given the generous TaP scheme and the “ clock “ needs only to be reset once every 18 months before a vist out too the Customs Union

Note that a VAT unpaid boat is a distinct advantage as it will also attract commercial buyers

One also that EU does not mandate vessel registration or insurance , these are solely national competencies. Ireland for example does not require registration or insurance for pleasure vessels.

Note there is no formal requirement to “ apply “ for temporary admission , if you meet the criteria , you are entitled to avail of it. Customs does not have to appraised of it. But of course it’s wise to carry evidence of the length of stay.

[MartyB]

Thanks a lot guys! This is very helpful information.

I'll need to verify for insurance but I think it does make sense to register the boat in Canada, get VAT exemption in EU and before the end of our initial 18 months, sail the boat to the Bahamas. It's the plan anyways to this... So it all makes sense!

Now I'll try to figure out the insurance part and I'll be good to go.

Thanks everyone for some very helpful knowledge! Can't wait to be on the waters...!

[Montanan]

The import duty on entry to the Bahamas is 10%. Which is much lower than for most goods imported to the Bahamas.
Reference:
https://drive.google.com/file/d/1Nal...QGBLfotoF/view

VAT is 7.5% VAT - is applicable to the sum of Value, Actual Duty, Processing Fees, Storage, Insurance, Freight, Other charges, Local landed charges
and Environmental Levy fees.

https://www.bahamascustoms.gov.bs/wp...d200120151.pdf


Reporting in at the Bahamas:
https://www.bahamas.gov.bs/wps/porta...vZ0FBIS9nQSEh/

[Montanan]

Originally Posted by goboatingnow

While much of what you say is true , this paragraph contains errors

Vat is in essence a transaction tax , it must be “ accounted “ for on
Sale
Purchase
Export
Import

And may be paid several times throughout the course of the lifetime of the product , for example technically , I as a EU tax resident , export my boat every time I exit the EUs territorial waters and therefore vat is due when I arrive back, but I can automatically avail of the RGR exemption to not have to pay vat again , however returning back after 3 years can result in me paying vat again.

Hence there are several situations where vat can legally become due again. ( certain aspects of 2nd hand commercial resale for example )

If you are not EU tax resident you cannot avail of EU RGR , hence even if vat paid , if you sail out of EU territorial waters vat paid status is lost, you would then renter only under the temporary Admission Procedures , ie 18 month vat clock

As such it makes very little sense for a non tax resident to buy a vat paid boat given the generous TaP scheme and the “ clock “ needs only to be reset once every 18 months before a vist out too the Customs Union

Note that a VAT unpaid boat is a distinct advantage as it will also attract commercial buyers

One also that EU does not mandate vessel registration or insurance , these are solely national competencies. Ireland for example does not require registration or insurance for pleasure vessels.

Note there is no formal requirement to “ apply “ for temporary admission , if you meet the criteria , you are entitled to avail of it. Customs does not have to appraised of it. But of course it’s wise to carry evidence of the length of stay.

[MartyB]

Originally Posted by Montanan

The import duty on entry to the Bahamas is 10%. Which is much lower than for most goods imported to the Bahamas.
Reference:
https://drive.google.com/file/d/1Nal...QGBLfotoF/view

VAT is 7.5% VAT - is applicable to the sum of Value, Actual Duty, Processing Fees, Storage, Insurance, Freight, Other charges, Local landed charges
and Environmental Levy fees.

https://www.bahamascustoms.gov.bs/wp...d200120151.pdf


Reporting in at the Bahamas:
https://www.bahamas.gov.bs/wps/porta...vZ0FBIS9nQSEh/

Would you have to pay a 10% import tax to the Bahamas if the boat is registered in Canada. If I sail the boat in and out multiple times of the Bahamas, does that lift the tax ?

[Montanan]

Originally Posted by MartyB

Hey guys! I need some advices.
We are new sailors and just purchased a new FP cat. The idea is we are going to take delivery in La Rochelle somewhere at the beginning on 2022 and then we plan on sailing the Med for the summer of 2022. We will then cross the Atlantic in December 2022 and bring the boat into the Bahamas where it is going to stay in a charter fleet for 3-4 years before we retire... We are Canadian citizens. We don't intend to sail the boat to Canada. We would have to pay a 15% sales tax if we did.
The plan is to sale the US east coast and the Caribbean.
So my question is where should we register the boat ? What implications goes with this ? Does it make any differences for insurance ? What about taxes ?
Any help would be appreciated. Thanks!

Originally Posted by MartyB

Would you have to pay a 10% import tax to the Bahamas if the boat is registered in Canada. If I sail the boat in and out multiple times of the Bahamas, does that lift the tax ?

You are importing your boat for placement into a charter business; it is not entering for pleasure cruising with a short term cruising permit, i.e, a temporary import.

Who will become the importer of record, you the boat owner or the charter business that brings the boat into its fleet in the Bahamas. Best check on the details as always the devil is in the details.

Note the VAT rate has been increased to 12%. Sorry for the old data that I posted earlier.

Value Added Tax (VAT) was introduced in The Bahamas in January 2015 as part of a broader reform of the tax system. The broad based consumption tax is applied to almost all goods and services that are imported, bought and sold for use in The Bahamas. Two rates of VAT are applied which is the standard rate of 12% and a zero rate of 0% for exempt goods. Goods exported to customers abroad are classified as exempt from VAT or zero rated.

Reference:

https://inlandrevenue.finance.gov.bs...tax/about-vat/


Registering a Foreign Charter
It is a requirement of The Government of The Bahamas that all foreign charters secure a licence in order to utilise Bahamian waters. Most foreign charter applications to The Bahamas are from yachts seeking to explore our beautiful seas. To accommodate these ‘sun seekers’ the Port Department has simplified the chartering process as detailed below.


Eligibility
Non-Bahamian yacht owners.

https://www.bahamas.gov.bs/wps/porta...vZ0FBIS9nQSEh/

[Montanan]

Not certain if you intend to import the boat into the USA, e.g. Florida.

Reference: US Custom and Border Patrol https://www.cbp.gov/sites/default/fi...0the%20U.S.pdf


Page 142

Boat Safety Standards
Imported boats and associated equipment are subject to U.S. Coast Guard safety regulations or standards under the Federal Boat Safety Act of 1971. Products subject to standards must have a compliance certification label affixed to them. Certain hulls also require a hull identification number to be affixed. A U.S. Coast Guard import declaration is required to be filed with entries of nonconforming boats. Further information may be
obtained from the Commandant, U.S. Coast Guard, Washington, DC 20593.

Dutiability
Vessels brought into the United States for use in trade or commerce are not
dutiable. Yachts or pleasure boats brought into the United States by nonresidents for their own use in pleasure cruising are also not dutiable.
Yachts or pleasure boats owned by a resident or brought into the United States for sale or charter to a resident are dutiable. Further information may be found in CBP’s pamphlet Pleasure Boats.

Restrictions on Use
Vessels that are foreign-built or of foreign registry may be used in the United
States for pleasure purposes and in the foreign trade of the United States. However, federal law prohibits the use of such vessels in the coastwise trade, i.e., the transportation of passengers or merchandise between points in the United States, including carrying fishing parties for hire. Questions concerning the use of foreign-built or foreign-flag vessels should be addressed to:

Chief, Cargo Security
Carriers and Immigration Branch
Office of Regulations and Rulings
U.S. Customs and Border Protection
1300 Pennsylvania Avenue, NW, Mint Annex
Washington, DC 20229


Additional reference for import broker that specializes in yachts: https://www.mcswift.com/services/marine-brokerage/