Rules for foreign flag vessels in US

Documenting a foreign built yacht should be no problem (just a bit costly), but don't be thinking of chartering or using it for commercial purposes. Bare boat charters may be an exception, but I'd consult a maritime attorney for advice before betting my boat. The law you may be looking for is called the Jones Act.

I'm not a lawyer, but I have a feeling that's a matter of lax enforcement. Maybe worth the risk with an old tub, but I'd look for word from a good lawyer before risking serious money. Any Admiralty lawyers out there with words of wisdom?

Pascal,

Have a look here.

http://www.marad.dot.gov/Programs/smallvessel/index.html

Get your information from the source.

Pascal, if you are, in a roundabout way, wondering as to the feasibility of buying a boat and then foreign-flagging as a means to avoiding Fla. sales tax, let me disabuse you as to the imagined savings.
1) You pay to set up the Cayman (as an example) corporation
2) You pay annually to maintain the corporation
3) You pay cruising fees and, upon motoring up from the Miami jurisdiction to, say, Fort Lauderdale, it will be contingent upon you to tell Uncle Sam your business.
4) You go to sell the boat one fine day. This costs. If you are somewhat unlucky, it can really cost: you paid off the mortgage some time ago and the bank mistakenly sent the Satisfaction of Mortgage to the Coast Guard. No, there is not a duplicate.
Oh, and the bank that originally held your mortgage got bought out.
The Caymanians will demand the charter from the Secretary of State allowing bank A to be bought by bank B. Someone's billable office hours are on the clock now. The paper trail of ownership is very important. The Brits dot their 'eyes' and cross their 'tees'.
Did I mention legal fees yet to sort out the mess?
Oh, yes, and the closing is dragging out to the point that the erstwhile Buyer is ready to walk, never mind sue.
The above example actually did occur to some poor unfortunate who swore, next time, he'd pay the G-D'ed 6% tax.

For stuff under a million bucks, it ain't worth all that, IMHO.

There is no mention of where the boat was built. If the boat was built in the US, but foreign flagged, it can be re-imported into the US as "returned goods."

If it was built outside of the US, but originally sold by a US dealer, duty might have been paid. If it was foreign built but purchased in the US, the duty may not have to be paid again.
It also depends where the closing was for the last owner. If US duty was paid when new, but the last closing was in a different country, the duty will most likely have to be paid again. If the last closing was more than three miles off the coast of Florida, but still in US waters, that is another situation.

A maritme attorney will give you answers for the particular situation, a documentation service will be more general.

There was a rules change last fall which does indeed allow US Documentation of your FF FB vessel.
There are a dozen marine documentation ladies (oddly, this is a Women's Only profession) between MIA & FLL and they can give you the latest expert info.

Has anyone in this thread caught on to the fact that this is very probably way more trouble than it's worth even if a little money is saved. Lawyers, banks, agents and government organizations in 2 plus countries and god forbid one document may be misplaced. If the guys with the 20 and 30 million dollar boats write "Not for sale or charter in the US" I accept that they've probably done their research better than I ever could. Like I tell my tax lady: I don't want to pay more than I have to, but I'd rather pay a little extra than have the IRS Knocking on my door.

A few points that haven't been mentioned yet:

(1) Customs' broker. A maritime attorney is highly recommended; a good Documentation lady can frequently cover some of the areas a maritime attorney would; however, a Customs Broker (and there's a very well-respected one in Miami known to most brokers) can provide answers on the duty issue without paying legal fees.

(2) When discussing foreign built vessels, don't forget that NAFTA excludes duty being required on inclusive countries (i.e., Canadian built boats do not have to have duty paid to be US flagged).

(3) For repeat buyers, the ability to have the sole asset of an offshore corp be the vessel means that the vessel can be sold and the new purchase put into the existing corp, thereby minimizing the expenses that were incurred by the 1st boat.

Although I generalize in saying that boats are usually over the $1m mark to be worth the effort or expense, I had a client go through the process on a 46' trawler last week and evidently it was worth it to him. No one needs to be looking over their shoulder, but there are numerous legitimate reasons for foreign flagging and it is done properly and frequently on less than megayachts.

Judy Waldman

I think that's an important part of this conversation which some regard higher than others. While there are the mechanics of what needs to happen in sailing from the islands, to the states, customs, paperwork and paper trails, USCG, etc. there is great value in the simple privacy of being flagged / owned offshore.

A little away from the specific topic, but never the less along the same lines, what about a Canadian buying a boat in Florida, registering it in Florida and using it in and around the U.S.? Is this done all the time? It certain would eliminate the need for cruising permits.

No problemt pay the tax.

Are you saying that if I flag my yacht in the USA then all my crew must be US citizens? How about when we're in foreign waters?

That was one of the things I've been looking forward to is having a cultural melting pot on board without a lot of ethnocentric Americans. I was looking forward to a global perspective.

If you employ people to work in the U.S. they must be citizens or have a green card or a work visa. In foreign waters you will be subject to that country's laws. You can have your melting pot. Just make sure they can legally work in the U.S. if you bring the boat here.

"Are you saying that if I flag my yacht in the USA then all my crew must be US citizens?"

Only licensed officers must be citizens.


"How about when we're in foreign waters?"

That is a flag state rule, it doesn't matter where the flag is flying.

"That was one of the things I've been looking forward to is having a cultural melting pot on board without a lot of ethnocentric Americans."

I will avoid making the obvious comment about that statement ... But, you are perfectly free to hire anyone of any ethnicity you desire, they can come from any nation on the planet, but, if they are officers on an American flag vessel they will be American citizens. The crew must be resident aliens at least, though there may be a loophole for crew hired in a foreign port for voyages between foreign ports ... check on that, don't make hiring decisions on what you read on an internet bulletin board.

If you are lucky you can find crew who are not so bigoted as to believe national origin makes them better people in some way, or even worse, believe that their national origin makes them "ethnocentric" and not worth hiring.

"In foreign waters you will be subject to that country's laws."

In foreign waters an American flag vessel is subject to American flag manning regulations.

great thread, very informative, thanks....