What flag to fly? We're buying a schooner in France

[svPersévérance]

I'm a USA citizen and my partner is a Swedish citizen.

We are buying a schooner that was built in France and is in France. VAT isn't an issue because the VAT has already been paid. It'll be registered as a private yacht as we don't intend to charter it.

We would appreciate any advice on where to register it:

If in the US, I'd have to put it in my name only and there's a 1.5% tax.

If Sweden or Poland then the schooner could stay in the EU indefinitely. That's nice but we hope to sail next year out of the EU, eventually winding up in the US via the long way home.

[Montanan]

Of issue is the ownership share between the partners of different citizenship as to being able to have the vessel flagged in their respective countries.

One may need to acquire a minority interest so that the other can claim controlling interest, or a partnership entity established.


US Coast Guard documentation center link:

https://unitedstatesvessel.us/faq/co...-requirements/

The National Vessel Documentation Center requires specific information for each application requested. According to the Code of Federal Regulations, Title 46, Volume II, for all RECREATIONAL applications, US Coast Guard Documented vessels must:

Be owned by (a) US Citizen(s) in the following manner:

Owned only by US Citizens (if not a corporation, partnership or trust)
§ 67.30 Requirement for citizen owner. Certificates of Documentation may be issued under this part only to vessels which are wholly owned by United States citizens. Pursuant to extraordinary legislation at 46 U.S.C. 12118 (Bowater Amendment) and 46 U.S.C. 12117 (Oil Pollution Act of 1990), Certificates of Documentation with limited endorsements may be issued in accordance with part 68 of this chapter to vessels owned by certain persons who are not citizens as defined in this part.

§ 67.33 Individual. An individual is a citizen if native-born, naturalized, or a derivative citizen of the United States, or otherwise qualifies as a United States citizen.

Partnership: at least 50 percent of the equity interest in the partnership is owned by citizens.

§ 67.35 Partnership. A partnership meets citizenship requirements if all its general partners are citizens, anda) For the purpose of obtaining a registry or recreational endorsement, at least 50 percent of the equity interest in the partnership is owned by citizens.

§ 67.39 Corporation. (a) For the purpose of obtaining a registry or a recreational endorsement, a corporation meets citizenship requirements if: (1) It is incorporated under the laws of the United States or of a State; (2) Its chief executive officer, by whatever title, is a citizen; (3) Its chairman of the board of directors is a citizen; and (4) No more of its directors are non-citizens than a minority of the number necessary to constitute a quorum. (b) For the purpose of obtaining a fishery endorsement, a corporation meets citizenship requirements if: (1) It meets all the requirements of paragraph (a) of this section; and(2) At least 75 percent of the stock interest in the corporation, at each tier of the corporation and in the aggregate, is owned by citizens.

§ 67.36 Trust. (a) For the purpose of obtaining a registry or recreational endorsement, a trust arrangement meets citizenship requirements if1) Each of its trustees is a citizen; and(2) Each beneficiary with an enforceable interest in the trust is a citizen.(b) For the purpose of obtaining a fishery endorsement, a trust arrangement meets citizenship requirements if1) It meets all the requirements of paragraph (a) of this section; and(2) At least 75 percent of the equity interest in the trust, at each tier of the trust and in the aggregate, is owned by citizens.


Swedish boat registry:

Reference link: https://www.transportstyrelsen.se/en...r-of-Shipping/


Swedish Register of Boats
Vessels with a length over all up to 24 meters are called boats and shall (or may) be registered in the Register of Boats, please see below.

All Swedish boats with a length over all exceeding 15 meters must be registered in the Register of Boats. Boats used commercially for tugging, towing, transport of goods or passengers, for fishing or renting to the public must also be registered, if the length of the hull exceeds 5 meters. Boats used for private use with a length over all not exceeding 15 meters may be registered at the owner's request.

Boats are considered Swedish if they are owned to an extent of more than 50 per cent by a Swedish citizen or a Swedish legal person. However, it is also possible for citizens of the EU/EEA to register their boats in Sweden, providing that the owner is a Swedish resident and the vessel normally is stationed in Sweden. Legal persons of the EU/EEA may also register vessels in Sweden, provided that the boat is part of an economic undertaking established in Sweden and the operation of the boat is managed and controlled from Sweden.

Boats with a length over all exceeding 15 meters that are normally stationed in Sweden have to be registered in Sweden even if the boat is not considered Swedish, if the owner of the boat is having his permanent residence in Sweden.

Registration may also be possible for boats whose owners do not meet the requirements above, if the owner is given permission according to the Swedish Maritime Code (1994:1009), chapter 1 section 1b. Such permission is granted by the Swedish Transport Agency if the vessel is essentially under Swedish control or if the boat owner has his permanent residency in Sweden.

Contact details
If you have any questions regarding registration of vessels in Sweden, please contact the Swedish Register of Shipping.
Phone:
+46 771 898 898 (available weekdays 10-12)

Telefax:
+46 11 182 225

E-mail:
sjofartsregistret@transportstyrelsen.se

Postal address:
Transportstyrelsen
Sjöfartsregistret
Box 502
60107 Norrköping

Visiting address:
Olai Kyrkogata 35
Norrköping


Do not know why the emoji's show up in the copied snipets.

Bon voyages.

[leecea]

You may want to check into how the flag might impact availability or cost of insurance.

[PippaB]

Originally Posted by svZiska

…If in the US, I'd have to put it in my name only and there's a 1.5% tax….

There’s a (most cases) 1.5% duty that is due if/when you import the boat into the US. You can document the boat while it is overseas just by paying the documentation fees and filling out the paperwork. The duty will only become due and payable when the boat enters the customs territory of the US (the USVI, for instance, are outside the US customs territory, Puerto Rico is inside).

Quite frankly, making sure the engine meets EPA requirements is a bigger deal for importing the boat.

The alternative is that you flag outside the US and get a cruising permit while in the US, but then you would have to play the annual renewal dance.

[Montanan]

Originally Posted by PippaB

There’s a (most cases) 1.5% duty that is due if/when you import the boat into the US. You can document the boat while it is overseas just by paying the documentation fees and filling out the paperwork. The duty will only become due and payable when the boat enters the customs territory of the US (the USVI, for instance, are outside the US customs territory, Puerto Rico is inside).

Quite frankly, making sure the engine meets EPA requirements is a bigger deal for importing the boat.

The alternative is that you flag outside the US and get a cruising permit while in the US, but then you would have to play the annual renewal dance.

A rebuild or repower of your vessel's engine may be required to meet the emission Tier specifications, if and when imported into the USA. US Customs will review the vessels propulsion system for compliance. Repowering can be a major expense.
Determine the model and year of the engine and research if it is in compliance.

[svPersévérance]

Originally Posted by PippaB

There’s a (most cases) 1.5% duty that is due if/when you import the boat into the US. You can document the boat while it is overseas just by paying the documentation fees and filling out the paperwork. The duty will only become due and payable when the boat enters the customs territory of the US (the USVI, for instance, are outside the US customs territory, Puerto Rico is inside).

Quite frankly, making sure the engine meets EPA requirements is a bigger deal for importing the boat.

The alternative is that you flag outside the US and get a cruising permit while in the US, but then you would have to play the annual renewal dance.

Thank you so much!!! I didn't know that the duty will become payable when we get back to the US. Probably take some years to get back home.

Fortunately she's got a Nanni diesel, N 4-115, that meets EU-RCD, US-EPA, BSO standards.

[svPersévérance]

Originally Posted by Montanan

Of issue is the ownership share between the partners of different citizenship as to being able to have the vessel flagged in their respective countries.

Partnership is a legal term. I'd have to form a legal entity and have that own the yacht. Or I could just own it outright, and my partner would go along with that if that were the only option.

[svPersévérance]

Originally Posted by leecea

You may want to check into how the flag might impact availability or cost of insurance.

Great point!!!!

[svPersévérance]

Bluewater Registration wrote to me that Poland flag is "grey listed... the flag will often be used for money laundering or stolen boats so the coast guard will often come to your boat to see all the papers and how you payed it."

“The Maritime Analysis and Operations Centre — Narcotics (MAOC-N), a joint US, UK and European operations centre for narcotics traffic based in Lisbon and focusing mainly on smaller vessels, has registered an increase in Polish-flagged pleasure craft suspected of carrying drugs since 2021.

While MAOC-N was monitoring 12 Polish-flagged vessels potentially linked to trafficking in 2021, that number rose to 31 in 2022 and 47 last year. Boats appear on the organisation’s radar because of intelligence tip-offs, ongoing investigations and suspicious vessel or crew movements.”

The Financial Times further notes that drug traffickers are taking advantage of a legal loophole that prevents law enforcement members from boarding Polish-flagged vessels at sea. The article states that the number of new boat registrations has rocketed from about 2,000 in Poland’s system in 2020, to almost 77,000 currently.

https://www.maritimedata.ai/post/the...s-the-atlantic

[Montanan]

A partnership is a business with more than one owner that hasn't filed papers with the state to become a corporation or limited liability company (LLC). The partnership is the simplest and least expensive co-owned business structure to create and maintain.


There are three common types of partnerships:

General partnership. You form a general partnership by agreeing to do business with one or more other people. In this type of partnership, you don't file any paperwork with the state. You and your partner(s) simply agree—usually with a written partnership agreement—to co-manage the business and take personal responsibility for the business's actions and debts.

Limited partnership. This type of partnership consists of at least one general partner who manages the business and one or more limited partners who usually only finance the business. You register a limited partnership with the state. General partners are personally liable for the business's debts. Limited partners are usually only responsible for the amount they contributed to the business.

Limited liability partnership (LLP). This type of partnership is a mix of a general partnership and a limited partnership. The partners co-manage the business and participate in the partnership's day-to-day activities. But partners are only liable for their own debts and wrongdoings, and not for their partners' actions. An LLP is a newer form of partnership that's recognized by most states. But some states only allow certain professionals (like lawyers, doctors, and accountants) to form an LLP.



Or one or the other of you could own the vessel.

There is of issue the aspect of who is skippering the vessel as to maritime law and as to custom's / immigration, for example if a non-American citizen is operating an American flagged vessel then it becomes subject to needing to clear in and out of US ports as the vessel is deemed to lose the nationality of the American flag if it is operated by someone without ties to the flag country [non-American citizen or permanent resident]. All technically very specific to the facts and circumstances of the moment and the country in which the vessels water's it is transiting. If the citizen whose flag state is being worn by the vessel is skipper then not an issue to have the non-citizen crew in this regard.

[Montanan]

As to admission for entry by the Swedish citizen upon arrival to a US port by private yacht, the Swede will need to have a B1 / B2 visa issued by the US State Department BEFORE arrival to the USA. No visa, no admittance to the USA.

Entry by private yacht requires B1 / B2 visas and is not subject to the typical ESTA or visa waiver program of arrival by common carrier airlines or cruise ships.

The Swede should apply for the B1 / B2 non-immigrant visa at the USA embassy in Stockholm, Sweden.

A B1 / B2 visa is NOT applied for or granted from within the USA or upon arrival. It is to be processed in the country of the applicant's citizenship or permanent residence. Obtain one before boarding your boat for the voyage to the USA, or the US territories, USVI, Puerto Rico.

The wait time for an appointment at the US Embassy is Sweden is exceptionally short compared to other countries, presently only 21 business days. It will take additional time to have the visa approval process to be completed after the interview appointment. Some countries the wait time is over a year or even more than two years to obtain the appointed interview.

Obtain the visa well before departure to the USA so that one does not need to return to Sweden to obtain the visa before arriving in the USA.

The Swede will be subject to the normal length of stay criteria of the issued temporary stay visa.

A B-1 / B-2 visa is a non-immigrant visa that allows foreign nationals to travel to the United States temporarily for business (B-1), tourism (B-2), or a mix of both (B1/B2). This visa category is widely used for brief visits to the U.S. B visas are typically valid for up to 10 years from the issue date, and travelers to the U.S. can stay up to 180 days, with the option to return to the U.S. again after that time.

A maximum of 6 months may be obtained for any B-1 / B-2 entry, with the possibility for extensions within the U.S. in qualifying cases. The exact duration varies per visa holder. Sometimes B1 / B2 visas are issued with shorter than 180 permitted duration of stay, subject to the discretion of the US State Department personnel.

The B1 / B2 visa is a multiple-entry visa, which means you can use it to enter the U.S. more than once. There’s no set limit to the number of times you can visit the U.S. in a year, and it depends on the specific circumstances and discretion of the CBP officers who review your case each time you enter.
One may be denied reentry particularly if the reentry is a short period of time from one's departure. The reentry allowance loophole is subject to curtailment and is never assured, but residents of Sweden are not considered to be persons that will be likely to overstay their visas, so one can have confidence that if you leave within the visa requirements and then return after a reasonable period of time elsewhere or back in Sweden that you will be well received and welcome back to the States.

It’s important to remember that the B1 / B2 visa is intended for temporary, occasional visits for business, tourism, or medical treatment. It’s not meant to be used for living long-term in the U.S. or spending the majority of your time in the country.


Depending on the type of nonimmigrant visa you have, you may be able to extend your stay in the U.S. Learn if you qualify and how to file for an extension.
https://www.usa.gov/extend-visa

How to extend your B2 tourist visa
If you are visiting the U.S. as a tourist with a B-2 visa, you may file for an extension with Form I-539. You must also:

Include your original Form I-94, which is the record of your arrival and departure dates
Explain:
The reason for your request
Why your extended stay would be temporary
What arrangements you have made to depart the U.S.
What effect your extended stay may have on your employment and residency in your home country
How to extend other nonimmigrant visas
Not all nonimmigrant visa categories are eligible for an extension.

https://www.uscis.gov/visit-the-unit...tend-your-stay

A request for an extension of stay (EOS) is generally filed on a Petition for a Nonimmigrant Worker (Form I-129) or Application to Extend/Change Nonimmigrant Status (Form I-539), depending upon the nonimmigrant classification the petitioner or applicant seeks to extend. The instructions for Form I-539 and Form I-129 provide detailed information regarding who may file each form. Supplemental Information for Application to Extend/Change Nonimmigrant Status (Form I-539A) or Petition for a CNMI-Only Nonimmigrant Transitional Worker (Form I-129CW) may also be filed, where applicable. If you remain in the United States longer than authorized, you may be barred from returning and/or you may be removed (deported) from the United States. Check the date in the lower right-hand corner of your Form I-94, Arrival-Departure Record, to determine the date your authorized stay expires. We recommend that you apply to extend your stay at least 45 days before your authorized stay expires.

You may apply to extend your stay if:

You were lawfully admitted into the United States with a nonimmigrant visa;
Your nonimmigrant visa status remains valid;
You have not committed any crimes that make you ineligible for a visa;
You have not violated the conditions of your admission; and
Your passport is valid and will remain valid for the duration of your stay.
You may not apply to extend your stay if you were admitted to the United States in the following categories:

Visa Waiver Program;
Crew member (D nonimmigrant visa);
In transit through the United States (C nonimmigrant visa);
In transit through the United States without a visa (TWOV);
Fiancé(e) of a U.S. citizen or dependent of a fiancé(e) (K nonimmigrant visa); or
Informant (and accompanying family) on terrorism or organized crime (S nonimmigrant visa).

Be sure that your passport is not subject to expiration within 6 months of arrival to the USA. Renew your passport so that it has many years of validity and your visa is honored and not shortened.

[svPersévérance]

Originally Posted by Montanan

As to admission for entry by the Swedish citizen upon arrival to a US port by private yacht...

Fortunately my partner has permanent residence status in the US, which unfortunately doesn't qualify for part ownership according to the USCG Documentation Center.

[svPersévérance]

Originally Posted by Montanan

General partnership. You form a general partnership by agreeing to do business with one or more other people. In this type of partnership, you don't file any paperwork with the state. You and your partner(s) simply agree—usually with a written partnership agreement—to co-manage the business and take personal responsibility for the business's actions and debts.

This from the USCG Documentation Requirements:

Partnership: at least 50 percent of the equity interest in the partnership is owned by citizens.
§ 67.35 Partnership. A partnership meets citizenship requirements if all its general partners are citizens, and (a) For the purpose of obtaining a registry or recreational endorsement, at least 50 percent of the equity interest in the partnership is owned by citizens.

Sounds complicated. I'd rather not go that route.

[CarlF]

The easiest thing is just to leave it Swedish flagged and get a cruising permit when you arrive in the US. These permits are free and good for one year. You can renew them each year by leaving the US for 15 days.

Your VAT paid status will eventually expire if you are out of the EU for a number of years (3?) but that likely can’t be helped given your plans.

If you stay in the US you can import and pay the 1.5% duty at any time and stop doing the cruising permits. There’s no requirement that you CG document. You can register and title with a state. Most don’t have any citizenship requirements for boat titles do you could jointly register. You just would have to place the state numbers on your bow.

If you decide to go the CG route it is by far the simplest to just own the boat as an individual (you). LLCs and partnerships are an advantage only if you are running the boat as a business and even those advantages are less than most imagine. There’s no tax advantage. And no liability protection if you are on the boat when the accident happens (since any intelligent lawyer will sue both the partnership and you as an individual).

Whatever you do, insurance will be an issue. Most US marinas/boatyards require $1M liability insurance but your current insurance company can provide that. Getting a US insurance company to insure your boat is likely to be more expensive and difficult than continuing with your current carrier since US companies do not like insuring old boats. Another reason to keep the Swedish flag. If for some reason you don’t want to keep the Swedish flag, consider flagging in the Marshal Islands. The flag used by most US superyachts. Very inexpensive. No duty. Not a gray flag. Easy to do online.

[svPersévérance]

Originally Posted by CarlF

The easiest thing is just to leave it Swedish flagged .

it currently has a French flag and keeping it so is not an option.