Paying Tax Again on your Boat

[Dooglas]

Originally Posted by 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

Applying payroll tax to wages over $400K (which are now exempt) would be for the purpose of continued funding for the social security program. It might be interesting to know how many full time cruisers rely on U.S. social security benefits for at least part of their income.

[dfelsent]

Originally Posted by admiral 31

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

My boat was built in the Netherlands in 1972.
Imported to the us and duty paid.
Exported to the UK about 1996 (left US documentation and entered SSR) and was VAT exempt. Eventually I (4th owner) exported her to the US and paid duty. (Left SSR and re entered US documentation )
Now after three + years if I were to bring her back to the UK I would need to pay VAT.

It has to do with dates and exemptions, not what we wish to be true. Not what we think makes sense.

I don’t know the reality of your situation, just that all this sometimes seems arbitrary and not sensible. But it is what it is.

[goboatingnow]

VAT is not a sales tax , VAT is a tax on transactions related to goods and services

Vat must be accounted for every time ( every time )
1. Purchase
2. Sales
3. Import
4. Export

Hence vat does have to be accounted for ( and sometimes paid ) every time these events occur.

However various reliefs are applied (/there are hundreds of reliefs and special cases )

1. Where both parties are not vat registered
2. RGR , this allows a person established in the EU , to export a vat paid item , and reimport it without import vat upto 3 years ( the 3 years is in every country , it’s not 2 years in France )
, in fact the vat legislation says 90 days extended by agreement with customs to 3 years and in fact , yiu can extend it further in special cases by agreement

The uk has signed into law all EU law upto the beginning of the withdrawal period , hence it’s a little EU onto itself !!

Vat can be paid on things multiple times , it’s not a simple sales or asset tax , and is completely different to US sales tax.

by the way I beleive the Hmrc has agreed 4 years for yachts returning from the EU

[NYSail]

When I bought my boat I paid sales tax here in New York. If I Sail out of the country for 5 years and return I do not have to pay “sales tax” again.

Greg

[Kd9truck]

RodgerLloyd,
Oh man I am with you, I payed New York State sales tax on the purchase of my used vessel at 8% and I was looking at trying to some how make the purchase in Rode Island, there are ways to do that, but it’s a lot of work.
At 20% possibly every couple of years you might be better off buying a vessel and leaving it in a tax free zone (not sure there is one that’s another thread) and spending that 20% traveling to it?
Sad to say the US will be increasing taxes overall, the middle class will be burdened the most, this will shrink the already receding recreational boat market.
I believe they will be focusing the tax on fossil fuels (at first) so sailing vessels should squeak past but that’s just theory. The Covid pain will continue and we will all be paying for all of that free money, debt forgiveness, quantitative easing and the only Solis is imagining what this planet would look like without the various types of relief provided.

[Tudorsailor]

Out of interest how are visiting yachts to the USA treated? Is there a time limit on how long one can stay before being charged a tax?
FWIW, I have a yacht that I bought 12 years ago in the UK and paid VAT but is currently in Greece!

TS

[SailMoonShadow]

Originally Posted by ggray

Is the OP really exporting and importing his boat? I would think that implies a sales transaction, not a matter of movement, or travel.

Nope! The OP is talking about Value Added Tax (VAT) which applies to the sale of goods and services and is currently 20% apart from heating fuel which is 5%. Some items, like food and children's clothes, are zero rated.

As far as this question is concerned the rule has always been that if you took your boat out of the UK for more than three years you will have been deemed to have "exported" it. Then when you return to the UK you will be "importing" it again and will have to pay VAT on its current value.

Up until now, that rule had been, pretty much, ignored provided that the boat was in the same ownership and hadn't been significantly improved to increase its value.

from January 1st 2021 that rule is going to be enforced which is proving to be an enormous headache for the (approx) 30,000 UK registered boats currently in the Mediterranean and for those on or contemplating circumnavigation.

The cynical might say that Her Majesty's Revenue and Customs (HMRC) which is equivalent to the US IRS, are using the cover of "Brexit" to bring this in because they see it as "a nice little earner" as a lot of UK boat owners will have trouble cruising the Med after Jan 1st as the UK will then be classed as a "third country" (and subject to the same visa restrictions as everyone else whereas while in the EU we were able to stay for as long as we liked) so many UK boat owners may bring their boats "home".

[skipmac]

Originally Posted by Tudorsailor

Out of interest how are visiting yachts to the USA treated? Is there a time limit on how long one can stay before being charged a tax?
FWIW, I have a yacht that I bought 12 years ago in the UK and paid VAT but is currently in Greece!

TS

Unless you plan to legally import the boat into the US for permanent use there is no import duty nor a federal tax or VAT.

Unfortunately other taxes vary with each state. In general I can confirm that as a foreign resident with a cruising permit you would be very, very unlikely to be billed for any state taxes. This might change if you kept the boat in one state for a long period of time. Most states will require boats to state register any vessel that is moored in that state for more than 90 days. However most, not all, states would not apply this to non US citizens. If so this is usually small, on the order of $50-$200 for most states depending on the size and age of the vessel.

Also most states will credit the sales tax paid on a boat in another state. I think the VAT might qualify you for this exemption IF that question ever arose.

[Pete7]

Originally Posted by admiral 31

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

Well, there rules are here and there is a link 2/3rds of the way down the page to Retrun of Goods etc.

https://www.gov.uk/government/public...nd-from-the-uk

[Tudorsailor]

Originally Posted by skipmac

Unless you plan to legally import the boat into the US for permanent use there is no import duty nor a federal tax or VAT.

Unfortunately other taxes vary with each state. In general I can confirm that as a foreign resident with a cruising permit you would be very, very unlikely to be billed for any state taxes..............

Hmm. Might be doing the ARC next year! Who issues the cruising permit, and is there a charge for it?

Thanks

TS

[Icarus]

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

Some 50 or so years ago the had something similar in Australia. After being absent for 5 years you had to pay some import duty on your vessel.
The reason behind was that while away the boat value could improve, like getting a complete refit in a labour cheap country which some of the yacht manufacturers actually did with large powerboats.
Anyway they knocked it on the head pretty quick.
I remember I had to apply for an export and a re import license back in the seventies.

[Montanan]

Originally Posted by Tudorsailor

Hmm. Might be doing the ARC next year! Who issues the cruising permit, and is there a charge for it?

Thanks

TS

What is a Cruising Permit?
Under US federal law, a foreign-flagged pleasure vessel may be issued a cruising permit by U.S. Customs and Border Protection, which enables a vessel to cruise freely in U.S. waters.

In other words, the cruising permit exempts pleasure vessels of certain countries from the requirement of undergoing formal entry and clearance procedures in the United States. In many states, including Florida, a cruising permit also allows a vessel to avoid being subject to the *relevant-use taxes. Depending on the port or jurisdiction in which the application is submitted, Customs may require the vessel to clear through a foreign port before issuing the license.

The Rules Remain
A cruising permit does not dispose of all rules relating to a vessel’s travel within our borders. Even with a permit, the captain must notify Customs whenever the vessel moves from one port jurisdiction to another, or when it enters and departs U.S. waters. Depending on the size, a vessel may also be required to file a Notice of Arrival/Departure when bound for, or departing from, ports within the United States. Notices can be filed electronically on the National Vessel Movement Center’s website, and the amount of notice required prior to arrival depends on the length of the voyage from the relevant foreign port to U.S. waters. Failure to file a proper NOA can result in fines or the Coast Guard not allowing the vessel to enter U.S. waters until sufficient information has been provided.
Additionally, a cruising permit will be renewed only if at least 15 days have elapsed since the previous permit expired or was surrendered and the vessel arrives in the U.S. from a foreign port or place. Traveling outside U.S. waters while a cruising permit is effective does not satisfy the 15-day requirement. Hence, vessel owners must plan their cruising itinerary a bit more carefully as the renewal date approaches.

Strangely, ports oftentimes interpret the rules relating to cruising permits in different ways. For example, the port of Miami might issue licenses *differently than the port of Fort Lauderdale. Some ports are simply sterner than others, but the rules have become stricter in all jurisdictions in recent months. For example, cruising permits are typically issued for one-year periods, but port officials are now consistently awarding shorter cruise periods to certain vessels.

Additionally, some ports are not allowing permits to be renewed if the relevant vessel is for sale, even if it is duty paid in the United States. These procedures are especially enforced against vessels with foreign owners, and the problem is exacerbated by the lack of consistency in the procedures, even within the same port office.

State laws also apply.

Each State has its own rules as to registration and length of temporary visitations to the State, generally 60 to 90 days before one has to register your boat with a State as that indicates the State has become a place of principle use. So determine which State or States you intend to transit and then research on line, typically it is the Department of Motor Vehicles. There are privilege taxes which may be applicable - Use taxation, in lieu of Sale tax which may be due upon registration.


https://help.cbp.gov/s/article/Artic...language=en_US

As of September 5, 2018, Small Vessel Reporting System (SVRS) is no longer in service and float plans are no longer required or accepted.

All operators of a non-commercial small vessel/pleasure boat must report immediately to the nearest U.S. Customs and Border Protection (CBP) Port of Entry upon arriving into the United States (U.S) from a foreign port or place.

You may report by:

Telephone
CBP ROAM app, or
In person (at the nearest Port of Entry when you return to the U.S.)
If referred for a formal entry, the operator of the pleasure boat/small vessel must provide a formal vessel entry on CBP Form 1300 within 48 hours. The operator will also need to report any foreign merchandise on the boat that is subject to duty.

Upon arrival in any port or place within the U.S., including, the U.S. Virgin Islands, any vessel from a foreign port or place, any foreign vessel from a port or place within the U.S., or any vessel of the U.S. carrying foreign merchandise for which entry has not been made, the master of the vessel must immediately report that arrival to the nearest CBP facility. The CBP officer may require the production of any documents or papers deemed necessary for the proper inspection/examination of the vessel, cargo, passenger, or crew.

CBP has designated specific reporting locations that are staffed during boating season for pleasure boats to report their arrival and be inspected by CBP. The master of the boat must report to CBP telephonically and be directed to the nearest Port of Entry to satisfy the face-to-face requirement, or report to the nearest designated reporting location along with the boat's passengers for inspection.

A cruising license exempt pleasure boats of certain countries from having to undergo formal entry and clearance procedures and can be obtained from the CBP Port Director at the first port of arrival in the United States. U.S. pleasure craft and foreign-flag vessels without a cruising license, which are 30 feet or longer in length, must pay an annual fee of $27.50 for the user fee decal. User Fee Decals may be purchased online through the CBP website.

While vessels that receive the CBP Cruising License may have some CBP reporting requirements reduced, the license does not exempt these vessels from the requirements for filing the Notice of Arrival (NOA) with the National Vessel Movement Center (NVMC) with the U.S. Coast Guard.

Under 33 Code of Federal Regulations (CFR) § 160.205 required to file a NOA with NVMC prior to arrival into the US. For more information on the reporting requirements, please visit the National Vessel Movement Center (NVMC).

U.S. citizens should carry proof of citizenship such as a passport or birth certificate. Canadian citizens should present proof of Canadian citizenship; Mexican citizens may present a border-crossing card. Canadian, Mexican, and U.S. citizens must carry a passport if they are arriving in the U.S. from outside the Western Hemisphere.

Permanent residents of Canada who are nationals of a designated Visa Waiver Program (VWP) country, may enter the United States by means of a pleasure boat along the northern border of the United States, if in possession of a valid, unexpired, passport issued by his or her country of nationality, and an unexpired multiple entry Form I-94W, Nonimmigrant Visa Waiver Arrival/Departure Form, or an unexpired passport, valid unexpired United States nonimmigrant visa and I-94 Arrival/Departure Form. Entry may be made only as a visitor for pleasure.

If your boat has anchored or tied up, you are considered to have entered the United States. No one shall board or leave the boat without first completing customs processing, unless permission to do so is granted by the CBP Officer in charge. The only exception to this requirement is to report arrival. If it is necessary for someone to leave the boat to report arrival to CBP, he or she must return to the boat after reporting and remain on board unless instructed otherwise. No one who arrived on that boat may leave until the CBP Officer grants permission to go ashore. A report of arrival into the United States should be made to the CBP office nearest to your point of entry.

[Tudorsailor]

Many thanks Montanan

TS

[barryglewis]

When we cleared in to Bundaberg Qld a month ago, Border Force officials politely told us from next year, if going overseas for more than a year, will need to export the yacht, and import it on return.

[Montanan]

Originally Posted by barryglewis

When we cleared in to Bundaberg Qld a month ago, Border Force officials politely told us from next year, if going overseas for more than a year, will need to export the yacht, and import it on return.

Indeed all to often yachties just depart with their boat and do not fulfill the requisite clearance and export procedures and documentation, which can thence become a very expensive outcome when they return.

When one takes an asset out of a country it is an export transaction, treat it as such. There are procedures that should be followed.

By way of example, for Australia:

Clearance
Australian Border Force clearance is required before you depart. This is available at any appointed port. You should contact us in advance to avoid unnecessary delay. It is an offence to depart without clearance.

Masters of Australian or imported vessels may be required to 'enter' the vessel for export if the craft is to be sold or positioned overseas.

Sailing in Australian waters
When you arrive in Australia, there are a number of clearance options depending on when you intend to leave. If you intend to leave within twelve months, you may be granted a Control Permit, asked to provide a security for temporary importation or to formally import the craft.

All options provide access to Australian waters and lands.

Control Permits
A Control Permit will be issued to the Master of the craft if we are satisfied the craft is transiting Australia for non-commercial purposes. Control Permits may be issued for a period of 12 months, or the length of the Master's visa, whichever is less. Extension of the permit may be granted on application, provided that you meet eligibility requirements and have an appropriate visa.

A person eligible to apply for a Control Permit must be a tourist or a temporary resident of Australia. Australian citizens are not eligible for a Control Permit unless they have overseas residency. Satisfactory evidence of overseas residency is required.

For a Control Permit to be issued, the craft must meet the following criteria:

the craft must have arrived from overseas and will be scheduled to depart for overseas
the craft must have arrived under its own power and not as cargo
the craft must be transiting Australia for non-commercial purposes i.e. is not engaged in the commercial carriage of cargo or passengers
the craft may be privately or corporately owned (however, a Control Permit is not granted where a craft is owned by a corporation and more than 50% of the owners of the corporation are Australian residents)
the craft must not be employed for any activities of a commercial nature (e.g. charter, hire or lease)
the craft, or parts of the craft, are not to be offered for sale, sold or otherwise disposed of.
However, the craft may remain in Australia for repair or refit.
Control Permits are not issued if the vessel is owned or operated by an Australian resident unless exceptional circumstances apply.
If circumstances of the craft's presence in Australia change, you are required to advise DIBP. Failure to do so can result in a Control Permit being revoked and the vessel being deemed imported at which time payment of duty and tax will be required.

What if the Master wants to fly home and come back later?
This is possible but you must advise us and make arrangements for appropriate control over the vessel.
Further information can be obtained from our office at your intended port of arrival.

Temporary importation of vessels
If your visa allows you to reside in Australia for a limited period you may be required to temporarily import a craft into Australia. Temporary importation without paying customs duty and tax is subject to:

The vessel being exported within 12 months of arrival; and
A security in cash or an appropriate bank guarantee being provided equal to the duty and tax that would otherwise be payable.
Return of security
If a cash security has been given and a cash refund is sought you must give us advance notice at the proposed port of departure before you leave.

Formal Importation
If you are an Australia citizen, permanent resident of Australia or migrating to Australia on a craft purchased outside Australia, importation of the craft is required. Customs duty and tax are payable on any craft imported into Australia upon its arrival.