American building boat in Eu...where to register?

[svbravo]

We are a couple, now cruising continuously out of US for over 8 years. We have ordered a new boat, to be launched in 1 year. Our plan is to keep cruising, out of the US for a number of years on the new boat, say 5-10. After that, we're not sure where we'll end up, but it might be US (Seattle is where we're from).

So, wondering where to flag the new boat. A few hours with Mr. Google, including CF threads, seems to indicate that, if we registered with USCG, no duty or tax of any kind would be due until the boat enters the US. At that point duty would be owed. Also, if we were to live in a marina in Seattle, say, we would need to pay the use tax to the State of WA every year.

On the other hand, if we flagged with a foreign flag, say Caymans or Jersey, we would enter the US on a "cruising permit", much as we do in any foreign country. We would get 1 year on this permit. Before expiration, we would need to clear out and in to another country, before reentering US on a new 1 year permit.

It seems like we could do this waltz indefinitely. Especially living in the Pacific NW, it's no hardship to head between US and Canada for a 15 day visit!!!

Then, when eventually it's time to sell the boat, we would need to import her. At this point the duty would be due, but it would be on the depreciated value, instead of new.

Am I correct in these assumptions? What am I missing? Any pitfalls or hidden difficulties here? Thanks!!!

[Standbly]

I'm just wondering about insurance. That might be a (small) issue.

[svbravo]

Standbly, what are your thoughts re: insurance? I admit I hadn't considered the insurance angle, but am not sure what might be the problem, since foreign flagged boats visit the US all the time. What am I missing? Thanks for any info.

[Pete7]

Does Johnny foreigner pay more for insurance when in the US, than say a local on a US registered boat? I don't know the answer but might be worth chatting to some of the insurance firms.

I was shocked how much they wanted to charge me (I'm English) for a theoretical visit to the US. Guess some folk haven't forgiven us for burning down the White House.

Pete

[valhalla360]

I assume, you would need to hold the boat in an foreign corporation to avoid import tax. Double check but I thought import duty was only like 1.5%...is the cost of maintaining a corporation and doing the dance out of country worth such a minor savings?

[hellosailor]

"I was shocked how much they wanted to charge me (I'm English) for a theoretical visit to the US."
Insurers typically consider the geographical range of your cruising grounds in their ratings. So as a Brit in the Colonies, your cruising grounds may be 2-7000 miles in extent, and that's going to cost you a bit more than your home coastal 100-200 mile range. If your broker can't politely explain that to you, you need a new broker.

For the OP, you can't just flag a boat anywhere. You may need to be a resident, or a citizen, or to set up a corporation (with licensing fees, filing fees, corporate insurance rates, etc) to do it, all depending on the laws of each nation. AND. If you are US state residents, perhaps with a driver's license and voter registration still in effect? You may find that when youre turn to the US (again, varying with state laws) you owe USE TAX on the purchase of the boat, plus penalties and interest dating back to the purchase date, not simply the date of import into your home state.
Check carefully. Check the rules in writing, don't just ask around. Some years ago a forum member (here or elsewhere) had a little problem with NY state demanding penalites and interest because he brought his boat home, 15 or 20 years after buying it, and being told that still was no excuse for not having paid the use tax when he did buy it. Never heard the outcome of that one.
And of course, you lose the scant few remaining perqs of US documentation, like waving off customs so you can deliver inbound mail to a post office on your return to the US.

[pcmm]

Originally Posted by svbravo

We are a couple, now cruising continuously out of US for over 8 years. We have ordered a new boat, to be launched in 1 year. Our plan is to keep cruising, out of the US for a number of years on the new boat, say 5-10. After that, we're not sure where we'll end up, but it might be US (Seattle is where we're from).

So, wondering where to flag the new boat. A few hours with Mr. Google, including CF threads, seems to indicate that, if we registered with USCG, no duty or tax of any kind would be due until the boat enters the US. At that point duty would be owed. Also, if we were to live in a marina in Seattle, say, we would need to pay the use tax to the State of WA every year.

On the other hand, if we flagged with a foreign flag, say Caymans or Jersey, we would enter the US on a "cruising permit", much as we do in any foreign country. We would get 1 year on this permit. Before expiration, we would need to clear out and in to another country, before reentering US on a new 1 year permit.

It seems like we could do this waltz indefinitely. Especially living in the Pacific NW, it's no hardship to head between US and Canada for a 15 day visit!!!

Then, when eventually it's time to sell the boat, we would need to import her. At this point the duty would be due, but it would be on the depreciated value, instead of new.

Am I correct in these assumptions? What am I missing? Any pitfalls or hidden difficulties here? Thanks!!!

Interesting Idea but I think you're wrong on the duty on the depreciated value. As you have to supply a bill of sale... How are you planning on showing depreciated value. Also keep in mind that on a "cruising permit" you have to constantly notify the coast guard of your whereabouts.

[boatpoker]

Originally Posted by svbravo

We are a couple, now cruising continuously out of US for over 8 years. We have ordered a new boat, to be launched in 1 year. Our plan is to keep cruising, out of the US for a number of years on the new boat, say 5-10. After that, we're not sure where we'll end up, but it might be US (Seattle is where we're from).

So, wondering where to flag the new boat. A few hours with Mr. Google, including CF threads, seems to indicate that, if we registered with USCG, no duty or tax of any kind would be due until the boat enters the US. At that point duty would be owed. Also, if we were to live in a marina in Seattle, say, we would need to pay the use tax to the State of WA every year.

On the other hand, if we flagged with a foreign flag, say Caymans or Jersey, we would enter the US on a "cruising permit", much as we do in any foreign country. We would get 1 year on this permit. Before expiration, we would need to clear out and in to another country, before reentering US on a new 1 year permit.

It seems like we could do this waltz indefinitely. Especially living in the Pacific NW, it's no hardship to head between US and Canada for a 15 day visit!!!

Then, when eventually it's time to sell the boat, we would need to import her. At this point the duty would be due, but it would be on the depreciated value, instead of new.

Am I correct in these assumptions? What am I missing? Any pitfalls or hidden difficulties here? Thanks!!!

I doubt the revenuers care where the boat is registered, they will want your their cut as soon as an american citizen with a boat hits their waters. At least that's the way it works in Canada.

If you did manage to pull it off you must realize that under a cruising license you must report to customs every time you move the boat.

[Standbly]

Originally Posted by svbravo

Standbly, what are your thoughts re: insurance? I admit I hadn't considered the insurance angle, but am not sure what might be the problem, since foreign flagged boats visit the US all the time. What am I missing? Thanks for any info.

Well, my experience with insurance companies since I left Europe to sail to the US (and back next year) have been complicated to say the least. It has nothing to do with your questions about registering your boat in a country in which you're not a resident. But you asked "what am I missing here" I just wanted to point out that yacht insurance companies are imho not easy to work with, if anything is out of the ordinary.

[Panama Red]

Just curious. Why do you need a new boat.

I understand you have a KP 46. I almost bought one, but it sold before I could get to it.

[Sand crab]

The use tax is a one time fee in Washington (I live here). Annual registration is not that big of a deal after the initial big hit. Use tax is sales tax but the question would be whether it would be calculated from the new price or the depreciated price from years of use.

I would just US doc the boat and deal with the rest down the road. Doc is pretty cheap and the 1.5% import duty when you finally get here seems very reasonable to me.

[svbravo]

I'll definitely check with our insurance carrier about this decision.

Yeah, Pete, old grudges do die hard!!! ;-). We have Brit friends who call Paul Revere's famous "Freedom Trail" ride in Boston the "Treason Trail".....always liked that!

[svbravo]

Originally Posted by Panama Red

Just curious. Why do you need a new boat.

I understand you have a KP 46. I almost bought one, but it sold before I could get to it.

Red, our KP 46 has been an absolutely terrific boat for us. We've owned her for 17 years now, and have been cruising the Pacific full time since leaving the US 8 years ago. She's always looked after us beautifully, and hopefully we've reciprocated, leaving her a much better boat than when we bought her.

But we're looking at some new cruising venues, into higher icy latitudes. The idea of an aluminum hull come into play there. Also, we were looking for a doghouse or pilot house design for inside watch standing in freezing conditions. The final big goal was to be able to see out while at anchor, instead of being down in the cave.

For us, the Boreal fits the bill on all accounts.

BTW, if you're still interested in a KP46, let me know.....I know of a beauty coming on the market in a couple of months!!!

[svbravo]

Originally Posted by pcmm

Interesting Idea but I think you're wrong on the duty on the depreciated value. As you have to supply a bill of sale... How are you planning on showing depreciated value.

Looking at the Wa State Dept of Rev site, it looks like the Use Tax is based on value when you first USE the boat in the state, so, if, say, it was a 10 year old boat by then, the depreciation could have significant effect, when compared to the "Bill of Sale" figure, which would be applied to Sales Tax if purchased from a Washington State dealer.

This from DOR website: "Sales tax is based on the selling price, while use tax is based on the value of the article when it is first used in Washington. "


As far as reporting to USCG, I found this in the "Code of Federal Regulations" under "Exemptions" to 160.204

"(5) The following vessels neither carrying certain dangerous cargo nor controlling another vessel carrying certain dangerous cargo:

(i) A foreign vessel 300 gross tons or less not engaged in commercial service."


It seems that this exempts most pleasure boats from the reporting requirement, unless it occurs under another regulation (very possible!!!). Do any foreign flagged cruisers know more about these reporting regulations when you were (or are) cruising in the US?

And, yes, the boat would need to be owned by a foreign corporation, but this is a common arrangement for vessel ownership, and not all that difficult to establish.

Thanks!

[gaucho]

As a foreign flagged vessel you report to CBP (Customs and Border Protection), not USCG. So that exemption don't apply.