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ski69sail 23-04-2016 00:04

Registration in Delaware USA
 
I am interested in registering my yacht off shore in Delaware USA. My vessel is currently in New Zealand and I intend to visit Australia, Fiji and USA.

It sounds to good to be true. Cheap, easy and a good country as my registered port.

Please add your opinion and experience with registration in Delaware.

Thanks Raymond.

denverd0n 25-04-2016 05:49

Re: Registration in Delaware USA
 
I don't think it works the way that you think it works. You don't just "register" your boat in Delaware. I mean, I suppose you can, but it won't gain you anything.

You are probably confusing registering your boat with creating a Limited Liability Corporation in Delaware to own the boat.

One thing that is pretty sure is that it is not "too good to be true." There are a number of legal hoops to jump through, expenses involved, and procedures to be followed. And then whether or not there will be any benefit at all depends entirely on what your current financial situation is, and what you expect to accomplish by doing this.

ski69sail 25-04-2016 13:38

Re: Registration in Delaware USA
 
I should be more specific.. Yes first I need a Limited Liability Company and then I can register my yacht through that entity in Delaware. I was recommended this location by a person/company who specialized in "flag of convenience."

I am looking for a flag of convenience for my vessel so I can leave New Zealand waters without having to comply with the Category 1 specifications These regulations are the most strict in the world and are very expensive to comply with.They are not flexible, it is an on going expense if you choose to depart New Zealand waters on a regular basis.

I am not looking to avoid taxes or any other particular issue.

Thanks

hellosailor 25-04-2016 14:33

Re: Registration in Delaware USA
 
Raymond-
You might be able to get Delaware state registration, but when you say "flag" of convenience, state registration doesn't buy you that. You need a national "flag" and that would be US federal vessel documentation, which is available only to US citizens. In the case of corporate ownership, roughly 51% of the corporate stockholders must be US citizens to do that.
Uncle Sam is simply not going to offer the promise of a quarter million dollar SAR effort or war zone evacuation to just anyone who buys a boat. That's reserved for citizens.
Now, if you'd like to emigrate and become a US citizen...that might take a couple of years but then the rest becomes simple, doesn't it?(G)

ski69sail 25-04-2016 16:18

Re: Registration in Delaware USA
 
Yes, what you said sounds correct.

But my understanding is that there are a large number of yachts floating around Turkey that are infarct resisted in Delaware., and yes carrying an American flag.
I understand that there is not enough space in Delaware to put all the vessels that are actually registered there.

Delaware registration may only work for somebody so long as you do not leave your own country, and of course you may not want to get rescued either ??

DotDun 25-04-2016 18:23

Re: Registration in Delaware USA
 
Quote:

Originally Posted by hellosailor (Post 2106277)
Raymond-
You might be able to get Delaware state registration, but when you say "flag" of convenience, state registration doesn't buy you that. You need a national "flag" and that would be US federal vessel documentation, which is available only to US citizens. In the case of corporate ownership, roughly 51% of the corporate stockholders must be US citizens to do that.
Uncle Sam is simply not going to offer the promise of a quarter million dollar SAR effort or war zone evacuation to just anyone who buys a boat. That's reserved for citizens.
Now, if you'd like to emigrate and become a US citizen...that might take a couple of years but then the rest becomes simple, doesn't it?(G)

Not true. The corporation must managed by US citizen. The corporation can be solely owned by non-US-citizen.

hellosailor 25-04-2016 18:37

Re: Registration in Delaware USA
 
dot-
Are you talking about Delaware state registration? Or US federal documentation? The State of Delaware is not what I was talking about. Federal documentation, even for a corporate owned vessel, still requires US citizens to be the majority owners in one way or another. Notice on the application where everyone has to certify exactly that:
https://www.uscg.mil/nvdc/forms/cg1258.pdf


Of course you could lie, or simply run the ownership through a sham corporation. Lies about "Delaware (state) registration" were real popular in New England, until the other tax men started placing liens on boats in the 70's, big time.


As for the vagaries of Turkish bureaucracy and tax evasion...We've got enough "tax deniers" here to worry about on our own.(G)


Should we be Panamanian this week? Or Liberian? Decisions, decisions.(G)

DotDun 25-04-2016 18:46

Re: Registration in Delaware USA
 
Quote:

Originally Posted by hellosailor (Post 2106391)
dot-
Are you talking about Delaware state registration? Or US federal documentation? The State of Delaware is not what I was talking about. Federal documentation, even for a corporate owned vessel, still requires US citizens to be the majority owners in one way or another. Notice on the application where everyone has to certify exactly that:
https://www.uscg.mil/nvdc/forms/cg1258.pdf


Of course you could lie, or simply run the ownership through a sham corporation. Lies about "Delaware (state) registration" were real popular in New England, until the other tax men started placing liens on boats in the 70's, big time.


As for the vagaries of Turkish bureaucracy and tax evasion...We've got enough "tax deniers" here to worry about on our own.(G)


Should we be Panamanian this week? Or Liberian? Decisions, decisions.(G)

I can show you corporation papers and USCG docs. The corp. is 100% owned by foreigners and 100% managed by US citizens.

skipmac 25-04-2016 19:00

Re: Registration in Delaware USA
 
Quote:

Originally Posted by hellosailor (Post 2106391)
. Federal documentation, even for a corporate owned vessel, still requires US citizens to be the majority owners in one way or another. Notice on the application where everyone has to certify exactly that:
https://www.uscg.mil/nvdc/forms/cg1258.pdf

This was my opinion but got into this discussion a year or so ago and read this document more closely. I had to think there must be some loophole because I've seen yachts with DE hailing ports, documented but seemingly owned by non US citizens.

Read these sections and see if you agree that a vessel that is not seeking endorsement for fishing or coastwise, the corporation or LLC does not have to be US owned.

First, under corporate owned vessels.

CORPORATION (SEE SECTION M, ITEM 4 WHEN APPLYING FOR A FISHERY OR COASTWISE ENDORSEMENT)

And why would this section include an option for less than 50% if it wasn't allowed?

6. PERCENTAGE OF STOCK OWNED BY U.S. CITIZENS ELIGIBLE TO DOCUMENT VESSELS IN THEIR OWN RIGHT, WITH THE
ENDORSEMENT(S) SOUGHT ON THIS APPLICATION IN ACCORDANCE WITH 46 CFR PART 67 (SUBPART C)
LESS THAN 50% 75% OR MORE (AND, AT EACH TIER, IF APPLICABLE)
50% OR MORE: STATE EXACT 75% OR MORE (AND, AT EACH TIER AND IN THE AGGREGATE (IF FISHERY), IF APPLICABLE)
PERCENTAGE _____________



Next, under the section for LLC owned vessels.

LIMITED LIABILITY COMPANY (LLC): (COMPLETE EQUITY SECTION AND CHOOSE TYPE) (SEE SECTION M, ITEM 5 WHEN APPLYING
FOR A FISHERY OR COASTWISE ENDORSEMENT).
EQUITY INTEREST OWNED BY PERSONS ELIGIBLE TO DOCUMENT VESSELS IN THEIR OWN RIGHT WITH THE ENDORSEMENT SOUGHT IN
ACCORDANCE WITH 46 CFR PART 67 (SUBPART C)
LESS THAN 50% 75% OR MORE (AND, AT EACH TIER, IF APPLICABLE)
50% OR MORE: STATE EXACT 75% OR MORE (AND, AT EACH TIER AND IN THE AGGREGATE (IF FISHERY), IF APPLICABLE)
PERCENTAGE _____________

So I think that the US citizen ownership only applies if you're applying for various commercial endorsements like fishing or cargo.

ski69sail 25-04-2016 19:49

Re: Registration in Delaware USA
 
To Hellosailer

Just in case you did not read my post..This issue has nothing at all to do with Tax,Tax Avoidance or anything at all to do with Tax.

chuckr 26-04-2016 00:31

Re: Registration in Delaware USA
 
I am in Turkey and boy do we have a lot of Delaware boats here. We have an American here who works for a local company that takes care of the registration each year for the boats -- she has been here over 25 years and knows how the system works - and they do sail their boats all over the place - we have Delaware in every country we have been to in the Med.

hellosailor 26-04-2016 10:00

Re: Registration in Delaware USA
 
Dunno. I would presume (rashly) that as Skip suggests there may be some type of loophole or odd circumstance that can be exploited.


The US Patent Office actually gave some fellow a patent on the wheelbarrow back around 1970. Nevermind that the "prior art" had been around for a thousand years, he got the patent for it. Eventually that was declared null and void, but meanwhile, yes, the government had done something it specifically said it would and could not do.


And of course, for decades people here in the US had their "income" sent to offshore banks, and only made withdrawals by using credit cards issued by those banks. Leaving no paper trail for the IRS, no proof of income, no taxes paid on it. Of course that changed in the 90's(?) when the fed applied some pressure to those tax havens and offered limited tax amnesty to the folks who paid up back taxes Real Fast. But for decades, hundreds? or thousands got away with it.


Putting the OP in touch with whoever is corporate counsel for one of those creative businesses might be a kind thing to do. Combing through the CFR and all those other fine volumes of federal literature can be a full time job.

skipmac 26-04-2016 12:21

Re: Registration in Delaware USA
 
Quote:

Originally Posted by hellosailor (Post 2106864)
Dunno. I would presume (rashly) that as Skip suggests there may be some type of loophole or odd circumstance that can be exploited.

That is indeed rash to presume based on my suggestions. :nonono:

BUT, I decided to do something totally foolish and called the USCG documentation office in Falling Waters WV and ask. I was told that a recreational vessel can be documented even if owned by a US corporation that was not majority owned by US citizens.

hellosailor 26-04-2016 13:03

Re: Registration in Delaware USA
 
Give that man a star!


Very interesting, especially since at some time in the past, not so very long ago, they used to say 51% citizens, or 51% shares owned by citizens, in the past. I wonder when the new policy went into effect. Or, whether they were just making it up in the past?

skipmac 26-04-2016 15:54

Re: Registration in Delaware USA
 
Quote:

Originally Posted by hellosailor (Post 2107011)
Give that man a star!

Would prefer a new storm jib or maybe 250' of 5/16 G4 chain. :biggrin:


Quote:

Originally Posted by hellosailor (Post 2107011)
Very interesting, especially since at some time in the past, not so very long ago, they used to say 51% citizens, or 51% shares owned by citizens, in the past. I wonder when the new policy went into effect. Or, whether they were just making it up in the past?

Was not really familiar with past policies. Are you sure the 51% wasn't for vessels documented for commercial or fishing?

hellosailor 26-04-2016 17:28

Re: Registration in Delaware USA
 
Nope, not sure at all. Of course, one might question whether anything owned by a corporation or other business entity....isn't automatically in commercial use anyhow.

For a business entity, even "morale building" and "entertainment" are, after all, just part of the business, and that's all commercial use in the end run.

DotDun 26-04-2016 18:34

Re: Registration in Delaware USA
 
Quote:

Originally Posted by hellosailor (Post 2107200)
Nope, not sure at all. Of course, one might question whether anything owned by a corporation or other business entity....isn't automatically in commercial use anyhow.

For a business entity, even "morale building" and "entertainment" are, after all, just part of the business, and that's all commercial use in the end run.

The pertinent point to the OP's question is what the USCG deems as recreational. And yes, a foreign entity can own 100% of a US Corp/LLC that is managed by a US citizen and document a vessel under USCG rules.

ski69sail 26-04-2016 21:04

Re: Registration in Delaware USA
 
So the next question is ???

Will my EPIRB be resisted with the US coast guard ??
What is the story with my radio licence ??

All sounds to be good to be true

skipmac 27-04-2016 05:22

Re: Registration in Delaware USA
 
Quote:

Originally Posted by ski69sail (Post 2107315)
So the next question is ???

Will my EPIRB be resisted with the US coast guard ??
What is the story with my radio licence ??

All sounds to be good to be true

I just read a discussion about EPIRBs. US has different requirements than most countries (all other countries?), mandating dual frequency 406 and 121.5 MHz EPIRBs vs other countries that only allow 406. As you would guess, a dual frequency model more expensive but if I understand the 121.5 signal allows SAR to home in directly on the signal to your location. Problem is US only registers dual frequency certified for US EPIRBs and other countries will only register single channel models.

So you might have to register the EPIRB elsewhere unless you buy a US certified model.

Regarding other radio licenses, the US FCC forms do have boxes for foreign citizens to register so again my assumption will be it is allowed.

denverd0n 27-04-2016 05:46

Re: Registration in Delaware USA
 
Quote:

Originally Posted by ski69sail (Post 2107315)
All sounds to be good to be true

I think you are going to change your mind when you actually get into all of the paperwork and expenses involved. Clearly it works out to be a worthwhile proposition for a lot of people, but "too good to be true?" I don't think so.

ski69sail 27-04-2016 13:23

Re: Registration in Delaware USA
 
The cost to register a yacht in New Zealand is approximately $1000 for 5 years.

But the compliance costs for CAT 1 which is the certification to clear customs is very expensive. A friend paid $5000 to comply with the regulations. And it is a cost that is a regular compliance issue every time you want to leave the country.

Australia is even cheaper at $1500 for the life of the vessel if you are an Australian citizen. And no CAT 1 compliance required to sail off to Fiji. The only problem is Ill have to pay 10% GST (tax) on the value of the vessel as soon as it arrives in the country. No matter how short the visit.

And no it is not a cheap boat.

On The Water 27-04-2016 14:12

Re: Registration in Delaware USA
 
US reg. Where?

Quote:

Boat registration fees are standardized as $15 for one year and $40 for 3 years, irrespective of the size or type of the boat.

skipmac 28-04-2016 05:17

Re: Registration in Delaware USA
 
Quote:

Originally Posted by ski69sail (Post 2107818)
But the compliance costs for CAT 1 which is the certification to clear customs is very expensive. A friend paid $5000 to comply with the regulations. And it is a cost that is a regular compliance issue every time you want to leave the country.

I would assume that it wouldn't cost $5000 every time you leave NZ. Aren't many of the costs a one time purchase of safety gear? For example, you buy harnesses and tethers, you only have to buy them once. Same with life jackets, life rafts, pumps, EPIRBs and more.

So the first time you have a big cost but following trips you have already made the big purchases and the cost is much less?

denverd0n 28-04-2016 05:25

Re: Registration in Delaware USA
 
Quote:

Originally Posted by skipmac (Post 2108219)
Aren't many of the costs a one time purchase of safety gear? For example, you buy harnesses and tethers, you only have to buy them once. Same with life jackets, life rafts, pumps, EPIRBs and more.

All things that you really OUGHT to be buying, even if the law DIDN'T require it!

skipmac 28-04-2016 17:36

Re: Registration in Delaware USA
 
Quote:

Originally Posted by denverd0n (Post 2108225)
All things that you really OUGHT to be buying, even if the law DIDN'T require it!

Well since you bring it up, yes I do think those items would be a good idea for going offshore.

ski69sail 28-04-2016 19:20

Re: Registration in Delaware USA
 
My vessel has already had CAT 1 , I have all the required safety gear etc etc

The real issue is that once you have compliance there is a given period of time to depart the country.( two months ) If you need to return to New Zealand for some reason once you have cleared customs you will need to go through the whole process again. Or if you fail to depart for some reason you need to repeat the process

A friend spent about $5000 on compliance, It was very very time consuming and painful process.
Not something you want to go through every year or two.

Foreign registered vessels do not have any of these issues.


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