Buying Yacht as non-US resident - help !

[Montanan]

Originally Posted by AndrewA2

Ruling out US Flagging (documenting etc)

Tempted by BVI/Jersey Corp and buy the boat through that. Then doing the Cruising Permit dance those times it would be in the US .
Just trying to understand if VAT would be due when hitting EU waters or just UK waters? (Assuming thats would be the only time it would be due ?)

Suggestions and thoughts most welcome !!

With Brexiting and its finally resolution needing to be negotiated, you could easily be faced with VAT being due if you import it into the EU and also again when you import it into the UK, depending on your residency and whether you are only temporarily importing the boat into the respective countries.

Don't count on there just being a once and done on VAT like there is when the UK was in the EU. The Brits should not expect to be granted any preferential VAT considerations upon importation of any and all goods, and / or of services post Brexit transition period. You can hope for better but don't plan for better.

At best with a hard Brexit you should hope for just temporary waiver of VAT similar to a US boat arriving into the respective water ways. Wherein the vessel must depart within a set period of time to avoid VAT. Ditto as to import customs duties. It could become a very large expense, similar to importing a US boat into Canada.

[iabmatos]

I was wondering... with so many subtleties about titling, registration, taxes, insurance, financing and all, how one buyer can be sure about buying a boat from the actual owner and 100% sure that there are no limitations or restrictions for transfering the title from the seller to the buyer. Say, the boat is in the BVI, with a Jersey's flag, from a German citizen living in Florida... Looks like hell.

[Montanan]

Originally Posted by iabmatos

I was wondering... with so many subtleties about titling, registration, taxes, insurance, financing and all, how one buyer can be sure about buying a boat from the actual owner and 100% sure that there are no limitations or restrictions for transfering the title from the seller to the buyer. Say, the boat is in the BVI, with a Jersey's flag, from a German citizen living in Florida... Looks like hell.

As with anything you purchase you can't be certain that the seller actual or can convey clean title, but with a boat there can be far greater exposure due maritime liens.

Caveat Emptor applies. As a buyer in your contract for purchase you should have clear and detailed representations and covenants from the seller such as to be able to have them contractually obligated if any claims arise after purchase but those are only as good as ones ability to enforce such and the seller to make good.

As to titlings and transfers of titlings recognize that they are attestments of ownership, they are not in fact proof of ownership. They provide for a means of providing notification of liens and encumbrances and the prioritization thereof, but are not all inclusive. There can be obligations and restrictions that are not included in the various national and state titling registries.

On high value purchases, one should consider purchasing title insurance to provide you with financial safeguards of ownership value. It being almost mandatory in the USA to acquire title insurance when you purchase Real Property else the financing company will not close their loan at time of purchase or refinance.

[AndrewA2]

Thanks for all the great info !!!!!!!

Clearly this is a very complex scenario with lots of options.

Agreed: Who knows what happens with Brexit!

Understand I cannot US flag, and as i dont have long term plans to keep boat in the US that doesnt make much difference. Similarly have no plans to take boat to UK, so not worried there.
Happy to get cruising permits for all countries US/EU/rest of world as needed

Right now it sounds like the best/cost effective options will be to buy and register/flag through Jersey. Would i need a LTD co. there or do it individually ?

[AndrewA2]

I should add that the plan is to buy the boat outright, so not looking for bank loans etc.

Been reading some more... Sounds like Jersey is grey/black listed for tax avoidance. As such a magnet for customs... Curious if anyone has some first hand experience/knowledge on this?

[Montanan]

Originally Posted by iabmatos

I was wondering... with so many subtleties about titling, registration, taxes, insurance, financing and all, how one buyer can be sure about buying a boat from the actual owner and 100% sure that there are no limitations or restrictions for transfering the title from the seller to the buyer. Say, the boat is in the BVI, with a Jersey's flag, from a German citizen living in Florida... Looks like hell.

You have listed four jurisdictions of relevance, and you have forgotten where the boat may have been [say a repair yard in some port, a marina slip or on the hard storage site, rental fee that is unpaid], a replacement part vendor, e.g., a sailmaker, a engine mechanic, an electronics equipment supplier], where it may have been purchased, where it may have been financed, where it is insured, where it may have been involved in a damage / tort claim, where the sale transaction is occurring and where delivery is occurring, where crew may have been hired, taken aboard or debarked. The more jurisdictions that the owner and the boat have association with the more potential jurisdictional claims and laws that could apply. Not hell just more complex. A maritime lien could apply almost everywhere except where the boat or the owner has not had association at one time or other.

What Is a Certificate of Title?
A certificate of title is a state or municipal-issued document that identifies the owner or owners of personal or real property. A certificate of title provides documentary evidence of the right of ownership mainly for real estate, but also personal property [vehicles, planes, boats]. Note it only provides documentary evidence of ownership, it does not provide proof of ownership, as with all items of evidence, it may only be worth the paper it is written on. Proof of ownership is adjudicated
in courts where the preponderance of evidence becomes a deciding factor.

How Certificates of Title Work
Certificates of title can apply to any type of property that has a title, particularly real estate and vehicles. The owner can assume title once their contractual and financial obligations are cleared.


Information on the certificate of title includes the name of the owner and information about the property. For instance, a vehicle's certificate of title will contain the owner's name and address, as well as the vehicle identification number (VIN).

In the world of real estate, the title embodies the right or evidence of the right of ownership of real property. For all involved parties to have an accurate assessment of ownership, public record-keeping is necessary as it provides legal and public notice regarding an entity’s interest in a specific piece of property. This public paper trail allows parties to protect their interests against any third-party claims.

During the sale of a property, the owner ordinarily guarantees to the buyer that the title being conveyed is free and clear of anyone else’s claims, or at least lists the encumbrances that will be transferred to the new owner. A part of that process is demonstrating proof of ownership through means of a certificate of title. The certificate of title, therefore, is a statement of opinion that a title company or attorney believes the property is owned free and clear—based on researching available public records. Public records normally list any encumbrances on the property, such as liens or easements.


When issued for real property—such as land or a house—by a title insurance company, the certificate of title is a statement of opinion on the status of the title, based on a thorough examination of specified public records.

Non-Real Estate Certificates of Title
Certificates of title are also issued for vehicles—automobiles, buses, motorcycles, motor homes, trailers and trucks, aircraft, and watercraft, and are often called pink slips. These are issued by a designated state agency to identify the owner of the vehicle in question. Any liens or outstanding loans are identified on the certificate of title.

A lender will often hold the title until the obligation has been satisfied, at which point the lien is released and the certificate of title will be sent to the owner. Take automobile loans, for example. If you purchase a new SUV, and the dealer finances your loan, it will hold the title until you make your last payment. The title is transferred into your name once the loan is paid off completely.

Guarantee of Ownership
A certificate of title is not a guarantee of a free and clear title. There may be unrecorded encumbrances and liens, incorrectly recorded information, or fraudulent activity that are simply unknown. For such reasons, title insurance is purchased to protect the seller from any claims arising from prior or unknown unrecorded or fraudulent activity. Title companies provide certificates of title to lenders that require these documents prior to approving mortgage loans.

[Oceansailor]

Originally Posted by Montanan

You have listed four jurisdictions of relevance, and you have forgotten where the boat may have been [say a repair yard in some port, a marina slip or on the hard storage site, rental fee that is unpaid], a replacement part vendor, e.g., a sailmaker, a engine mechanic, an electronics equipment supplier], where it may have been purchased, where it may have been financed, where it is insured, where it may have been involved in a damage / tort claim, where the sale transaction is occurring and where delivery is occurring, where crew may have been hired, taken aboard or debarked. The more jurisdictions that the owner and the boat have association with the more potential jurisdictional claims and laws that could apply. Not hell just more complex. A maritime lien could apply almost everywhere except where the boat or the owner has not had association at one time or other.

What Is a Certificate of Title?
A certificate of title is a state or municipal-issued document that identifies the owner or owners of personal or real property. A certificate of title provides documentary evidence of the right of ownership mainly for real estate, but also personal property [vehicles, planes, boats]. Note it only provides documentary evidence of ownership, it does not provide proof of ownership, as with all items of evidence, it may only be worth the paper it is written on. Proof of ownership is adjudicated
in courts where the preponderance of evidence becomes a deciding factor.

How Certificates of Title Work
Certificates of title can apply to any type of property that has a title, particularly real estate and vehicles. The owner can assume title once their contractual and financial obligations are cleared.


Information on the certificate of title includes the name of the owner and information about the property. For instance, a vehicle's certificate of title will contain the owner's name and address, as well as the vehicle identification number (VIN).

In the world of real estate, the title embodies the right or evidence of the right of ownership of real property. For all involved parties to have an accurate assessment of ownership, public record-keeping is necessary as it provides legal and public notice regarding an entity’s interest in a specific piece of property. This public paper trail allows parties to protect their interests against any third-party claims.

During the sale of a property, the owner ordinarily guarantees to the buyer that the title being conveyed is free and clear of anyone else’s claims, or at least lists the encumbrances that will be transferred to the new owner. A part of that process is demonstrating proof of ownership through means of a certificate of title. The certificate of title, therefore, is a statement of opinion that a title company or attorney believes the property is owned free and clear—based on researching available public records. Public records normally list any encumbrances on the property, such as liens or easements.


When issued for real property—such as land or a house—by a title insurance company, the certificate of title is a statement of opinion on the status of the title, based on a thorough examination of specified public records.

Non-Real Estate Certificates of Title
Certificates of title are also issued for vehicles—automobiles, buses, motorcycles, motor homes, trailers and trucks, aircraft, and watercraft, and are often called pink slips. These are issued by a designated state agency to identify the owner of the vehicle in question. Any liens or outstanding loans are identified on the certificate of title.

A lender will often hold the title until the obligation has been satisfied, at which point the lien is released and the certificate of title will be sent to the owner. Take automobile loans, for example. If you purchase a new SUV, and the dealer finances your loan, it will hold the title until you make your last payment. The title is transferred into your name once the loan is paid off completely.

Guarantee of Ownership
A certificate of title is not a guarantee of a free and clear title. There may be unrecorded encumbrances and liens, incorrectly recorded information, or fraudulent activity that are simply unknown. For such reasons, title insurance is purchased to protect the seller from any claims arising from prior or unknown unrecorded or fraudulent activity. Title companies provide certificates of title to lenders that require these documents prior to approving mortgage loans.

Montana. You are a wealth of information. Let me come with some follow up questions.

- A green card holder ( not citizen ) that buys a yacht in USA can only register the yacht in the state it is used.

What flag should he fly? USA or the flag of his citizenship?

If a green card holder decides to flag the boat in his country of citizenship he has to obtain a one year cruising permit if he takes it to USA. But he does not have to pay user or sales tax in the state the boat is used?

If above is true that puts him in a better situation than a US citizen that have to pay taxes. That does not sound fair?

[Montanan]

Originally Posted by Oceansailor

Montana. You are a wealth of information. Let me come with some follow up questions.

- A green card holder ( not citizen ) that buys a yacht in USA can only register the yacht in the state it is used.

What flag should he fly? USA or the flag of his citizenship?

If a green card holder decides to flag the boat in his country of citizenship he has to obtain a one year cruising permit if he takes it to USA. But he does not have to pay user or sales tax in the state the boat is used?

If above is true that puts him in a better situation than a US citizen that have to pay taxes. That does not sound fair?

Not being a citizen of the USA, USA flagging of your vessel is not a privilege you can garner. You could proceed with out flagging your vessel and just register it in the State that the boat resides in, but just having a State register vessel does not provide the vessel with an internationally treaty recognized nationality and the benefits of such nationality.

Ha, ha, ha. Fairness and taxes now that is a subject that can become quite unsuitable for discussion on the CruisersForum. Tends to involve too much Politics. Poly meaning many, and tics, meaning blood sucking parasites.

But so long as the discussions stays directed To The Facts and applies to boats and boat owners then the subject can be of great substance relevance to the forum. One just needs to be conscious and respectful to maintain appropriate Forum Decorum.

Begin with a definition of fair: Definitions being of debate.

An example.

Adjective.

in accordance with the rules or standards; legitimate.

Countries agree to reciprocity in agreements to allow for their flagged boats to enter other countries without incurring unreasonable fees and bureaucratic restrictions. [Not Unreasonable, typically meaning Not Unfair]. In the USA, our Federal government of our Union of States has been accorded certain powers by the States, which States have in turn been enumerated powers from the People. One of the powers that has been Federalized is the power to engage in agreements and treaties with Foreign Countries. States respect the Foreign Flagging of vessels because the Federal government respects the Foreign Flagging.

So yes, State legislatures have expressly passed laws and State regulators have proscribed regulation availing foreign flagged vessels with waivers for certain obligations including State sales / use taxes, excise taxes, property taxes, etc. States do not have the authority to impose importation duties or quotas, only the Federal government is allowed to impose those [and the Trump administration has become very active in that regard]. Note not all States have clarified by legislation the waiver / exemption of taxes and registrations to Foreign Flagged vessels, their legislators simply have not codified such, so confusion arises.


An USA flagged vessel is accorded similar exemptions and waivers when they visit the countries that reciprocity has been negotiated and granted, so they too receive waivers from VAT, importation duties, etc. in those nations. So if you are a citizen of the USA and thus can flag your vessel with the USA you get similar benefits of Foreign flagged vessel visiting the USA. What goes around, comes around.

But if you are a US citizen and do not cruise internationally, you don't garner the benefit of the foreign countries waivers and exemptions You have to bring your boat to the countries of reciprocity to gain such benefit. You don't get the benefit if you stay in USA waters or State waters with your USA flagged boat as a citizen of the USA.

As a Greencarder you are provide privilege of residency in the USA by the US Federal government and in turn by the States and the principalities that the State has in turn empowered [counties, cities, townships].

Yes there is a distinct advantage accorded to you and / or rather explicitly to your foreign flagged vessel, enjoy such and be grateful that others are paying a greater share of taxes to provide the services of the State and local governments. But then similarly a US citizen with their US flagged vessel is accorded the benefits when they travel to foreign waters and ports.

If you perceive your foreign flagged vessels exemption from taxation is unfair, perhaps you could just make payments in lieu of taxation. Simple to do.

Just recognize that with the USA, keep the perspective that the United States of America are, not the United State of America is. E pluribus unum and all.

Citizenship and Residency Status are defined statuses which status is accorded privileges and obligations.

By way of example. Who is an American? Who is accorded residency?

I will initiate with America's First People. Genealogy as a basis of membership. Rather long subject discussion by its nature. Just skip if not of interest.

My second residence in located within the external boundaries of the Flathead Indian reservation in northwest Montana,i.e., Indian Country. I am not a tribal member and the majority of the population living within the reservation are not tribal members. There are added complexities of jurisdiction and governance, as there are Counties and municipalities proscribed by the State within the reservation boundaries and there are Tribal governance. The tribal members are citizens of the USA and of the State of Montana and are accorded the benefits of such and are members of their tribe. One will commonly see the flags of the USA, the State of Montana and the Flathead Nation flying side by side, at public buildings, homes, business, heck even inside stores, such as Walmart. Of keen issue here on the reservation and in the State is that the tribal members are not taxed by the State or by the Counties, or by the cities or townships. The State of Montana does not have any sales or use taxes or VAT so that form of revenue is nil and thus not a complication to administer. The tribal members do not pay state income tax; if they chose to simply place their real property ownership into trust with the Bureau of Indian Affairs of the US Federal Government than their property is not subject to property taxation which taxes are a principal form of revenue for the county and local governments and for the school districts. Thus the tribal members receive all the benefits of being a resident and also of citizenship but do not pay taxes, other than Federal taxes. The tribes are accorded what is termed "Dependent Sovereign" status under Federal law and only the Federal Congress has the authority to transact and govern and to tax with the Federally recognized tribes. Note, States must recognize all Federally recognized tribes, but States can also grant State recognition to tribes independent of but in addition to Federal government recognition. Montana has for several decades recognized the Little Shell tribe [i.e., band] of the Chippewa and has advocated Federal recognition and I believe that the Federal government has just recently agreed by legislation to also recognize the Little Shell band as its own tribe and accord their members unique benefits and some land holdings.

So is it "fair" that my neighbors do not have to pay State or local taxes but receive all the benefits thereof, roads, utilities, health, protection, schooling, etc. It is "fair" per the definition of the adjective I listed above as such is in accordance with the rules or standards; therefore legitimate.

The way I see it, is that I am privileged to be able to live on the land that was reserved for them by the Hellgate Treaty of 1865 before Montana gained Statehood. I have become an inholder. An inholder of debatable legitimacy. Their reserved lands became opened for non-tribal members settlement with a change in Federal policy towards Indians and the law which resulted in upwards of 70% of their treaty reserved lands being sold to non-members. The tribes have been purchasing back the private fee simple lands and now have regained the ownership of the majority of the within reservation properties. Truly there was a breaking of the intent of the Treaty rights. Of keen debate not only of what tribe is to be recognized but also who constitutes members of the tribe. The tribes typically are empowered to define their membership, albeit with the ultimate acceptance of such definition being left to the non-tribal government, the Federal government for Federally recognized tribes and by the State government explicitly for the tribes that have been recognized only by the State but not by the Federal government. Membership by its nature is inclusion and exclusionary. Both the included and the excluded have to recognize those that are in and those that are not in, else it is a one side affair and not a joint recognition. Citizenship is a membership of sorts. Membership is the scope of the We in the "We The People" of the tribe's constitutions. The Flathead Reservation is reserved for the Confederated Salish Tribes [two branches] and the Kootenai tribe. There is but one elected tribal governing council that administers to Flathead Nation that rules over the Confederate Salish and the Kootenai. The Flathead Nation recognizes as members persons who have at least 1/4 blood quantum of ancestry collectively of the two Salish bands and the Kootenai band. So one must be of quarter bred. Which means one can be mostly not of such tribal lineage. There being very few whole blood of either of the Salish or Kootenai. There being many benefits of being enrolled membership. Of issue is that there trends towards dilution of tribal blood quantum with each passing generation and the membership roll could decline so there may become a time when the tribes desire to redefine their membership to say 1/8th blood quantum and then the question would arise if the non-members will agree to accord to such definition and recognize such a tribal membership and the recognition of the tribe itself. To be a Cherokee Indian one needs to be able to trace your ancestry lineage to a historical lists of the "five civilized tribes" membership which list included Cherokee Indians and the Freedman [the former slaves owned by the Cherokee Indians, which slaves were decidedly of African descent]. The Cherokee Nation Registration Office processes Certificate of Degree of Indian Blood (CDIB). The basic criteria for CDIB/Cherokee Nation tribal citizenship is that an application must be submitted along with documents that directly connect a person to an enrolled lineal ancestor who is listed on the “Dawes Roll” Final Rolls of Citizens and Freedman of the Five Civilized Tribes. Hence there are about 300,000 Cherokees, blood quantum dilution does not factor into their membership so their membership trends to increase whereas blood quantum membership tribes trend towards dilution and smaller enrollments, especially on a reservation where the majority of the population are of non-membership.

I recall a rather contentious public meeting of one of the local school districts here on the Rez wherein tribal members were seeking the school district to develop specialized programs oriented towards keeping a higher degree of tribal member students enrolled and completing high school. There being a considerably higher percentage of tribal students not completing secondary schooling or excelling at their education. A very reasonable point to be addressed and advocated for. The elected members of the School Board that are the authorities empowered to running the school district include both tribal members and non-tribal members. One of the School Board members was a respected member of the elected Tribal Council and a significant real property owner. That elected tribal Council member and elected School Board member confronted several of the tribal members who were advocating the School Board to initiate the special programs directed to aid the tribal students with the fact that none of the tribal members that were advocating for the enhanced school programs was in fact paying property taxes on their properties so as to fund the school district because they had elected to place their properties into tax exempt trustee holding by the Federal Bureau of Indian Affairs. Whereas he had chosen to pay property taxes on his valuable land holdings and to not pursue tax exempt status even though he could have been accorded such tax exemption. The entire School Board was supportive of developing programs to facilitate enhanced tribal student education and enrollment, but the entire School Board also recognized the financial constraints. The Tribal Councilman / School Board member challenged his fellow tribal members to put their money where their mouth were, to participate by electing to keep their property in fee simple, property taxable land status, or to make payments to the school district in lieu of taxation so as to fund the school district. Now just imagine if one of the non-tribal School Board members had made the same assertion as to tribal members fairly paying up for the services that were being provided to the tribal children. So what and when is fair.

If you perceive your foreign flagged vessels exemption from taxation is unfair, perhaps you could just make payments in lieu of taxation which is a common practice of many 'farness minded" tax exempt organizations. The Nature Conservancy typically makes payments on their vast property holdings which they could chose to be tax exempt. Of local issue that arises is if the Nature Conservancy opts to transfer their purchased properties to Federal title holding or to State holding because the property taxes that the non-for-profit was paying ceases to be paid placing the burden of taxation onto a smaller land base. The Nature Conservancy purchased about a decade ago 320,000 acres [500 square miles] of land from the private Plum Creek timberland company in the valley to the east adjoining the Flathead reservation for $510 million. That land composed the majority of the private land in the adjoining county. It's taxation or non-taxation has huge implications as to financing public services. If the land is ultimately transferred by gifting to the Federal government then the issue becomes a factor of the Federal government being needed to make Payments In Lieu of Taxes to the State and local governments, if Congress will provide for such funds. Those are called PILT Grants. Federal payments to local governments that help offset losses in property taxes due to the existence of nontaxable Federal lands within their boundaries. Partially offset. The federal government owns about 28.86 percent of Montana's total land, 26,921,861 acres out of 93,271,040 total acres. Montana ranked 10th in the nation in federal land ownership. Montanan expect that non-Montanans will pay Federal taxes and the Federal government will pay the State of Montana payments in lieu of Montana property taxes so as to fund public services in Montana. If that fair? Well to the extent that the Federal government has been granted tax exemption from the States of the Union than the Federal Government's tax exemption is fair. But is it equitable for Montana to receive federal payments in lieu of taxes? Equity and fairness not always the same.

[Oceansailor]

Originally Posted by Montanan

Not being a citizen of the USA, USA flagging of your vessel is not a privilege you can garner. You could proceed with out flagging your vessel and just register it in the State that the boat resides in, but just having a State register vessel does not provide the vessel with an internationally treaty recognized nationality and the benefits of such nationality.

Ha, ha, ha. Fairness and taxes now that is a subject that can become quite unsuitable for discussion on the CruisersForum. Tends to involve too much Politics. Poly meaning many, and tics, meaning blood sucking parasites.

But so long as the discussions stays directed To The Facts and applies to boats and boat owners then the subject can be of great substance relevance to the forum. One just needs to be conscious and respectful to maintain appropriate Forum Decorum.

Begin with a definition of fair: Definitions being of debate.

An example.

Adjective.

in accordance with the rules or standards; legitimate.

Countries agree to reciprocity in agreements to allow for their flagged boats to enter other countries without incurring unreasonable fees and bureaucratic restrictions. [Unreasonable, typically meaning Not Unfair]. In the USA, our Federal government of our Union of States has been accorded certain powers by the States, which States have in turn been enumerated powers from the People. One of the powers that has been Federalized is the power to engage in agreements and treaties with Foreign Countries. States respect the Foreign Flagging of vessels because the Federal government respects the Foreign Flagging.

So yes, State legislatures have expressly passed laws and State regulators have proscribed regulation availing foreign flagged vessels with waivers for certain obligations including State sales / use taxes, excise taxes, property taxes, etc. States do not have the authority to impose importation duties or quotas, only the Federal government is allowed to impose those [and the Trump administration has become very active in that regard]. Note not all States have clarified by legislation the waiver / exemption of taxes and registrations to Foreign Flagged vessels, their legislators simply have not codified such, so confusion arises.


An USA flagged vessel is accorded similar exemptions and waivers when they visit the countries that reciprocity has been negotiated and granted, so they too receive waivers from VAT, importation duties, etc. in those nations. So if you are a citizen of the USA and thus can flag your vessel with the USA you get similar benefits of Foreign flagged vessel visiting the USA. What goes around, comes around.

But if you are a US citizen and do not cruise internationally, you don't garner the benefit of the foreign countries waivers and exemptions You have to bring your boat to the countries of reciprocity to gain such benefit. You don't get the benefit if you stay in USA waters or State waters with your USA flagged boat as a citizen of the USA.

As a Greencarder you are provide privilege of residency in the USA by the US Federal government and in turn by the States and the principalities that the State has in turn empowered [counties, cities, townships].

Yes there is a distinct advantage accorded to you and / or rather explicitly to your foreign flagged vessel, enjoy such and be grateful that others are paying a greater share of taxes to provide the services of the State and local governments. But then similarly a US citizen with their US flagged vessel is accorded the benefits when they travel to foreign waters and ports.

If you perceive your foreign flagged vessels exemption from taxation is unfair, perhaps you could just make payments in lieu of taxation. Simple to do.

Just recognize that with the USA, keep the perspective that the United States of America are, not the United State of America is. E pluribus unum and all.

Citizenship and Residency Status are defined statuses which status is accorded privileges and obligations.

By way of example. Who is an American? Who is accorded residency?

I will initiate with America's First People. Genealogy as a basis of membership. Rather long subject discussion by its nature. Just skip if not of interest.

My second residence in located within the external boundaries of the Flathead Indian reservation in northwest Montana,i.e., Indian Country. I am not a tribal member and the majority of the population living within the reservation are not tribal members. There are added complexities of jurisdiction and governance, as there are Counties and municipalities proscribed by the State within the reservation boundaries and there are Tribal governance. The tribal members are citizens of the USA and of the State of Montana and are accorded the benefits of such and are members of their tribe. One will commonly see the flags of the USA, the State of Montana and the Flathead Nation flying side by side, at public buildings, homes, business, heck even inside stores, such as Walmart. Of keen issue here on the reservation and in the State is that the tribal members are not taxed by the State or by the Counties, or by the cities or townships. The State of Montana does not have any sales or use taxes or VAT so that form of revenue is nil and thus not a complication to administer. The tribal members do not pay state income tax; if they chose to simply place their real property ownership into trust with the Bureau of Indian Affairs of the US Federal Government than their property is not subject to property taxation which taxes are a principal form of revenue for the county and local governments and for the school districts. Thus the tribal members receive all the benefits of being a resident and also of citizenship but do not pay taxes, other than Federal taxes. The tribes are accorded what is termed "Dependent Sovereign" status under Federal law and only the Federal Congress has the authority to transact and govern and to tax with the Federally recognized tribes. Note, States must recognize all Federally recognized tribes, but States can also grant State recognition to tribes independent of but in addition to Federal government recognition. Montana has for several decades recognized the Little Shell tribe [i.e., band] of the Chippewa and has advocated Federal recognition and I believe that the Federal government has just recently agreed by legislation to also recognize the Little Shell band as its own tribe and accord their members unique benefits and some land holdings.

So is it "fair" that my neighbors do not have to pay State or local taxes but receive all the benefits thereof, roads, utilities, health, protection, schooling, etc. It is "fair" per the definition of the adjective I listed above as such is in accordance with the rules or standards; therefore legitimate.

The way I see it, is that I am privileged to be able to live on the land that was reserved for them by the Hellgate Treaty of 1865 before Montana gained Statehood. I have become an inholder. An inholder of debatable legitimacy. Their reserved lands became opened for non-tribal members settlement with a change in Federal policy towards Indians and the law which resulted in upwards of 70% of their treaty reserved lands being sold to non-members. The tribes have been purchasing back the private fee simple lands and now have regained the ownership of the majority of the within reservation properties. Truly there was a breaking of the intent of the Treaty rights. Of keen debate not only of what tribe is to be recognized but also who constitutes members of the tribe. The tribes typically are empowered to define their membership, albeit with the ultimate acceptance of such definition being left to the non-tribal government, the Federal government for Federally recognized tribes and by the State government explicitly for the tribes that have been recognized only by the State but not by the Federal government. Membership by its nature is inclusion and exclusionary. Both the included and the excluded have to recognize those that are in and those that are not in, else it is a one side affair and not a joint recognition. Citizenship is a membership of sorts. Membership is the scope of the We in the "We The People" of the tribe's constitutions. The Flathead Reservation is reserved for the Confederated Salish Tribes [two branches] and the Kootenai tribe. There is but one elected tribal governing council that administers to Flathead Nation that rules over the Confederate Salish and the Kootenai. The Flathead Nation recognizes as members persons who have at least 1/4 blood quantum of ancestry collectively of the two Salish bands and the Kootenai band. So one must be of quarter bred. Which means one can be mostly not of such tribal lineage. There being very few whole blood of either of the Salish or Kootenai. There being many benefits of being enrolled membership. Of issue is that there trends towards dilution of tribal blood quantum with each passing generation and the membership roll could decline so there may become a time when the tribes desire to redefine their membership to say 1/8th blood quantum and then the question would arise if the non-members will agree to accord to such definition and recognize such a tribal membership and the recognition of the tribe itself. To be a Cherokee Indian one needs to be able to trace your ancestry lineage to a historical lists of the "five civilized tribes" membership which list included Cherokee Indians and the Freedman [the former slaves owned by the Cherokee Indians, which slaves were decidedly of African descent]. The Cherokee Nation Registration Office processes Certificate of Degree of Indian Blood (CDIB). The basic criteria for CDIB/Cherokee Nation tribal citizenship is that an application must be submitted along with documents that directly connect a person to an enrolled lineal ancestor who is listed on the “Dawes Roll” Final Rolls of Citizens and Freedman of the Five Civilized Tribes. Hence there are about 300,000 Cherokees, blood quantum dilution does not factor into their membership so their membership trends to increase whereas blood quantum membership tribes trend towards dilution and smaller enrollments, especially on a reservation where the majority of the population are of non-membership.

I recall a rather contentious public meeting of one of the local school districts here on the Rez wherein tribal members were seeking the school district to develop specialized programs oriented towards keeping a higher degree of tribal member students enrolled and completing high school. There being a considerably higher percentage of tribal students not completing secondary schooling or excelling at their education. A very reasonable point to be addressed and advocated for. The elected members of the School Board that are the authorities empowered to running the school district include both tribal members and non-tribal members. One of the School Board members was a respected member of the elected Tribal Council and a significant real property owner. That elected tribal Council member and elected School Board member confronted several of the tribal members who were advocating the School Board to initiate the special programs directed to aid the tribal students with the fact that none of the tribal members that were advocating for the enhanced school programs was in fact paying property taxes on their properties so as to fund the school district because they had elected to place their properties into tax exempt trustee holding by the Federal Bureau of Indian Affairs. Whereas he had chosen to pay property taxes on his valuable land holdings and to not pursue tax exempt status even though he could have been accorded such tax exemption. The entire School Board was supportive of developing programs to facilitate enhanced tribal student education and enrollment, but the entire School Board also recognized the financial constraints. The Tribal Councilman / School Board member challenged his fellow tribal members to put their money where their mouth were, to participate by electing to keep their property in fee simple, property taxable land status, or to make payments to the school district in lieu of taxation so as to fund the school district. Now just imagine if one of the non-tribal School Board members had made the same assertion as to tribal members fairly paying up for the services that were being provided to the tribal children. So what and when is fair.

If you perceive your foreign flagged vessels exemption from taxation is unfair, perhaps you could just make payments in lieu of taxation which is a common practice of many 'farness minded" tax exempt organizations. The Nature Conservancy typically makes payments on their vast property holdings which they could chose to be tax exempt. Of local issue that arises is if the Nature Conservancy opts to transfer their purchased properties to Federal title holding or to State holding because the property taxes that the non-for-profit was paying ceases to be paid placing the burden of taxation onto a smaller land base. The Nature Conservancy purchased about a decade ago 320,000 acres [500 square miles] of land from the private Plum Creek timberland company in the valley to the east adjoining the Flathead reservation for $510 million. That land composed the majority of the private land in the adjoining county. It's taxation or non-taxation has huge implications as to financing public services. If the land is ultimately transferred by gifting to the Federal government then the issue becomes a factor of the Federal government being needed to make Payments In Lieu of Taxes to the State and local governments, if Congress will provide for such funds. Those are called PILT Grants. Federal payments to local governments that help offset losses in property taxes due to the existence of nontaxable Federal lands within their boundaries. Partially offset. The federal government owns about 28.86 percent of Montana's total land, 26,921,861 acres out of 93,271,040 total acres. Montana ranked 10th in the nation in federal land ownership.

And there is no rule or law saying that a resident of USA is not allowed to drive/use a foreign registered yacht in US water?

That is as least what happens in most countries in Europe when it comes to cars and yachts. If you are a resident you are not allowed to sail a foreign registered non taxed boat in EU. You are also not allowed to drive a foreign registered car. There are ways to get around that. For example you can be employed by the yacht owner as a captain. But if they (custom) find out that you have a normal work you are in for some serious problems.

[Montanan]

Originally Posted by Oceansailor

And there is no rule or law saying that a resident of USA is not allowed to drive/use a foreign registered yacht in US water?

That is as least what happens in most countries in Europe when it comes to cars and yachts. If you are a resident you are not allowed to sail a foreign registered non taxed boat in EU. You are also not allowed to drive a foreign registered car. There are ways to get around that. For example you can be employed by the yacht owner as a captain. But if they (custom) find out that you have a normal work you are in for some serious problems.

Excellent point.

By the definition of fair meaning in accordance with the rules or standards; legitimate; the exemption accorded in the USA is fair but perhaps not equitable in comparison to the European rules as it pertains to taxation based on residency.

The Constitution of the United States of America's stated purpose is "to form a more perfect Union", a union that was more perfect then the original post revolutionary Confederation of States. Mind you, not perfect, just more perfect.

It would seem to be more equitable if the granting of the privilege of residency in the USA to a foreign citizen would oblige the resident to need to pay sales and use tax to the States for the residents owned foreign flagged vessel. The resident of the USA is required to pay sales and use tax on everything else, why not their boats? We don't have VAT here in the States.

We Brexited back in 1776 but heck we apparently are still giving the Brits favorable accord - this time: Taxation Exemption Without Representation. Dang time for another Tea Party Attack on Union Jack displaying vessels. I'll discuss such with my native American neighbors here on the Flathead Nation reservation and see if we can gather up and go clear out the Boston Harbor.

When I travel to visit my British clients I hire VAT paid, UK registered vehicles and I endeavor to drive on their self defined "proper" side of the roadway, but there are those occasions when I go all Crazy Yankee and drive anti-clockwise, instead of clockwise around the round about. Tooting horn and yelling "Make a hole, Yank coming through". Scares the bejesus out of the Londoners, great fun to hear my British passengers screaming and cursing. Understandably my clients now often prefer to pick me up at Heathrow and to offer to drive around instead of having this Montanan drive like he is off-roading in one of his 4WD big rigs. I can't help but wish to drive and navigate passing portside to portside; how the heck the Brits are able to discern to navigate their vessels on the right [read "correct"] side and not their "proper" side of their accustomed terrestrial travel is beyond me.

I suppose that is why trains carry vehicles through the chunnel because at the mid point there would be the need to swap sides of the road and things would get pretty nutzoid.

[AndrewA2]

So coming back to my options. It sounds like i need :
1. to setup a company (BVI/Carmen/Jersey)to be able to buy the boat through that (deals with sales tax/VAT)
2. Register for UK flagging (as i cant US flag as not a US citizen)
3. Apply for cruising permits when in US and EU waters (as i will not be staying in either of those places permanently and i am not a full time EU resident)

Am i missing or overcomplicating anything ?

[WindwardPrinces]

Originally Posted by AndrewA2

So coming back to my options. It sounds like i need :
1. to setup a company (BVI/Carmen/Jersey)to be able to buy the boat through that (deals with sales tax/VAT)
2. Register for UK flagging (as i cant US flag as not a US citizen)
3. Apply for cruising permits when in US and EU waters (as i will not be staying in either of those places permanently and i am not a full time EU resident)

Am i missing or overcomplicating anything ?

Or, register it in the state where you'll be keeping it until you decide to cruise internationally, and flag the vessel at that time, with more certainty of what your actual plans are.

[Montanan]

Originally Posted by WindwardPrinces

Or, register it in the state where you'll be keeping it until you decide to cruise internationally, and flag the vessel at that time, with more certainty of what your actual plans are.

Agreed if you intend to keep the boat in USA waters for a while and particularly not staying in another state beyond 90 days so as to require reregistering to the state in which the boat has wondered into and resides; only major issue is whether the foreign flagging may avail a waiver of the use taxation in Mississippi, then pursuing foreign flagging immediately upon purchase might save some $$$$.

I don't believe any VAT would be due in the UK until you import the boat there.

[AndrewA2]

Im still unclear what the advantage/need would be to register the boat in MS if that is indeed the temporary "home base" state if I adhere to cruising permit requirements?

[Gerrycooper56]

Ok, would depend on whether the vessel you buy is CoastGuard registered (US flag) or just state registered. I don’t think there’s any way around state sales tax unless the vessel is shown to be for sale outside of the US. So, as a US resident you could buy the state registered vessel and then at the appropriate time flag the vessel to the most appropriate country. If you buy a US flagged vessel then the owner must get a certificate of deletion from the USCG to show the vessel is no longer US flagged.