Canadian or US Delaware LLC Registration ?

[Northernguy59]

Howdy sailors !

I am trying to figure out how to register a new to me sailboat. The boat was built in France and imported into the USA and carries a USCG registration. I am and Canadian citizen living in Nova Scotia and I am also an American citizen, so I am a dual citizen. I spoke with a Canada Customs agent this morning and a duty of 9.5 % is due upon importation, plus NS applicable taxes.

I told him I am a dual citizen and may keep the boat registered in the USA, which he said that cannot be done, as you have to be a permanent resident in one of the two countries at a time. I am not sure if this is true or not but that is what the agent told me. The boat will stay 80 % of the time in Canada I am assuming at this point.

I wonder if I start an LLC in Delaware and register the boat with the LLC if that would create any problems ? I have done a search but have not found any particular situation such as I have. I need to sort this out ASAP

Thanks for your insight and comments in advance !

Dale

[Kelkara]

Are you trying to avoid paying Canadian taxes? As a Canadian resident the only way to do that is to never bring the boat to Canada. As a Canadian Resident you will have to pay the tax as soon as you bring the boat to Canada ... citizenship of owner and flag of boat are irrelevant.

[boatpoker]

Originally Posted by Kelkara

Are you trying to avoid paying Canadian taxes? As a Canadian resident the only way to do that is to never bring the boat to Canada. As a Canadian Resident you will have to pay the tax as soon as you bring the boat to Canada ... citizenship of owner and flag of boat are irrelevant.

As a Transport Canada Appointed Tonnage Measurer I get involved with this all the time .... As a Canadian "citizen", resident or not you are liable for all taxes and duties as soon as your vessels hits Canadian waters regardless of registry.

[Scott Berg]

Why not buy it in Canada and not pay the US Duty instead? About the same I think. They you'll just pay the applicable taxes in Canada and won't have to pay the the US ones. I'm guessing they quoted price includes US Duty (1.5%, so less than Canada's) so it would be less that then plus Canadian Duty and any Provincial taxes but no state taxes in the US. You'll have to pay it when you bring the boat to Canada as noted so why not save by doing it first?

[Northernguy59]

Originally Posted by Kelkara

Are you trying to avoid paying Canadian taxes? As a Canadian resident the only way to do that is to never bring the boat to Canada. As a Canadian Resident you will have to pay the tax as soon as you bring the boat to Canada ... citizenship of owner and flag of boat are irrelevant.

I am not trying avoid anything, I am just trying to find out what options are available to make a decision.

[Northernguy59]

Originally Posted by boatpoker

As a Transport Canada Appointed Tonnage Measurer I get involved with this all the time .... As a Canadian "citizen", resident or not you are liable for all taxes and duties as soon as your vessels hits Canadian waters regardless of registry.

Thanks, Great information

[jmschmidt]

I don't know if these bits of information will be helpful.

I am a US citizen (only) and a resident of Washington State. My company, a Washington State LLC, owned a USCG "Documented" (not "registered", that is a state function) charter boat based in the BVI for three years. Its hailing port was Honolulu, Hawaii. I moved the boat to Puerto Rico to sell it to an American charter company. The boat had not previously been "admitted into the US." The move to Puerto Rico cost about $4,000 including duty and a whole bunch of miscellaneous fees. A boat owner's obligation to pay state and local fees and personal property taxes depends on the state and location of the boat, not who owns it or where they live. I have owned boats in Hawaii for over forty years. Currently Hawaii has no personal property taxes or annual fees on USCG documented boats. State registered boats pay a small annual fee.

[peterincalgary]

A Canadian who owns a US registered boat can bring it into Canada for shipyard work, the CBS (Canadian Border Services) state you go straight in and come straight out, but also could sail through Canadian waters from WA to Alaska.

[Rumrace]

If you are Canadian and buy a boat from France with our free trade union with Europe and Japan its tax and tariff free.
If you buy a European boat new or used it’s 9.5% tariff. If you buy an American boat in Europe it’s a 25% tariff.
If you buy an American boat it is tax and tariff free giving the US a 13% advantage over a Canadian boat builder.
The trade war continues. Welcome to the skirmish

[Rumrace]

In case you missed it. Europe’s tariff closed Wellcraft Scarab 4 Winn’s and Beneteau moved them to Poland. Closed their 36 year old yacht factory just when both brands were hitting a high note. Really sad stuff and a “back at ya “ which is permanent.

[Rumrace]

We have two American boats in our club. We love their pretty flag. Just keep the US registration fly both flags. We can tell US boats from a distance they have way better water balloon mortars. It been two years we’ve been missing New York. Going to be some fun rafts.
Or buy the boat in France for a lot less. If you find a Beneteau or Jeanneau US made it is tax free. I guess Beneteau last big production was 460, and Jeanneau a few 440. Anything larger would be built in France.

[Hobie_ind]

Originally Posted by peterincalgary

A Canadian who owns a US registered boat can bring it into Canada for shipyard work, the CBS (Canadian Border Services) state you go straight in and come straight out, but also could sail through Canadian waters from WA to Alaska.

When we were buying a boat for our family's extended cruise I was looking at a boat in Washington state and spoke to Canadian Customs about this. The boat needs to brought in under bond, but it is still at their discretion. I wanted to bring the boat into Victoria for some refit work prior to leaving, and fully understanding that I wouldn't be able to 'cruise' the boat in Canada unless I paid the import fees (also a French built boat)

The agent I spoke to was very dismissive and basically accused me of just trying to bring the boat in under a loophole to avoid taxes and stated that he felt it was better if I just had the necessary work done in the US since they had all equivalent services there. When I asked him if Canadian marine suppliers and boatyards understood that CBS was actively pushing work and employment outside of Canada, he didn't have a response. I was not impressed at all.

Even with your dual citizenship, I'd be surprised if you find an easy way to have the boat in Canada without paying the duties.

Long story short, the deal on that boat fell through in the end. I bought a boat in St Lucia and we ended up doing our final preparations there before leaving for 3 years in the Caribbean and South Pacific before selling her in Australia at the end of our cruising. The cheaper prices in the Caribbean and not having to pay duties & Canadian taxes more than covered the travel costs for the next year or so before we moved aboard full time for our trip. I'd have loved to have planned to keep the boat for a few years at the end of our trip to cruise in Canada, but when we factoring in GST, PST & the additional duties, the economics of it just stopped making sense. Now there's a strange statement to make concerning boats...do they ever make sense? :-)

When we later expand the newly announced Luxury Tax to used boats, it will even be worse and less people will buy boats here if they have a choice..., but that's probably irrelevant.

[Rumrace]

Yes it’s a hard fast trade rule and recent really, 9.5%. Canada would have supported Europe’s 25% were it not for NAFTA.
An American on an American boat can stay with their visa. Americans and Mexicans, in good standing can get a work visa in one hour. Of course they are welcome to bring their boat. If you abuse your Canadian passport to dodge tax you run the risk of loosing your Canadian passport and face charges way more than 9.5%

[boatpoker]

Originally Posted by Rumrace

An American on an American boat can stay with their visa. Americans and Mexicans, in good standing can get a work visa in one hour. Of course they are welcome to bring their boat.

Their boat may stay for one year. Anything longer is at the discretion of the Customs officer standing in front of you. My buddy Brian Debbs was one of the Americans brought up to Canada to run Ontario Hydro (in 2000 ?). They only gave him one six month extension to keep his boat at PCYC then he had to get it out of Canada and he had some serious pull.

[Rumrace]

Sad to hear. He needed a quick talk with an immigration lawyer to have fixed that.
As of September 2017 Free Trade with Canada and 28 countries of Europe established Free Trade. Somewhere in the mid 96% of goods heading for 98. It was continued in England in 2021.
With the EU boats being suddenly attacked by US tariff I guess it was a no brainer all luxury taxes and tariffs were gone. Buying a French boat in Canada became 40-60,000$ cheaper for a 40’ overnight. We also dodge the exchange game which if you’re not careful can equal the Canadian tariff in place.
Europe actually made noise about increasing the tariff to 50% in 2021 but I believe that never passed.
Find a Catalina or a Tartan you’re good to go.
French German Italian Danish Finnish Polish Netherlands England a recent new one imported from US will cost more than a new one from Europe.
In other agreements with Japan similar trade connection protects the parties from malicious attacks outside the trade group.