Buying boat in Puerto Rico

[massnspace]

Hello

I found a boat I am interested in. In Puerto Rico. 42’ sloop.

Can anyone comment on what I need to worry about in buying this and sailing it from there to the Miami area sometime in the next 12 months? Both from a paperwork/purchasing point of view as well as the actual sailing trip?

Thank you

[Montanan]

I believe the territory wide base sales tax will be 10.5% in Puerto Rico. Additional local-option jurisdiction taxation may apply (1%). There are 74 jurisdictions. One should seek tax counsel to determine if non-resident exemption may apply, for example, based on prompt removal of the vessel from the territory after the sale.

A use tax will likely become applicable in Florida, if and when it becomes the State of Principal Use and one has to register the boat in Florida upon which time a property tax will apply.

Not sure that Florida will grant a credit against their Use taxation for the payment of sales tax in Puerto Rico because PR is a territory and may not have a Sale / Use taxation reciprocity agreements in place with Florida [or any other State].

Unclear if there will be a custom's duty due upon importation to the USA, arrival in Florida.

Unclear about the EPA engine emissions requirement for your specific boat upon import to the USA. Best confirm that you do not need to repower the boat to be able to import before you purchase the boat, or if a certification must be accomplished.

Puerto Rico issues registrations on boats but does NOT issue titles for boats.

[Montanan]

Puerto Rico boat registration:

https://www.drna.pr.gov/wp-content/u...stration-2.pdf

Boats must be registered with 60 days of operation in Puerto Rico.



A Sales and Use Tax (SUT) regimen operates in Puerto Rico and has replaced, with few exceptions, the excise tax system that existed for many decades. SUT applies to taxable items: tangible personal property, taxable services, admissions rights and combined transactions, business to business services and business to customer services, subject to certain exclusions and exemptions. The SUT rate applicable to the sale of tangible personal property is 11.50% out of which 10.5% goes to the Commonwealth of Puerto Rico and 1% goes to municipalities.

I am unclear if their remains an excise taxation on vessels, or if a SUT has replaced the excise tax [in lieu] or if there is both an excise tax and an SUT for vessels [an additive tax].

Excise tax code specific to vessels:

https://casetext.com/statute/laws-of...eavy-equipment

Snipets:

P.R. Laws tit. 13, § 31629
2019-02-20 00:00:00+00
§ 31629. Vessels and heavy equipment
(a) An excise tax of seven percent (7%) shall be imposed, collected, and paid on every type of ship and every type of heavy equipment that is introduced from abroad or manufactured in Puerto Rico.

(1) Ships.— In the case of ships, the excise tax shall be imposed on the suggested consumer sales price. The maximum excise tax amount to be imposed and collected per ship under this section shall not exceed ten thousand dollars ($10,000.00).

. . .

(e) Every ship and every unit of heavy equipment subject to the provisions of this section shall be exempt from the sales and use taxes established in §§ 32001 et seq. of this title.

(f) Exemption on nonresident ships.—

(1) Ships with foreign registration or documented by the United States Coast Guard shall be exempt from the excise tax provided by this section if they are acquired by a Puerto Rico nonresident, who has the title and ownership of said ship, and who does not engage in the sale of ships in Puerto Rico.

(2) For purposes of this subsection, a ship acquired, or the title or ownership or both of which is held by a nonresident corporation, limited liability society or company shall not be considered eligible for the tax exemption provided in this section if one or more Puerto Rico residents jointly own, directly or indirectly, fifty percent (50%) or more of the stocks or shares of the entity holding the title or ownership of said ship. Furthermore, for purposes of subsection (a) of this section, the exemption shall apply to the ship as well as to its furnishings (“bare boat”), but not to merchandise inside the ship.


Sale Use Tax exemption:

https://casetext.com/statute/laws-of...es-and-use-tax

P.R. Laws tit. 13, § 32053
2019-02-20 00:00:00+00
§ 32053. Exemptions for export
(a) Except for the reciprocity requirement concerning the collection of sales and use taxes in Puerto Rico provided in this part, the taxable items sold for use or consumption outside Puerto Rico shall be exempt from the payment of the sale and use tax established in this Subtitle, even when the sale takes place in Puerto Rico. In order for the taxable items thus sold to be exempt from the taxation, they must be exported within sixty (60) days as of the date of sale.

. . .

(c) Subject to the provisions of §§ 33001 et seq. of this title, the Secretary may extend the time limit established in subsection (a) of this section for a taxpayer to export taxable items.

[Montanan]

As to reciprocity of sales / use taxation credit in Florida.

I am unsure if the Florida reciprocity that applies to vehicles in States and Territories of the USA also applies to vessels but I suspect it will.

Reference link:

https://floridarevenue.com/taxes/tip...P_21A01-13.pdf


As to vehicles:

Snipet:

Currently, the states of Arkansas, Mississippi, and West Virginia impose a sales tax on motor vehicles but DO NOT allow a credit for taxes paid to Florida. Residents of these states should be informed that they must pay sales tax to Florida at the rate imposed by their home state when
they purchase a vehicle in Florida and must also pay tax to their home state when the vehicle is licensed in their home state.

Motor Vehicles Purchased in Another State and Brought into Florida

Florida’s use tax rate of 6% generally applies to motor vehicles purchased in another state, the District of Columbia, or a U.S. territory and subsequently titled, registered, or licensed in Florida.
Florida law allows a credit to be given to reduce the tax due when a like tax has been lawfully imposed and paid in another state, the District of Columbia, or a U.S. territory. Credit against Florida use tax and any discretionary sales surtax is given for a like tax paid in another state,

[donradcliffe]

Might be better to have the sale/delivery take place offshore or in Florida.

It is not a good idea to take the boat to Florida in hurricane season.

[Montanan]

Originally Posted by donradcliffe

Might be better to have the sale/delivery take place offshore or in Florida.

It is not a good idea to take the boat to Florida in hurricane season.

Or to have the boat in Puerto Rico during hurricane season.

As to having the vessel purchase occur elsewhere that largely depends on where one will take the newly purchased vessel. Each jurisdiction has its own tax consequences upon entry or reentry. The complexity of international taxation is engaging. Avoidance = good, evasion = not good.

[Fintry]

Originally Posted by Montanan

Not sure that Florida will grant a credit against their Use taxation for the payment of sales tax in Puerto Rico because PR is a territory and may not have a Sale / Use taxation reciprocity agreements in place with Florida [or any other State].

Unclear if there will be a custom's duty due upon importation to the USA, arrival in Florida.

Unclear about the EPA engine emissions requirement for your specific boat upon import to the USA. Best confirm that you do not need to repower the boat to be able to import before you purchase the boat, or if a certification must be accomplished.

In the order above:


1) As noted in several posts above, Florida gives credit for sales taxes paid in a US state or territory. While Puerto Rico (PR) is technically not a territory -- it is a Commonwealth -- I think it is safe to assume that the same rule would apply.


2) PR is part of the United States so you do not "import" something from there any more than you might "import" it from New York.



3) See #2.


With respect to the PR sales tax, if the boat is documented and if you buy the boat and leave PR fairly promptly for Florida, it is very unlikely that the PR tax authorities will find you and charge you the tax.


Jim

[Montanan]

What is the customs status of the boat you intend to purchase in Puerto Rico?

Devil lies in the details.

Its origin of arrival and of its manufacture?

Has it previously cleared customs in PR, completed importation and release?

Is it of a temporary admission status in the territory?

Has it had paid Sales and / or Use taxation, if so, where?

Is the vessel registered in Puerto Rico?

One needs to draw the distinction between domestic shipments coming from any other part of the United States and international shipments arriving from outside the U.S.

Domestic Shipments Arriving to Puerto Rico:

Because Puerto Rico is a territory, no customs duties are assessed on goods arriving from the U.S.
However, these goods are subject to an excise tax. For many goods, the tax is 11.5%, although it differs depending on your goods.
This tax is directly paid to the Puerto Rico Department of Treasury or el Departamento de Hacienda de Puerto Rico.
Shipments must be paid for and cleared by Hacienda before they can be released and delivered for use or offered for sale.

International Shipments Arriving to Puerto Rico:

Shipments arriving directly to Puerto Rico from international destinations must first clear U.S. Customs.
Then, they’ll be subject to the excise tax and clearance by Hacienda, as described above.

Shipments Leaving Puerto Rico for the U.S.:

Because of Puerto Rico’s territorial status, these shipments won’t be subject to excise taxes or customs inspection.

Shipments Leaving Puerto Rico for International Destinations:

As with any international shipment, your goods will be subject to local customs regulations and inspection at their destination.

[Jimbo2010]

I bought a boat in St Thomas, it was documented in PR., I sailed to Fl paid the FL tax.
But I am a Fl resident.

I was told in I stayed in FL less than 60 or 90 days for another state I could pay that states tax upon arrival there.

My thinking is no tax in PR.

As to sailing to Fl just pick your weather window, we were mostly off the wind the whole way

[Montanan]

Originally Posted by massnspace

Hello

I found a boat I am interested in. In Puerto Rico. 42’ sloop.

Can anyone comment on what I need to worry about in buying this and sailing it from there to the Miami area sometime in the next 12 months? Both from a paperwork/purchasing point of view as well as the actual sailing trip?

Thank you

Hurricane season rather precludes sailing from June 1 to November 1.

Your insurance policy may have restrictions as to where the coverage is extended during the storm period.

Be sure to have as a part of your offer a buyer's purchase contingency being the procurement of an insurance policy acceptable to the buyer. Insurance is becoming harder to acquire and if a policy cannot be obtained then you will desire to have the deal not proceed.

Promptly discuss with insurance brokers licensed in Puerto Rico to find out if you and the boat will qualify. This can be a deal breaker and preclude your desired navigational plans.

[Jimbo2010]

For insurance, no problem

Offshore Risk Management
807 Forrest Ave |
Cocoa, FL 32922p: 305-743-7711 x2210

michele@offshorerisk.com

[SailingHarmonie]

Originally Posted by Jimbo2010

I bought a boat in St Thomas, it was documented in PR., I sailed to Fl paid the FL tax.
But I am a Fl resident.

I was told in I stayed in FL less than 60 or 90 days for another state I could pay that states tax upon arrival there.

My thinking is no tax in PR.

As to sailing to Fl just pick your weather window, we were mostly off the wind the whole way

Just to put this particular advice in perspective, there is no such thing as "documented in Puerto Rico." You can REGISTER a boat in PR, but documentation is only issued by the USCG and is completely agnostic about where the boat is or its home port.

If someone does not understand this basic fact, you have to be skeptical of the rest of their advice...

For example PR most certainly has a sales tax. Check the requirements.

And your status as a FL resident has little to do with if you register a boat there are not. If the boat has an existing valid registration or USCG documentation and is in state for more than 90 sequential days, you MUST register it with Florida and pay up any sales tax due. They will credit you for PR tax paid, so you can see that as just a different place to send the same money.

If it is a new purchase made in Florida, you have 30 days to register it. If you bought it through a broker, there are excemptions if you take it out of state soon after the sale. Details are complicated, but available on the offical websites of the tax authority.

[Montanan]

The PR excise tax is separate and apart from the Sale / Use taxation. It appears that one gets the privilege of paying both unless there is an exemption.

The obvious exemption for the sale / use taxation will be to export the vessel within 60 days of its purchase.

There is an exemption for the excise tax if the good is reexported.

PR has been in need of revenue.

Now be glad you do not wish to purchase a vehicle because the excise tax is based on a sliding scale of its value, going from 13% to 40%.



§ 31621. General excise tax provision
An excise tax shall be imposed, collected, and paid, at the rates prescribed in §§ 31622-31627a of this title, inclusive, on cement manufactured locally or introduced into Puerto Rico, sugar, plastic products, the introduction or manufacture of cigarettes, gasoline, aviation fuel, gas oil or diesel oil, crude oil, partially finished and finished oil by-products, as well as on any other hydrocarbon blend, and motor vehicles. The fixed excise tax shall apply if the goods have been introduced, sold, consumed, used, transferred or acquired in Puerto Rico, and it shall be paid only once, at the time and in the manner specified in Chapter 1036 of this parte. The application of the tax shall be subject to the exemptions granted in Chapter 1033 of this part.

§ 31654. Conditional exemption; goods in transit, for re-export or return

(a) No conditional exemption shall be recognized in the cases indicated in §§ 31660 and 31661 of this title, unless the goods to which the exemption is granted is once again exported, returned to the manufacturer, destroyed, or otherwise disposed of as required by the provisions of said sections.

(b) Subject to the provisions of §§ 33001 et seq. of this title, the Secretary may extend or broaden the time limit for a taxpayer to once again export, return to the manufacturer, destroy, or otherwise dispose of the goods subject to conditional exemptions for any of the reasons or causes established in §§ 31660 and 31661 of this title.

History —Jan. 31, 2011, No. 1, § 3030.04, retroactive to Jan. 1, 2011; Dec. 10, 2011, No. 232, § 134.

[Jimbo2010]

yep u know more than me, thanks for your kind comments.