Tax on Boats?

[goeasy123]

We're currently in the EU. We want to sail in the Caribbean and east coast US and/or the Pacific. We also want a change of boat. We figure we can sell our EU VAT paid boat in the EU and buy the boat we want on the 'other side'.


What's the tax position on used yachts on the 'other side'?

[redneckrob]

Originally Posted by goeasy123

We're currently in the EU. We want to sail in the Caribbean and east coast US and/or the Pacific. We also want a change of boat. We figure we can sell our EU VAT paid boat in the EU and buy the boat we want on the 'other side'.


What's the tax position on used yachts on the 'other side'?

Tax on boats purchased in the U.S. are a state based sales tax. They range from 0% in Delaware to 6% in FL to 5% in MD, but generally will be significantly less than the VAT you're used to. Many states also have a maximum you have to pay that kicks in if you're going above $250-$300k.

[goboatingnow]

Clearly of course you can’t bring such a boat back into the EU without incurring Vat

[sailingabe41ds]

In California it could be as high as 10.75%. Unlike the VAT tax every time the boat is sold the new owner pays a sales tax...so it is not a one time tax. Add to that there is a yearly user tax based on the vallue of the boat. In California it comes out to 1.1 to 1.2% depending where you are living by the time they add state..city...all other local taxes. Other states may be lower or higher...I do not know.
Finally..your sales tax is based on your state residency not boat location.
Abe

[Cheechako]

You wont need to pay sales tax. In most states , you have 90 days to get out of the state it's in.
I bought a boat in Annapolis, moved to Florida after 3 months. Stayed in Florida for 3 months and went to the Caribe for a couple years. Sold the boat back in Florida. Never did have to pay sales tax anywhere.
States dont charge tax immediately for out of state residents. You sign a form stating you are moving it out.

[goeasy123]

Thanks all. That's really useful.


I won't be staying in any one state for more than 90 days. When I come back to Europe I can sail, without paying VAT, under the Temporary Importation rules.

[goboatingnow]

Originally Posted by goeasy123

Thanks all. That's really useful.


I won't be staying in any one state for more than 90 days. When I come back to Europe I can sail, without paying VAT, under the Temporary Importation rules.

As long as you are not EU tax resident or intend to be and you can prove it. This is doubly true if you hold EU passports. Simply being out of the EU for any length of time will not undo your tax residency.

[goeasy123]

Originally Posted by goboatingnow

As long as you are not EU tax resident or intend to be and you can prove it. This is doubly true if you hold EU passports. Simply being out of the EU for any length of time will not undo your tax residency.

I'm tax resident in the UK and have a British passport. By virtue of the Good Friday Agreement and being born in Northern Ireland I'm an Irish, and therefore and EU, citizen.


Simply being an EU citizen does not impact the ability to use TI rules. You could hold only an EU passport, but be tax resident and live in 3rd country and use TI rules in the EU.



The key term in the directive is 'established'. There isn't a definition of this, but having your primary home, and paying taxes exclusively in a 3rd country is clearly 'established'.

[tamicatana]

In the US, EACH STATE has different laws, and the thing to do is contact the state of interest/where you intend to go

I expect it is the same for the various sovereign countries in the Carib

Contact the source.

[Fishigan]

I have seen a couple people make the comment about a "90 Day Rule". I want to see that in writing somewhere. I have made a lot of vehicle, RV, camper and even boat purchases in other states, I live in Michigan, and 100% of the time the state of Michigan collects taxes. You have to register the boat somewhere and from what I have found you register in the state your drivers license and mailing address are for. Which is why I couldn't register the boat I purchased in Colorado in Colorado but rather had to do it in Michigan where they collect 6% of the sale price... for everything.

[Fishigan]

The information on the State of Florida's website states that a boat over 5 net tons of admeasurment can remain for 90 days if a decal is purchased AND then within 90 days of removal from the state of Florida you have to provide proof that you registered the vessel in another state or you are liable for the Florida sales tax. If the vessel is under 5 net tons admeasurement you have 10 days. And as a bonus.... "A purchaser who attempts to evade tax by submitting a fraudulent affidavit is subject to the tax due, interest, and a mandatory 200% penalty (according to section 213.29, Florida Statutes). The purchaser is also subject to a fine of up to $5,000 and up to five (5) years in prison."

[goeasy123]

Originally Posted by Fishigan

The information on the State of Florida's website states that a boat over 5 net tons of admeasurment can remain for 90 days if a decal is purchased AND then within 90 days of removal from the state of Florida you have to provide proof that you registered the vessel in another state or you are liable for the Florida sales tax. If the vessel is under 5 net tons admeasurement you have 10 days. And as a bonus.... "A purchaser who attempts to evade tax by submitting a fraudulent affidavit is subject to the tax due, interest, and a mandatory 200% penalty (according to section 213.29, Florida Statutes). The purchaser is also subject to a fine of up to $5,000 and up to five (5) years in prison."

What if you're buying a boat in Florida for export from the US and you're not a US citizen or resident in the US?

[redneckrob]

Originally Posted by goeasy123

What if you're buying a boat in Florida for export from the US and you're not a US citizen or resident in the US?

Then you can send them proof of registration in whatever country you exported the boat to, or if you never plan to return to the U.S. as anything but a visitor take the risk of just ignoring the the requirement because they won't be able to enforce it wherever you are.

The office that enforces this is both very diligent and quite reasonable in my experience. I fell into their crosshairs at one point but they accepted my explanation without any drama.

[denverd0n]

Originally Posted by sailingabe41ds

Add to that there is a yearly user tax based on the vallue of the boat.

Only true in some states. Florida, for example, has no annual property tax on boats. You do have to register the boat, if you keep it here, but that is a very modest fee, and is based on the boats length.

Originally Posted by sailingabe41ds

Finally..your sales tax is based on your state residency not boat location.

Most usually, sales tax is based on where the boat is sold, not where you live. As mentioned before, if you move the boat from the state in which it was sold within a certain amount of time, then you do not have to pay sales tax to that state (though you may very likely have to pay tax to the state that you move it to).

[Fishigan]

Here is the link to the Florida Department of Revenues information on Sales And Use Tax On Boats. https://floridarevenue.com/Forms_lib...t/gt800005.pdf