Paying Tax Again on your Boat

[Lepke]

Some states require marinas to report the boats staying there for property tax or a yearly fee if the boat is documented and not state registered. If you stay at a private dock or off sailing the world, usually the tax people don't know you exist. When you leave the area and return, there's no penalty tax. Although I wouldn't be surprised to see it in California, NY, NJ or other places that can't control their spending.

[Montanan]

If foreign-made goods are sold to a customer outside the U.S., and returned to the U.S. importer because customer is not satisified. Are the goods duty-free?

If a U.S. retailer import goods from a foreign manufacturer, sells the goods to a consumer in a third country and then the consumer return the goods to the U.S. retailer because they're not satisfied with the goods, subheading 9801.00.26 of the Harmonized Tariff Schedule (HTS) may be applicable under certain conditions.

Subheading 9801.00.26, HTS, provides for articles, previously imported, with respect to which the duty was paid, if:

They were exported within 3 years after the date of such previous importation.
Sold for exportation and exported to individuals for their personal use, re-imported for the reason that such articles do not conform to sample or specifications.
Re-imported without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.
Re-imported as personal returns from those individuals; and re-imported by and for the account of the person who exported them from the United States within one year of the exportation.
If all of these conditions are satisfied, the goods are eligible to be re-imported duty- free.

If the imported articles are classified in subheading 9801.00.26, HTS, the goods are exempt from quota and visa requirements.

If the U.S. retailer exported the goods with the benefit of a drawback, the goods will not be eligible for duty-free treatment upon re-importation. The reason is that U.S. Note 1(a), Subchapter I, Chapter 98, HTS, states that subheading 9801.00.26 would not apply to an article exported with the benefit of drawback.

19 CFR § 10.8a - Imported articles exported and reimported.
CFR
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§ 10.8a Imported articles exported and reimported.
(a) In addition to regular entry procedures, supplementary documentation is required in connection with duty-free entries under subheading 9801.00.25, Harmonized Tariff Schedule of the United States (19 U.S.C. 1202), of articles which were originally entered duty paid, removed from Customs custody, and subsequently exported, if:

(1) The articles were exported within 3 years after the date of the previous importation.

(2) The articles were not advanced in value or improved in condition by any process of manufacture or other means while abroad.

(3) The articles did not conform to sample or specifications abroad.

(4) The articles are reimported by or for the account of the person who imported them into and exported them from the United States.

(b) The following supplementary documents shall be filed in connection with the entry of articles claimed to be free of duty under subheading 9801.00.25, Harmonized Tariff Schedule of the United States:

(1) A declaration by the person abroad who received and is returning the merchandise to the United States, in substantially the following form:

I declare that the___________ (Description of articles) were received by me from _________________ (Name and address of U.S. exporter), that they have not been advanced in value or improved in condition by any process of manufacture or other means and are being returned to ________________(Name and address of consignee in the United States) because they do not conform to sample or specifications for the following reasons:

(Date) (Signature)
(Address) (Title)
(2) A declaration by the owner, importer, consignee, or agent, in substantially the following form:

I declare that the ___________ (Description of articles) were previously imported into the United States at the Port of ________ (Name of port), Entry No.___, on _______ (Date of entry) by ___________ (Name and address of importer) at which time duty was paid; that they were exported from the United States at the Port of ________ (Name of port) on __________ (Date of exportation) by ___________ (Name and address of exporter) without benefit of drawback; that the articles are being reimported by or for the account of ________, and, that the attached declaration from ________________ (Name of foreign shipper) is correct in every respect.

(Date) (Signature)
(Address) (Title)
(c) If the Center director concerned is reasonably satisfied because of the nature of the articles or production of other evidence that the requirements of subheading 9801.00.25, Harmonized Tariff Schedule of the United States, and the related section and additional U.S. notes have been met, he may waive the production of the documents provided for in paragraph (b) of this section.

[T.D. 72-221, 37 FR 17469, Aug. 29, 1972, as amended by T.D. 89-1, 53 FR 51247, Dec. 21, 1988]

[Reel Love]

Originally Posted by RogerLloyd

In the UK, the rule next year will be that if you take your UK tax paid boat outside the UK for over 3 years when the boat returns you will be eligible for another dose of tax, as if you had just purchased the boat from new, but based upon its current value (presumably, whatever that is with out a sale being made).

Please would you tell me the equivalent tax situation in the USA ? I.e. what tax is due on a USA tax-paid vessel returning to the USA after some years abroad ? Thanks

Sir: You have received a lot of responses here, many of them may or may not fit your situation.

As to sales tax:
There are a lot of requirements that must be complied with to avoid what you are referring to as a "double taxation." However, suffice to say that generally we only pay sales tax once on a purchase.

Ad valorem tax:
(a/k/a personal property tax) As noted, ad valorem taxes vary state by state. But again, there are a lot of requirements that must be complied with to either avoid the tax or be subject to them. There are various titling, residency and registration laws/requirement that may or may not exempt the vessel from being taxed.

Direct Answer
In direct answer to your question, if a vessel returns to waters governed by a particular state for a length of time that would subject that vessel to a state's registration/licensing laws, then if that state was the same state that the vessel left from, there would not be any new sales tax charged, but the vessel would be required to be re-registered, and there could be penalties charged for the owner's failure to keep the vessel properly registered.

Now, if the owner returned to the United States and the boat is kept in waters for a length of time that would subject that vessel to that state's registration and/or licensing laws, and it was a different state than the one that it left many years prior, then the "new" state could subject the owner to "new" sales taxes. However, if sales taxes were paid on that vessel by the same owner in another state, then some, not all, states have reciprocity laws that will afford the owner a credit for prior taxes paid.

Our entire system of taxes on vessels is, to say the least; complicated. Many states limit the amount of sales taxes that can be charged, etc. Some states have shorter residency (vs transient) requirements than others. On top of the sales tax issues are Registration/Licensing requirements, and there is also a Federal documentation system in place that can be used to avoid state licensing requirements too.

To be short, it's complicated, complex, and confusing with lots and lots of differing laws that vary state by state.

[wizoc]

A quick google search will show no sales tax due in RI new or used for all boats purchased after 1993.

[jmschmidt]

Most responders are correct. An import duty of 1.5% plus a few assorted fees must be paid on the import of most foreign build vessels. Get a low-ball market survey value.
Check around. Yachts built in South Africa are duty exempt if imported directly from SA to the US. However we imported one from French Polynesia in 2010 which was declared duty free. We did the same thing in 2019 and were told only the direct import from SA would have been duty free.

I'm told by old-time customs agents that it seems US Customs in DC has a new lady lawyer who is trying to make a name for herself by socking everyone who imports a SA built boat if it has lived anywhere else on the planet for any period of time.

The US does not have anything like Mexico's Temporary Import Permit (TIP) which is good for ten years for $300 and is renewable every ten years, maybe for ever.

[jewt]

No sale tax on used boats in NC. Handled the purchase of my boat throught a NC broker and got it out of Florida soon enough to aviod their tax.

[Clivevon]

OP is talking about UK Value added tax (VAT) which is a sales tax on goods and services, currently 20%. I Am wondering though how the equivalent US tax situation is in any way relevant? Looking for any kind of logic to tax law is futile. The government is elected to make our financial choices for us and All taxes are a form of legalised extortion - demanding money with menaces- so the govt can fund its decisions. Some tax is a mark of a civilised society. Above that it is a sign of an out of touch liberal elite imposing its values on a partially apathetic people - 1 in 3 potential electors dont vote. Where you draw that line is the big question. Good luck!

[Kd9truck]

RogerLloyd, (op) what was your tax law before the Euro-zone? What was it with? How has it changed, if any, since Brexit?

[Dooglas]

Originally Posted by acem

I live in Arkansas. I have not yet had to pay sails tax on a used boat here and they came from out of state. I expect this to change in the future.

Oh my gosh. Arkansas taxes the sails too?!? What next?

[Kd9truck]

One thing is certain we all be paying more in taxes shortly, the US just put a 50 year politician in office Again!? and he has sworn to increase the taxes on everybody making over 400k
Skip to subtext: if you pay taxes you will be paying more for those who don’t, like the Euro zone and the Greeks.
Maybe....because so many judges and politicians are vessel owners they will leave the shrinking boat industry alone...but the EPA will probably be inforceing some form of bull$&!+ carbon tax on the fuel....glad I use mostly wind.

[Kd9truck]

Originally Posted by Dooglas

Oh my gosh. Arkansas taxes the sails too?!? What next?

Wind tax in lue of carbon tax😭😩☹️

[admiral 31]

Originally Posted by CarlF

I believe that a US CG documented boat is not exported unless it is reflagged to another country. It can leave the US indefinitely without owing the 1.5% import duty when it returns. It's probably advisable to pay the $26 each year to keep the CG documentation in force.

At risk of thread drift!



Does anyone know if this scenario also applies to a UK Registered & renewed (SSR) boat that has been out of the UK for more than 5 years?


This also applies to US boats in that how would they know you had been away?

[RogerLloyd]

Before the UK joined the EU we had sales tax. Then we had VAT (Value Added Tax) [which is like Australia's GST]. VAT is basically a sales tax, which applies to new goods on first sale (unless the goods are heading for export when presumable they get charged the equivalent of VAT when imported to some other country); but VAT does not apply on resale of goods. Before the UK joined the EU I was not aware that there was any law requiring the boat to be liable for any extra VAT to be charged when a VAT-paid boat re-entered the UK after any number of years out of the country.

Then the UK joined the EU. The current rate of VAT is 20% in the UK and similar (but not necessarily exactly that in other EU countries). The EU covers a much larger land and cruising area than the UK. The EU has a rule that says if you take your boat out of the EU area for >3 years then you pay VAT again when you re-import it.

[The rule actually states that boat will be charged VAT again on re-importation, unless RGR, Returned Goods Relief is applicable. This means a zero charge liability, provided there is no change in ownership and no improvement to the goods, and their export was less than 3 years ago.]

Since the area of the EU is considerably greater than that of the UK, and of course included the UK, joining the EU effectively enlarged the area that a UK-registered boat could roam indefinitely without paying a second lot of VAT again. So everybody was happy.

However, now that the UK has left the EU, after 1st January 2021 the UK has decided that it will impose VAT again on any boat re-imported after being outside (the smaller waters of) the UK for more than 3 years. For those boats that have been outside the UK but in EU waters already for more than 3 years, the UK has decided that it will be incredible generous [ !!! ] and give boat owners one year from 1st January 2021 to allow them to return such boats to the UK without paying VAT again.

[Of course, bringing their boat back to the UK next year will be incredibly easy, particularly for boats based in the eastern Mediterranean, and especially for owners still working, and in any case UK residents will not be able to be tourists in the EU for more than 3 months at a time; Oh, and of course, there will be no restrictions due to covid from now until the end of next year. Regardless of gales and headwinds boat owners will just add wheels and brakes to their boat and charge off on the motorway at 60 MPH. How incredibly generous of UK customs to give us a whole year's grace to get our boats back to the UK.]

My problem is that I like to be a good, law-abiding citizen and I understand that governments need to charge taxes, and even that taxes will need to be raised after Covid (and probably because of Brexit as well). I am a reasonable man, and unfortunately, I expect my Government to make sensible, reasonable laws.

Unfortunately, I cannot bring myself to pay VAT twice (or even multiple times !) [at 20% of value !] on the SAME boat.

[admiral 31]

Originally Posted by RogerLloyd

Before the UK joined the EU we had sales tax. Then we had VAT (Value Added Tax) [which is like Australia's GST]. VAT is basically a sales tax, which applies to new goods on first sale (unless the goods are heading for export when presumable they get charged the equivalent of VAT when imported to some other country); but VAT does not apply on resale of goods. Before the UK joined the EU I was not aware that there was any law requiring the boat to be liable for any extra VAT to be charged when a VAT-paid boat re-entered the UK after any number of years out of the country.

Then the UK joined the EU. The current rate of VAT is 20% in the UK and similar (but not necessarily exactly that in other EU countries). The EU covers a much larger land and cruising area than the UK. The EU has a rule that says if you take your boat out of the EU area for >3 years then you pay VAT again when you re-import it.


[The rule actually states that boat will be charged VAT again on re-importation, unless RGR, Returned Goods Relief is applicable. This means a zero charge liability, provided there is no change in ownership and no improvement to the goods, and their export was less than 3 years ago.]


Since the area of the EU is considerably greater than that of the UK, and of course included the UK, joining the EU effectively enlarged the area that a UK-registered boat could roam indefinitely without paying a second lot of VAT again. So everybody was happy.

However, now that the UK has left the EU, after 1st January 2021 the UK has decided that it will impose VAT again on any boat re-imported after being outside (the smaller waters of) the UK for more than 3 years. For those boats that have been outside the UK but in EU waters already for more than 3 years, the UK has decided that it will be incredible generous [ !!! ] and give boat owners one year from 1st January 2021 to allow them to return such boats to the UK without paying VAT again.

[Of course, bringing their boat back to the UK next year will be incredibly easy, particularly for boats based in the eastern Mediterranean, and especially for owners still working, and in any case UK residents will not be able to be tourists in the EU for more than 3 months at a time; Oh, and of course, there will be no restrictions due to covid from now until the end of next year. Regardless of gales and headwinds boat owners will just add wheels and brakes to their boat and charge off on the motorway at 60 MPH. How incredibly generous of UK customs to give us a whole year's grace to get our boats back to the UK.]

My problem is that I like to be a good, law-abiding citizen and I understand that governments need to charge taxes, and even that taxes will need to be raised after Covid (and probably because of Brexit as well). I am a reasonable man, and unfortunately, I expect my Government to make sensible, reasonable laws.

Unfortunately, I cannot bring myself to pay VAT twice (or even multiple times !) [at 20% of value !] on the SAME boat.

Will read this & get back to you!



Given that the boat in question was built & launched in 1980 in Belguim, well before VAT was imposed, & has since been registered in the UK (SSR)

personally fail to see how I can be charged VAT upon supposed re-importation to the EU or Uk

[Mag3]

Rhode Island has no sales tax on the purchase of new boats.