Foreign Flagged Boat US Citizen buyer requirements - SailNet Community
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post #1 of 12 Old 10-29-2018 Thread Starter
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Foreign Flagged Boat US Citizen buyer requirements

What are the pros/cons and "nice-to-haves" of reflagging a boat from foreign flag to USA flag when purchasing? It is required, or can it remain an English flagged boat owned/operated by US Citizen? Will that impact Customs/Check-In/Exit etc. other issues?

I am US Citizen.
Buying a foreign flagged boat (England), VAT paid.
Purchasing in Grenada.
The boat will leave Grenada but will remain in the Caribbean.
There are no plans to Import boat into US or USVI.
It will be resold in 12 months (up to 18 months max) when we head back to the states and get our jobs back.

Boat financing with a US Bank does require USGC documentation. Assuming no bank financing, are there any other benefits and advantages or legal requirements to reflag the boat?

Thoughts?
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post #2 of 12 Old 10-29-2018
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Re: Foreign Flagged Boat US Citizen buyer requirements

If it will never be in the US, I can’t think of an advantage to flagging in the US. What requirements or taxes there may be to flag it elsewhere are a different story. Many mega-yacht owners will flag their boat outside the US to avoid taxes. The downside to doing so is having to operate under a cruising permit, when one does want the boat in the US and being forced to remove it when the permit expires. (6 months ?)


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post #3 of 12 Old 10-29-2018
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Re: Foreign Flagged Boat US Citizen buyer requirements

Last I tried, you cannot document a foreign manufactured vessel. However, like in most things, there was a loophole. If over 50% of the vessel's equipment, such as engines and generators, then you may be able to get an exemption. It will (did) require a lot of back and forth with the CG, but I did get it done.
This probably will include paying import duty, and with the new regs, you need to see if that makes importing a foreign flagged vessel economical these days.
Good luck.

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post #4 of 12 Old 10-29-2018
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Re: Foreign Flagged Boat US Citizen buyer requirements

You would have to pay some dough and create a British corporation to own your boat, because you cannot transfer the ownership to yourself if you aren't a British citizen.

(Just went through this - bought a Brit-flagged boat, re-flagged to Canada - dunno about the US but no import duties payable until arrival in Canada, which is scheduled for ... never)

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post #5 of 12 Old 10-29-2018
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Re: Foreign Flagged Boat US Citizen buyer requirements

Quote:
Many mega-yacht owners will flag their boat outside the US to avoid taxes.
Unfortunately this is not the reason most mega-yachts fly foreign flags. It's because of a law passed in 1920. Yachts over a certain tonnage must be classified as commercial vessels not recreational. Trump signed a law that changed that. You can read it here:

https://www.tradeonlytoday.com/indus...-american-flag

You will now see more mega-yachts with US flags.

As far as the OP, are you going to USGC document or not?
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post #6 of 12 Old 10-29-2018
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Re: Foreign Flagged Boat US Citizen buyer requirements

Interesting article on the 300 gross ton issue. However, there is no doubt that boat’s are flagged offshore to avoid sales taxes too. Especially, when their program is to be in the States in the summer and the islands in the Winter anyway.


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post #7 of 12 Old 10-29-2018
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Re: Foreign Flagged Boat US Citizen buyer requirements

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However, there is no doubt that boat’s are flagged offshore to avoid sales taxes too.
You are right about that. I just watched a youtube video about a couple who bought a 40'-something catamaran in Florida and left before the 90 day requirement to avoid the FL sales tax and registration...........

So not just mega-yachts. However, if, you say, maybe, owned an 145' yacht and wanted to park it, full time, in your backyard in Miami Beach you can now do so with an American flag.............
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Re: Foreign Flagged Boat US Citizen buyer requirements

[QUOTE=capta;2051560892]Last I tried, you cannot document a foreign manufactured vessel.

This is not correct. You can US document a foreign built vessel but it will be endorsed for recreational use only. If you want a Coastwise endorsement, then you need a Jones Act waiver. My vessel was built in France and there is very little on it that is from the US. The CG issued US documentation based on the original French document.

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post #9 of 12 Old 10-30-2018
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Re: Foreign Flagged Boat US Citizen buyer requirements

Vaguely, I think it is Title 46 of the USC that enumerates all the obligations and benefits of US vessel documentation. They've shrunk over the years.

And, your vessel will have to be equipped and operated to the safety standards and other regulations of the flag state. Your insurer may also have some questions or constraints.
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post #10 of 12 Old 11-01-2018
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Re: Foreign Flagged Boat US Citizen buyer requirements

Dumb question- What does it mean to have the coast guard "Document" a boat?
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