FLAGS OF CONVENIENCE
FOREIGN REGISTERED VESSELS & DUTY
Once a yacht becomes part of the commerce of the United States, either by filing entry and paying duty or having been built here, it will remain part of the commerce of the U.S. until it has been “exported”.
“Exported” means…severed from the mass of things belonging
to this country with the intention of uniting it to a mass of things
belonging to some foreign country. (i.e. paying duty to another
country).
The retention of a foreign registration on a yacht that remains in
the U.S. even if sold to a non-resident, does not result in exportation.
The movement to a foreign country with the intention of returning
the yacht to the U.S. would not be an exportation, regardless of
the fact of foreign registration.
If a yacht is purchased here, it will maintain its status as part of the commerce of the United States. Documenting a yacht foreign for convenience purposes and/or taking it foreign for cruising purposes does not create an export.
For advice on whether your yacht is dutiable or not when it comes up for resale, please contact a reliable
customs broker.
FOREIGN FLAGGED BOATS OFFERED FOR SALE HERE IN THE U.S. while under a U.S. Cruising Permit.
Recently U.S. Customs “detained” several yachts in Florida which were Foreign Flagged AND offered for sale, while operating in U.S. Waters under a U.S. Cruising Permit.
The language on the Cruising Permit states that the boat cannot be offered for sale or charter, and further states that if the vessel is offered for sale or charter, the Cruising Permit becomes invalid.
On those yachts that were detained, the vessels had not made a formal entry by paying the 1.5% duty or posting bond.
At this point we are not sure what will happen to those vessels that have been detained. They are “subject to forfeiture” if the owners have indeed offered the boats for sale without the following language being added to
ALL ADVERTISING:
“NOT FOR SALE TO U.S. RESIDENTS WHILE IN U.S. WATERS”
(This includes all SIGNAGE posted on the Yacht itself by the Yacht Broker.)
PLEASE CONTACT A CUSTOMS BROKER IF YOU HAVE ANY QUESTIONS … we are more than pleased to refer you to Mr. Steele Reeder at Howard S. Reeder, Inc. 305-371-8431 or you may email him at
steele@howardsreederinc.com
IN FLORIDA, once the vessel is duty paid, the Florida Dept. of Revenue expects to receive the sales/use tax on the value of the boat, (now capped at $18,000.00). UNLESS the following occurs:
- The vessel is placed under the “Care, Custody & Control” of a Yacht Broker under a Central Listing Agreement. The owner
cannot use the vessel while it is under the Care, Custody & Control of the Broker.
OR
- The owner may stay for a period of 20 days at any dock that charges tax on the dockage fee. The clock starts ticking on the first day, and the vessel must leave Florida by the 20th day.
IMPORTANT NOTE:
- If the vessel is docked behind someone’s house, and tax on the dockage fee is not collected, (i.e.: not registered with the state of Florida with a sales tax number,) then TAX
MAY BE DUE ON THE VALUE OF THE VESSEL TO THE STATE OF FLORIDA
IMMEDIATELY.
For clarification on the Florida Administrative Code – Sales and Use Tax please see F.A.C. 12A-1.0071 Boats Temporarily Docked in Florida.
It is not our intent to give tax advice on this site, and for questions and clarification you are advised to seek “technical assistance” from the Florida Dept. of Revenue, and/or a Maritime Attorney familiar with Florida’s tax laws.
For advice on vessels situated in other states, we recommend consultation with those tax advisors.
