Canadians cruising a US Boat

[rogdodger1]

We are Canadians looking to buy a US registered boat and sail offshore for 3-5 years or so. Caribbean and west coast Mexico probably. We would then sell the boat on. We were just at the SSCA meeting in Melbourne Florida and several people warned us that due to the heightened security that it has become much more difficult to have a Canadian skipper clearing in and out of port on a US boat. We believe that a Canadian cannot "register" a US vessel but can only hold state title.
Could anyone be good enough to help us get to the bottom of this, perhaps someone out there has had first hand experience.
If we have to I guess we can transfer the registry to Canada but this would incur all sorts of import duties and taxes etc.
Any help would be great, Thanks.

[ModMMax]

We just went through it. We were told that owning a US registered boat as a Canadian was not an option. We hired a document processer in Florida to handle the Canadian registration for us. It was the best money we ever spent since registering a boat with Transport Canada is not easy. You can register the boat as a Canadian vessel without paying the taxes. If you bring the boat to Canada the taxes will be due. BTW, you will owe the GST and possibly a 9.5% import tariff if the boat was not built within the NAFTA agreement. The PST may also be payable. Hope this helps you.

[Faster]

We have friends that sail the Caribbean every winter on their Guadeloupe (France) purchased/Canadian registered boat. Given the large number of customs clearances required when cruising this area, I'd sure be leery of complicating these procedures.

They did not import the boat, and so have not paid taxes as indicated above. Should they do so they would be liable for GST, PST if applicable and duties (because the boat is not North American built as ModMMax pointed out).

In this "new" world we live in, I'd register the boat as Canadian - or change citizenship (NOT recommended )

[rogdodger1]

Thanks ModMMax and Faster
This is sound advice, the Document Processor is a great idea, we have a few names, thought we would go through one in Seattle, we live on Vancouver Island. Or do you think a Canadian Document Processor would be better?
You are right too Faster, wouldn't want to take the smile off the customs and excise guys face when we complicate things entering and departing.
Bit surpised that the import duty is 9.5%, we are looking at a Hylas and they are built outside NAFTA.
Again thanks, this is great

[camaraderie]

Rog...just to expand a bt on the info you've been given....
There are two ways to "own" a boat in the USA...federal documentation which is a CONDITION of most boat loans here in the states AND NOT AVAILABLE to foreign citizens.
The other way is state registration available to all and in any state. You will pay sales tax on the purchase price of the boat to the state where you register. This does you NO GOOD if you are sailing to foreign ports as they will want to see federal documentation.
So...it appears your only option is to do what Mod suggests nd register in Canada and use a Canadian lender if need be... Note also that in most states...regardless of where or how you are registered...after 90 days you will be eligible to have the tax collectors assess sales tax and/or personal propery tax on the boat. The sales tax you pay initially in some state will be credited against whatever is due in the "new" state but personal property taxes are annual fees charged by all the states from Maryland through Georgia as you head down the coast so you can't linger too long in any one place. There are a lot more subtleties to all of this and there are several extensive threads on the subject here that you can search on. Good luck.

[Zanshin]

Particularly if the boat won't be in Canada all the time, you could think about registering the yacht overseas using one of the flags of convenience. The annual fees run about US$250 and the initial cost is $1000. This gives you a registered yacht that you can even put into a foreign IBC (International Business Company) and legally hide overseas assets. Your yacht will then have a home port of "Malta" or "Gibraltar" or "Road Harbour" but otherwise be perfectly legal. And with a red-ensign registry the vessel is registered in such a way that you can also get bank loans off the boat.

[rogdodger1]

You guys are great, thanks Zanshin and camaraderie.
We also carry British (EU) passports Zanshin, if we say register in Malta and then say go to the Bahamas are we not back at the starting point with a Canadian/Brit skipper entering on a Maltese vessel or is this simpler than a Canadian on a US boat?
I think I am 90% of the way there thanks to you all.

[Zanshin]

If you have a EU passport then things are easier. You can register the vessel in the BVI and don't have to create an IBC. All that is needed is some paperwork (fees, of course), a tonnage survey and -presto- you have a red ensign registration. There are so many yachts registered out of the ports of convenience that it is seldom an issue when entering a new country. Of course, the US might now be an exception. I would check the Canadian laws, but I think that by doing the foreign registration you can avoid paying the various taxes and duties that you might otherwise have to.

You can search around the internet for information but beware of the many companies that offer to do these services for exhorbitant fees (both one-time and recurring). I can give you some names in the BVI (and Gibraltar, if I can find it) who will do this for more reasonable rates. And beware of companies that require you to create an IBC - that is not necessary and they are just out to make a profit.

Check out BVI Registry FAQs for some initial information. I am going through this process right now and am even dispensing with middlemen as I will personally walk the papers through the offices; most of the BVI registered vessels never even get close to the islands so the intermediaries are a necessary evil.

[hellosailor]

Rog, be aware that as civilians (rather than a multi-national corporation) you will be bound to/with certain rights, obligations, and privelges depending on the flag your boat is titled with and flying. These include national laws with financial obligations, repatriation rights/expenses, and the availability (or lack of it) for protections by the agents of your flag, i.e. a particular coast guard or embassy.

You *really* want to make sure of what you are getting into before you start getting wrapped up in a flag of convenience. For instance, with an EU "registration" you may become liable for value added tax (VAT) on the boat, depending on where you and it are and for how long. I'm not very familiar with VAT issues--but then again, I don't have to be. I just try to remain aware of the issues of flying my national ensign.

[Zanshin]

Roger & Hellosailor,

when you look through the yachts moored or at dock in port in the Med you will see that a very high proportion are flagged to ports that are not only distant but where the boats probably have never physically been. Or if you look at boat sales sites such as www.yachtworld.com you can see the large number of non-VAT yachts. This use of flags of convenience can save quite a bit of money in VAT and annual registration fees plus those using IBCs can limit their liability and legally hide them from their tax authority.

VAT issues only come into play in most of the EU with a foreign flagged
vessel when remaining within the EU for more than 18 months or so. Basically if you intend to remain longer than that period you need to pay VAT or ensure that you leave EU water long enough to reset the VAT clock ticking. I think that the exact number of months allowed has changed recently and that different members of the EU interpret the rules differently, but even then there are hundreds of non-VAT yachts in the Mediterannean that have been there for years. And it is true that with a red-ensign flag your vessel is part of the British Commonwealth - but I think that generally the help from a British consulate or embassy in remote foreign ports might be more easily sought than either Canadian or American. Oh, if I remember correctly in the smaller print you will find that your vessel can be commandeered in times of war by the flag holder - I can just imagine them mounting a Ma-Deuce over the windlass . The red ensign flags are Category part 1 or 2 registered which is proof enough of ownership for banks to allow liens placed on them - i.e. to secure a loan.

A starting point for a web search could be done Red Ensign Group.