[PUP] Offshore Registration

[Sonaia Maryon-Davis]

I have been an owner of trust companies for 25 years and at one time
my group had offices in Gibraltar, Jersey, Bermuda, Ireland,
Mauritius, Cyprus, Brunei and the Netherlands and Netherlands
Antilles. The decision on whether to register a boat in a so-called
offshore jurisdiction depends on your nationality and your cruising
plans as well as the size of boat.  In the EU, we have seen measures
taken against offshore registration where a primary driving force was
avoidance of sale tax (UK it's called VAT, Germany call it
Mehrwertsteuer - it all stands for value added tax) which is typically
around 15%-20% depending on the country.  If you have use an offshore
company and don't pay VAT, there is a time restriction on how long you
may use the boat in EU waters and there are use restrictions such as
no chartering.  The one thing about boats is they lose value over time
so there are no capital gains tax issues.  In the EU some countries
have wealth tax and again using a company may lower wealth tax.

If you are a US national (or green card holder) and your boat will be
used in US waters much of the time, unless the value is over $5
million there is no real benefit in registering through an offshore
company.  Sure, it is a way of flying a different flag where there may
be hostility towards US people but that is an extreme case and I doubt
that you would want to ever visit such a country.

On insurance, I don't think an offshore company has any meaningful
benefit because the insurance company will look at your experience and
qualifications and through the corporate entity.  You are better to
search around and find an insurer.  If necessary, invest in becoming
more qualified to satisfy the insurer.

And I would query using an offshore company when an onshore company
may be a lower cost solution.  Boats do not operate at a profit so an
onshore company would not be liable to tax and could reclaim VAT if an
EU company.  For example, a UK, Irish, Cypriot or Malta company (all
part of the EU and within the Customs Union - i.e. subject to VAT)
would almost certainly be a superior solution.  Also you might choose
a Swiss company.  It is more expensive to form and subject to stamp
duty at 1% on its capital (but you can lend much of the money into the
company) but it is a good flag to fly.  Onshore companies may get
better treatment from insurers too.

I hope the above is helpful.
Chris (Goleen)



On 1/17/07, Paul Goyette <paul@whooppee.com> wrote:
> In addition to the need to obtain a cruising permit to be in US waters,
> you have an additional issue to deal with when the vessel is owned by an
> offshore company.  Basically, you can't sell the vessel in the US!  This
> is clearly noted on your cruising permit in the fine print...
>
> If you even list the vessel with a broker, and/or advertise it, and/or
> show the vessel to prospective buyers, you might become immediately
> liable for various taxes and import fees (duties, etc.) EVEN IF you end
> up not selling the vessel!
>
> Paul Goyette
> former owner of the 103' Lloydship "Southern Cross II"
> Documented (at that time) in St. Vincent and the Grenadines
> Operated in the San Francisco Bay Area
> Sold in Ensenada, Mexico
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