Flag for boat, VAT not paid, US to EU by cargo ship

[Montanan]

Originally Posted by Usersail

Thank you very much for all.
boatman61 I have only Caribbean passport (CBI program, not born in Caribbean).

wolfgal I have EU ID residency card for one year, with option to prolong. I'm not spending more than 180 days in my EU residency country.

No dual citizenship.

The CBI is citizenship by investment, in which country you state you have never been, indeed many such countries of convenience do not require residency.

Of further consideration for you, with which country are you a naturalized person, [place of birth, or derived from parentage]?

Yet you indicate that you have no dual citizenship, which would imply that you disavowed your natural citizenship, else you would have retained such; or in some countries dual citizenship is disallowed so by opting for a CBI by defacto you can lose your citizenship in such countries that do not permit duality of citizenship.

Key point: Your residency in Slovenia, an EU member country, means you will be required to pay VAT [and possibly Duty] to the EU country into which the cargo ship delivers your vessel by discharging it as cargo from the USA. The imported vessel will clear that country's customs agency upon arrival [when it is removed from the cargo ship as a cargoed good] and the tax and duty will be need to be paid before it will be released from that country's customs custody. The port of discharge of your vessel [good] from the cargo transport ship will dictate which country VAT will be charged.

The CE mark is a technical issue that will be reviewed by the customs agency upon clearance of the vessel and if not found to be in compliance, that could be a very expensive issue to resolve, e.g. a repowering of the boat.

You should pursue flag registering your vessel, else upon arrival it will be considered a vessel without nationality [i.e., stateless] and instantly be fully subject to the laws of the country it has entered, that opens up a can of worms that is very much country specific. By way of example, you may be required to immediately register your vessel with the country it has thence arrived. The flag State's jurisdiction is limited by the rights and
competences given to the coastal State when the vessel is within the territory of the coastal State.

Vessels that operate internationally or cross international borders are required to be registered. The country of registration is a ship's flag state and determines its nationality as well as which country's laws govern its operation and the behavior of its crew. A ship's flag state exercises regulatory control over the vessel and is required to inspect it regularly, certify the ship's equipment and crew, and issue safety and pollution prevention documents. The organization which actually registers the ship is known as its registry. A register that is open only to ships of its own nation is known as a traditional or national register. Registers that are open to foreign-owned ships are known as open registries and are sometimes called flags of convenience.

United Nations Convention of the Law of the Sea UNCLOS

Article 91

Nationality of ships

1. Every State shall fix the conditions for the grant of its nationality to ships, for the registration of ships in its territory, and for the right to fly its flag. Ships have the nationality of the State whose flag they are entitled to fly. There must exist a genuine link between the State and the ship.

2. Every State shall issue to ships to which it has granted the right to fly its flag documents to that effect.


Article 92

Status of ships

1. Ships shall sail under the flag of one State only and, save in exceptional cases expressly provided for in international treaties or in this Convention, shall be subject to its exclusive jurisdiction on the high seas. A ship may not change its flag during a voyage or while in a port of call, save in the case of a real transfer of ownership or change of registry.

2. A ship which sails under the flags of two or more States, using them according to convenience, may not claim any of the nationalities in question with respect to any other State, and may be assimilated to a ship without nationality.

Article 94

Duties of the flag State

1. Every State shall effectively exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag.

2. In particular every State shall:

(a) maintain a register of ships containing the names and particulars of ships flying its flag, except those which are excluded from generally accepted international regulations on account of their small size; and

(b) assume jurisdiction under its internal law over each ship flying its flag and its master, officers and crew in respect of administrative, technical and social matters concerning the ship.

3. Every State shall take such measures for ships flying its flag as are necessary to ensure safety at sea with regard, inter alia, to:

(a) the construction, equipment and seaworthiness of ships;

(b) the manning of ships, labour conditions and the training of crews, taking into account the applicable international instruments;

(c) the use of signals, the maintenance of communications and the prevention of collisions.

4. Such measures shall include those necessary to ensure:

(a) that each ship, before registration and thereafter at appropriate intervals, is surveyed by a qualified surveyor of ships, and has on board such charts, nautical publications and navigational equipment and instruments as are appropriate for the safe navigation of the ship;

(b) that each ship is in the charge of a master and officers who possess appropriate qualifications, in particular in seamanship, navigation, communications and marine engineering, and that the crew is appropriate in qualification and numbers for the type, size, machinery and equipment of the ship;

(c) that the master, officers and, to the extent appropriate, the crew are fully conversant with and required to observe the applicable international regulations concerning the safety of life at sea, the prevention of collisions, the prevention, reduction and control of marine pollution, and the maintenance of communications by radio.

5. In taking the measures called for in paragraphs 3 and 4 each State is required to conform to generally accepted international regulations, procedures and practices and to take any steps which may be necessary to secure their observance.

6. A State which has clear grounds to believe that proper jurisdiction and control with respect to a ship have not been exercised may report the facts to the flag State. Upon receiving such a report, the flag State shall investigate the matter and, if appropriate, take any action necessary to remedy the situation.

7. Each State shall cause an inquiry to be held by or before a suitably qualified person or persons into every marine casualty or incident of navigation on the high seas involving a ship flying its flag and causing loss of life or serious injury to nationals of another State or serious damage to ships or installations of another State or to the marine environment. The flag State and the other State shall cooperate in the conduct of any inquiry held by that other State into any such marine casualty or incident of navigation.

[Montanan]

Originally Posted by Usersail

After reading of all advises, I am inclined to think that I will pay EU VAT in Netherlands in day one, when she will be landed.

1. Is it possible to pay VAT in Netherlands if I don't have a Netherlands tax number?

2. Is it bureaucratic to pay VAT in Netherlands? Or easy and fast?

3. Can I flagged an boat in advance before arriving to EU? Do I need just an agreement, invoices for the flag process? She is now under US flag.

Thank you

VAT and customs clearance fees will be due and collected from the Netherlands custom agency before they will release custody of your boat. Easy or fast, it will be what it is, no choice.

You might be able to flag it ahead of its arrival. Depends on which country you chose to pursue registry and how long before it arrives in the Netherlands.

You state: "She is now under US flag." Was the vessel previously documented with the USCG by the prior owner, or has the US flagging been done by you? If by the previous owner, did you have the USCG notified of the change in title of the vessel?

When the sale is finalized the seller may complete a U.S. Coast Guard Bill of Sale (CG-1340) or complete the “Sale or Transfer of Vessel” section on the reverse of the Certificate of Documentation (CG-1270). This will need to be notarized.


Before a vessel can be reflagged it will need to be deflagged. A vessel can only have one ownership title and one nationality.

As to the USCG:

Reference: https://www.dco.uscg.mil/Portals/9/D...-28-130935-320


"A vessel may be deleted from documentation upon the request of the vessel owner or an authorized agent on behalf of the owner. The request must be in writing and must include the vessel’s official number and reason for deletion. The original Certificate of Documentation (COD) is to be returned by the owner named on the certificate."

1. Please provide evidence of sale or transfer AND a statement indicating the
nationality of owner and/or country in which vessel will be flagged (in the event the vessel is being sold to a non-US citizen(s) or being flagged in a foreign country).
Evidence of sale is required in the event vessel is sold foreign as per 46 CFR
67.171(c)(1).
2. A Certificate of Documentation (COD) is invalid and the vessel subject to deletion from the roll of actively documented vessels when any of the situations listed in 46 CFR 67.171 occurs.
3. An original OR a copy of a release instrument signed by the mortgage holder (mortgagee) is required before the vessel can be removed from documentation if the vessel is covered by an outstanding mortgage of record.
4. Vessels of five net tons or more (determined by volume) used in fishing activities on the navigable waters of the U.S. or in the Exclusive Economic Zone (EEZ), or used in the coastwise trade must be documented unless the vessel is exempt from documentation. See 46 CFR 67.9 for a list of exemptions.
5. If a letter evidencing removal from documentation is required, include that
information in the letter request with fee of $15.
6. If the request for deletion is accompanied by a complete, original or copy of a bill of sale and $8 per page filing fee, it may be recorded to evidence transfer of ownership.

Highly recommend that you utilize the USCG Bill of Sale document when you close your purchase of the USA flagged vessel. Be sure to list each and every appurtenance associated with the boat, electronics, dinghy and dinghy motor, sails, autopilot, software, anchors, lifeboat, generator, water purifier, etc., etc.,
Reference: https://www.dco.uscg.mil/Portals/9/D...-09-113141-317


If there are any mortgages or liens on the vessel be sure to obtain written release of such encumbrances to its title.
Recommend using the USCG release form linked here:
https://www.dco.uscg.mil/Portals/9/D...-01-144715-483

[Usersail]

Originally Posted by Montanan

You should pursue flag registering your vessel, else upon arrival it will be considered a vessel without nationality [i.e., stateless] and instantly be fully subject to the laws of the country it has entered, that opens up a can of worms that is very much country specific.

Yes, I'm thinking the same about it.

So, Polish flag in my case is a good choice? I will have a sale agreement only to register.

Thank you

[Usersail]

Originally Posted by Montanan

You state: "She is now under US flag." Was the vessel previously documented with the USCG by the prior owner, or has the US flagging been done by you? If by the previous owner, did you have the USCG notified of the change in title of the vessel?

By previous owner. I will ask about USCG notify

[danm4]

Originally Posted by Montanan

The CBI is citizenship by investment, in which country you state you have never been, indeed many such countries of convenience do not require residency.

Of further consideration for you, with which country are you a naturalized person, [place of birth, or derived from parentage]?

Yet you indicate that you have no dual citizenship, which would imply that you disavowed your natural citizenship, else you would have retained such; or in some countries dual citizenship is disallowed so by opting for a CBI by defacto you can lose your citizenship in such countries that do not permit duality of citizenship.

Key point: Your residency in Slovenia, an EU member country, means you will be required to pay VAT [and possibly Duty] to the EU country into which the cargo ship delivers your vessel by discharging it as cargo from the USA. The imported vessel will clear that country's customs agency upon arrival [when it is removed from the cargo ship as a cargoed good] and the tax and duty will be need to be paid before it will be released from that country's customs custody. The port of discharge of your vessel [good] from the cargo transport ship will dictate which country VAT will be charged.

The CE mark is a technical issue that will be reviewed by the customs agency upon clearance of the vessel and if not found to be in compliance, that could be a very expensive issue to resolve, e.g. a repowering of the boat.

You should pursue flag registering your vessel, else upon arrival it will be considered a vessel without nationality [i.e., stateless] and instantly be fully subject to the laws of the country it has entered, that opens up a can of worms that is very much country specific. By way of example, you may be required to immediately register your vessel with the country it has thence arrived. The flag State's jurisdiction is limited by the rights and
competences given to the coastal State when the vessel is within the territory of the coastal State.

Vessels that operate internationally or cross international borders are required to be registered. The country of registration is a ship's flag state and determines its nationality as well as which country's laws govern its operation and the behavior of its crew. A ship's flag state exercises regulatory control over the vessel and is required to inspect it regularly, certify the ship's equipment and crew, and issue safety and pollution prevention documents. The organization which actually registers the ship is known as its registry. A register that is open only to ships of its own nation is known as a traditional or national register. Registers that are open to foreign-owned ships are known as open registries and are sometimes called flags of convenience.

United Nations Convention of the Law of the Sea UNCLOS

Article 91

Nationality of ships

1. Every State shall fix the conditions for the grant of its nationality to ships, for the registration of ships in its territory, and for the right to fly its flag. Ships have the nationality of the State whose flag they are entitled to fly. There must exist a genuine link between the State and the ship.

2. Every State shall issue to ships to which it has granted the right to fly its flag documents to that effect.


Article 92

Status of ships

1. Ships shall sail under the flag of one State only and, save in exceptional cases expressly provided for in international treaties or in this Convention, shall be subject to its exclusive jurisdiction on the high seas. A ship may not change its flag during a voyage or while in a port of call, save in the case of a real transfer of ownership or change of registry.

2. A ship which sails under the flags of two or more States, using them according to convenience, may not claim any of the nationalities in question with respect to any other State, and may be assimilated to a ship without nationality.

Article 94

Duties of the flag State

1. Every State shall effectively exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag.

2. In particular every State shall:

(a) maintain a register of ships containing the names and particulars of ships flying its flag, except those which are excluded from generally accepted international regulations on account of their small size; and

(b) assume jurisdiction under its internal law over each ship flying its flag and its master, officers and crew in respect of administrative, technical and social matters concerning the ship.

3. Every State shall take such measures for ships flying its flag as are necessary to ensure safety at sea with regard, inter alia, to:

(a) the construction, equipment and seaworthiness of ships;

(b) the manning of ships, labour conditions and the training of crews, taking into account the applicable international instruments;

(c) the use of signals, the maintenance of communications and the prevention of collisions.

4. Such measures shall include those necessary to ensure:

(a) that each ship, before registration and thereafter at appropriate intervals, is surveyed by a qualified surveyor of ships, and has on board such charts, nautical publications and navigational equipment and instruments as are appropriate for the safe navigation of the ship;

(b) that each ship is in the charge of a master and officers who possess appropriate qualifications, in particular in seamanship, navigation, communications and marine engineering, and that the crew is appropriate in qualification and numbers for the type, size, machinery and equipment of the ship;

(c) that the master, officers and, to the extent appropriate, the crew are fully conversant with and required to observe the applicable international regulations concerning the safety of life at sea, the prevention of collisions, the prevention, reduction and control of marine pollution, and the maintenance of communications by radio.

5. In taking the measures called for in paragraphs 3 and 4 each State is required to conform to generally accepted international regulations, procedures and practices and to take any steps which may be necessary to secure their observance.

6. A State which has clear grounds to believe that proper jurisdiction and control with respect to a ship have not been exercised may report the facts to the flag State. Upon receiving such a report, the flag State shall investigate the matter and, if appropriate, take any action necessary to remedy the situation.

7. Each State shall cause an inquiry to be held by or before a suitably qualified person or persons into every marine casualty or incident of navigation on the high seas involving a ship flying its flag and causing loss of life or serious injury to nationals of another State or serious damage to ships or installations of another State or to the marine environment. The flag State and the other State shall cooperate in the conduct of any inquiry held by that other State into any such marine casualty or incident of navigation.

Thank you Montanan for your comprehansive explanations
I'm an Israeli citizen and resident that hold also Portuguese citizenship with no whatsoever business or assets in the EU.
I expect reaciving a new boat at La rochel France in the comming few weeks. The boat is registered under Gibraltar company and Jersy flag.
I would like to use the Temporary Admission rules as an Israeli resident.
I would like to know if ther is a distinguish between Citizenship vs residency for the EU VAT payment Issue?

Does the fact that I hold European citizenship I can be in risk of paying the VAT even though I am an Israeli resident?

Is there any connection between the issue of Temporary Admission Rules and the issue of the EU's 90/180 Days Rule.
As a Portuguese passport holder, can I stay in the EU for more than 90 consecutive days without risking VAT under TA RULES?

[Anders]

Originally Posted by Usersail

wolfgal I have EU ID residency card for one year, with option to prolong. I'm not spending more than 180 days in my EU residency country.

That makes it a bit more interesting and I would ask the EU if you are considered as an EU resident for this purpose. They are good at answering questions.

[Pete7]

Originally Posted by Usersail

After reading of all advises, I am inclined to think that I will pay EU VAT in Netherlands in day one, when she will be landed.

1. Is it possible to pay VAT in Netherlands if I don't have a Netherlands tax number?

2. Is it bureaucratic to pay VAT in Netherlands? Or easy and fast?

3. Can I flagged an boat in advance before arriving to EU? Do I need just an agreement, invoices for the flag process? She is now under US flag.

Thank you

Ignore the flag problem for now, on day one of arrival in the EU there will be a import duty and VAT occurrence. Don't worry about the Dutch, they will find a quick easy solution enabling you to pay the thousands of Euros due, trust me.

Once your yacht is in "free circulation" meaning import duty and VAT paid, then you can choose which country you want to register it in. Individual countries all have their own rules, some of which are more complicated than others. Spain wouldn't be my first choice.

Pete

[Anders]

Originally Posted by danm4

Thank you Montanan for your comprehansive explanations
I'm an Israeli citizen and resident that hold also Portuguese citizenship with no whatsoever business or assets in the EU.
I expect reaciving a new boat at La rochel France in the comming few weeks. The boat is registered under Gibraltar company and Jersy flag.
I would like to use the Temporary Admission rules as an Israeli resident.
I would like to know if ther is a distinguish between Citizenship vs residency for the EU VAT payment Issue?

Does the fact that I hold European citizenship I can be in risk of paying the VAT even though I am an Israeli resident?

Is there any connection between the issue of Temporary Admission Rules and the issue of the EU's 90/180 Days Rule.
As a Portuguese passport holder, can I stay in the EU for more than 90 consecutive days without risking VAT under TA RULES?

Citizenship is irrelevant and as a non EU resident you can use TA but if your boat is bought as sail away the boat may have to leave the EU first before returning.
As a Portuguese citizen you can stay for as long as you want but don't stay so long in any single country that you become resident.

[Montanan]

Originally Posted by danm4

Thank you Montanan for your comprehansive explanations
I'm an Israeli citizen and resident that hold also Portuguese citizenship with no whatsoever business or assets in the EU.
I expect reaciving a new boat at La rochel France in the comming few weeks. The boat is registered under Gibraltar company and Jersey flag.
I would like to use the Temporary Admission rules as an Israeli resident.
I would like to know if ther is a distinguish between Citizenship vs residency for the EU VAT payment Issue?

Does the fact that I hold European citizenship I can be in risk of paying the VAT even though I am an Israeli resident?

Is there any connection between the issue of Temporary Admission Rules and the issue of the EU's 90/180 Days Rule.
As a Portuguese passport holder, can I stay in the EU for more than 90 consecutive days without risking VAT under TA RULES?

Originally Posted by Anders

Citizenship is irrelevant and as a non EU resident you can use TA but if your boat is bought as sail away the boat may have to leave the EU first before returning.
As a Portuguese citizen you can stay for as long as you want but don't stay so long in any single country that you become resident.

Check the facts:

So you have dual citizenship, Israel and Portugal. You are NOT a resident of the EU. As a non-resident TA should be available.

When you state the vessel is flagged in Jersey are you stating the The British Register of Ships in Jersey which is the largest Category 2 registry in the Red Ensign Group; or are you stating the Jersey Small Ship Registry, which SSR is only open to Jersey residents, and is not an open registry, nor is it a proof of ownership or of nationality for a vessel?

Non-EU flagged vessels which are intended for re-export may be temporarily brought into and used for private purposes in the EU, or more strictly in the “Customs territory of the Community”, without Customs duties or Value Added Tax (VAT) needing to be paid. But this can only be done by persons who are not EU residents – in official terms – by people who are “established outside that territory”.

Jersey is not a part of the EU, so your vessel is not EU flagged, if it was EU flagged it would need to have VAT paid upon first entry / import into the EU.

Citizenship is relevant for attaining the flagging / nationality of a vessel which is not an open registry, that is to say, not a flag of convenience. Now you indicate that you are a resident of Israel and a citizen of Israel.

Please be advised that as an Israeli citizen you are apparently legally required to flag your vessel with Israel. It appears that you do not have the luxury of flagging the vessel under another nationality.

The Shipping and Ports Authority within the Ministry of Transport and Road Safety oversees vessel registration. See information and link below. The taxation due on importing a vessel into Israel is massive, 34.55% of its value upon arrival. I think you might not wish to bring your vessel there, that is a lot of New Shekels.

Reference: Boat registration – Foreign Flag – Youval Harari

Israel:

Who is required to register in the Israeli flag

A ship owned by an Israeli citizen or owned by a company registered in Israel or owned by a foreign company, of which more than 50% of its shares are owned by an Israeli citizen, must be registered in the Israeli vessel registry. It is not possible to keep a vessel registration in two countries (double registration).

Year of production over 7-10 years

In accordance with the Regulations of the Shipping Manager, it is not possible to import a ship into Israel and register an Israeli flag when the ship is over 10 years old and 7 years a commercial vessel. The regulation is explained by the need to maintain the proper level of safety of vessels in Israel and to prevent the importation of obsolete and unsafe vessels.

(Sailing license / sailing permit (sailing certificate

A ship in the Israeli flag must be licensed by the Ministry of Transport, the Shipping Administration. A ship in a foreign flag that is in Israel must have an Israeli permit. A 30-day delay can be obtained from the Marina Manager and an extension of 90 days from the Marina Manager.

Skipper’s License

An Israeli skipper sailing a boat with an Israeli flag must hold Israeli skipper licence. An Israeli skipper sailing a foreign flag boat in Israel’s coastal waters must hold Israeli skipper licence.Skipper with a foreign citizenship (who does not have Israeli citizenship) who is sailing a foreign flag boat in the coastal waters of Israel does not have to have an Israeli skipper licence. He must comply with the requirements for an operator license of the flag state and must also have an insurance policy.

Special Committee – Registration of a vessel up to the of age 15 under Israeli flag
New instructions from Ofer Ben Ezra, Director of the Small Craft Department, allow an application for an Israeli flag registration for vessels up to age 15.

Total Refit
Complete Renovation vessel,Total Refit, under the supervision of a marine engineer or marine assessor, may in special cases grant an exceptional engineering permit for registration under Israeli flag. In this case, you must apply through a marine engineer recognized by the Shipping and Ports Authority in the Ministry of Transport.

Import of vessels over the age of 15 under a foreign flag
You can import vessels of any age under a foreign flag. Foreign nationals who do not have citizenship or residency in Israel can import a vessel to Israel when the vessel is registered on their name. Israeli citizens can import vessels registered under a foreign company. There is a conflict here with the requirement to register under Israeli flag for vessels owned by Israeli nationals or companies. Because the State of Israel is the only one in the world that limits the registration of vessels according to their age at the time of registration, which is clearly unreasonable, the Ministry of Transport does not investigate the ownership of foreign companies importing vessels into Israel. In any case, both the Israeli flag and the foreign flag must pay import duties at a rate of 34.55%, consisting of 15% sales tax and 17% VAT. The value of the vessel for tax calculation takes in consideration the purchase value and the current vessel technical condition.

In order to receive details and to register under foreign flag, you may desire to contact

Yuval Harari – Naval Architect & Yacht Surveyor, Marina Tel Aviv, Eliezer Perry 14 Tel Aviv 61162Mobile Phone 054-4353777 Fax 077-4701945Email: harari.youval@gmail.com


Importing yachts to Israel

The meaning of “yacht import” includes sailing to Israel on its own or transporting it as a cargo on a ship. The tax on importation of a yacht to Israel is 17% VAT is levied on Israeli flag vessels and on foreign flag vessels as soon as they are imported to Israel. A foreign flag vessel may stay in Israel for 3 months as a guest in Israel, after which he must leave Israel or pay the tax as required by law. In recent years, an additional 15% import tax has been added, known as “Lapid Tax” after the Minister of Finance who initiated it. First add 15% and then 17% so that the total tax is 34.55%.

Calculation of import tax

In the past the tax was calculated according to the value of the vessel on the day of payment. The tax day is calculated according to the value of the vessel on the day it arrives in Israel, plus interest and linkage. The calculation is performed according to the assessment of the VAT assessor, and if there is disagreement regarding the value of the vessel, it is possible to present an assessment of the seller’s appraiser and accepted by the VAT authorities. Such assessment is based on the value of similar vessels, price lists and the technical condition of the vessels. In order to determine the technical condition of the vessel, a survey is carried out on the ship and a report is issued accordingly, the cost of repairing the vessel is reduced from its value in proper condition and on this basis the valuations are submitted.

All the best. Enjoy your sailing.