Ownership and reg structure for world trip

[Benelorn]

Hi everyone, I am new here and this is a first post.

I have found a 52 Lagoon and am preparing to purchase her.

First some background.... This is my retirement dream - to sail the world. I will start next year with 2/3 summers in the med , then 2 in the Caribbean and then down through the pacific to NZ and Australia.

Right now I am trying to get my head around the purchase and whats best with mind to an eventual sale in 6 or 7 years time in Australia.

The boat is currently registered in the Marshall Islands and is owned by a Florida LLC (Director is French/EU resident). I am a New Zealander.

Where should the sale take place, in Florida? or in international waters?

Do I leave it registered in the Marshall Islands?
- what are the advantages?
- Would I leave it registered in the MI upon (eventual planned) sale in Aus?

Do I simply purchase by transferring the shares of the Florida company and continuing that way?
- or should I purchase with an NZ or AU entity? (limited company? or?)

What pitfalls should I be aware of?

Thanks for any help!
Benno

[goboatingnow]

If you acquire the company you need to do due diligence carefully so that you are aware of the companies financial liabilities

Secondly a “hobby “ company may have implications for your personal tax position

In my view a clean sale of the vessel only to you personally , and registered into your national flag is the cleanest and best solution

I’ve had boats both personally and through companies. The company route often has more disadvantages then advantageous

[nuku34]

Sounds like you need a good lawyer familiar with this sort of convoluted ownership drama. Who knows what the used boat market in Oz will be in 6-7 years? Good luck mate and enjoy the cruise.

[GordMay]

Greetings and welcome aboard the CF, Benno.

[goboatingnow]

Originally Posted by nuku34

Sounds like you need a good lawyer familiar with this sort of convoluted ownership drama. Who knows what the used boat market in Oz will be in 6-7 years? Good luck mate and enjoy the cruise.

There’s nothing particularly convoluted it’s a boat wrapped up in a company (LLC) whose shares are owned privately

There are two simple decisions

1. Buy it privately out of the company , and register it wherever suits ( or is legal )
This is the simplest case as you have clean title and no association with the wrapper company ( sellers tend not to like this option as it strands the proceeds in the company , which then has to be wound up. )

2. Acquire the company either privately buying the shares or via a company acquisition

This tends to be the sellers preferred option as the funds are share purchase and are their are often tax advantages. In my view it’s not a good deal for the buyers As not only have you to due diligence on the boat, you have to do it on the company also.

The second route offers very little advantages unless you are using it to avoid sales taxes , hobby companies in many jurisdictions are frowned upon by the tax man and or attract issues like benefit in kind or self supply VAT or GST issues ( or where you use a company asset for private purposes )

Hence unless there is clear and substantial monetary gain I would never recommend acquiring the boat via buying the wrapper company.

[Benelorn]

Originally Posted by goboatingnow

There’s nothing particularly convoluted it’s a boat wrapped up in a company (LLC) whose shares are owned privately

There are two simple decisions

1. Buy it privately out of the company , and register it wherever suits ( or is legal )
This is the simplest case as you have clean title and no association with the wrapper company ( sellers tend not to like this option as it strands the proceeds in the company , which then has to be wound up. )

2. Acquire the company either privately buying the shares or via a company acquisition

This tends to be the sellers preferred option as the funds are share purchase and are their are often tax advantages. In my view it’s not a good deal for the buyers As not only have you to due diligence on the boat, you have to do it on the company also.

The second route offers very little advantages unless you are using it to avoid sales taxes , hobby companies in many jurisdictions are frowned upon by the tax man and or attract issues like benefit in kind or self supply VAT or GST issues ( or where you use a company asset for private purposes )

Hence unless there is clear and substantial monetary gain I would never recommend acquiring the boat via buying the wrapper company.

This is great guidance thanks!
I think I am leaning to:

1. Buy the boat from his company in my personal name, but just need to check there is no advantage, either liability protection or tax wise in forming a fresh limited company ownership from NZ.
I did realise I would need to do full DD on the existing company if I was to purchase the shares and that could be $5-10K apparently. The advantage would be no sales tax as ownership is constant in that company, but this is also potentially avoidable by completing a sales contract to a new owner in international waters?? As far as continuing with the Marshall Islands registry I am not sure how much DD is required there, is that not fairly simple to change to a new owner?

2. Weigh up the pros and cons of continuing with Marshall islands registration versus changing to a red ensign or registering in NZ or AU.
Can anyone give me some dot points on this?

When I (all going to plan!) eventually make it back to AU there will be tax/duties etc to be paid if the boat is to remain there past a certain time period (12 or 18 months?). There would seem to be no reason to register in the AU now but rather wait until 6/7 years time at the time of resale to then change registration and apply the tax/duties using the future lesser valuation of the boat?? For now it would seem it may be best to complete the sale without sales tax which I assume is part of the benefit of the Marshall islands registry (and some others). Is this making sense? Can this take place with the boat physically in Florida? Or do we need to sail a short way into international waters to sign the sales contract?
With the boat in the Med for 2 or 3 years, I believe it can't remain in the EU (unless EU registered and tax paid) for over 18 months. In which case I will need to station it outside the EU (Turkey is my intention and still not EU as I understand it).
In the Caribbean, are there any time limits and "in and outs" with permits that one should be aware of when choosing a flag of registration? I know that the Marshall islands flag simplifies access to American ports with no need to individually apply to each state which is great but my focus besides Florida and perhaps one or two states is to be mainly down in the islands.

Anyone with experience and wisdom to offer welcome!

[ozsailer]

Gday Benelorn,
good questions. I can only comment regarding trying to sell an international vessel in Australia. We were looking at a Lagoon 421 in Aus which some French were trying to sell here. 1) The owners wanted what the boat was worth in France - not here in Australia. Boats at the time were significantly cheaper to purchase in Oz in regard to the boat market at the time. 2) The owners were trying to sell with no tax paid. This left any new owner to pay the import and other tax's (add approximately 17 %) to the selling price of the boat. They had no wish or inclination to pay the tax which resulted in them sailing to French Polynesia to sell the boat there. 3) no one knows what the boat market will be in several years time. Could be great could be really bad. 4) we have a different method of selling boats here in Oz. We have hundreds of boat brokerage business's trying to get you to sign a contract to sell your boat and then charge a huge commission. Nothing unusual to have to pay between 4 and 7% the value of the boat as commision.

Ozsailer

[Benelorn]

Originally Posted by ozsailer

Gday Benelorn,
good questions. I can only comment regarding trying to sell an international vessel in Australia. We were looking at a Lagoon 421 in Aus which some French were trying to sell here. 1) The owners wanted what the boat was worth in France - not here in Australia. Boats at the time were significantly cheaper to purchase in Oz in regard to the boat market at the time. 2) The owners were trying to sell with no tax paid. This left any new owner to pay the import and other tax's (add approximately 17 %) to the selling price of the boat. They had no wish or inclination to pay the tax which resulted in them sailing to French Polynesia to sell the boat there. 3) no one knows what the boat market will be in several years time. Could be great could be really bad. 4) we have a different method of selling boats here in Oz. We have hundreds of boat brokerage business's trying to get you to sign a contract to sell your boat and then charge a huge commission. Nothing unusual to have to pay between 4 and 7% the value of the boat as commision.

Ozsailer

Thanks Ozsailor,
I have no problem with this. The end of the trip could be two years or more in Brisbane where I live and have a berth. I would meet the market whether it’s up or down and pay the taxes whether I keep or sell based on sale price/valuation at the time. If it was worth the effort I suppose it could also go back to the islands, NZ or elsewhere to sell if the buyer was not wanting it in Oz.

[ozsailer]

Just sent you a private message re some further details


Ozsailer

[chrisr]

we are in the process of purchasing a german registered cat, currently lying in french polynesia

we have decided to keep the german registration (an option via family) for 2 reasons ;

1. it is quicker / cheaper / simpler to transfer ownership within the same register rather than the paperwork / potential re-measure etc involved to change

2. if we register in australia (second choice) i'm fairly sure that we would need to import the boat when / if we visit australia. on the other hand if registered elsewhere we can stay up to 12 months within aussie without paying import duty & GST

there is no company involved so cannot help you on that, although i am in the process of selling a business (but not the company) and from a buyers point of view this is best ie do not buy the company - unless you wish to hide ownership from the ex-wife or creditors !

my suggestion : buy the boat, not the company, and maintain marshall islands register

cheers,

[goboatingnow]

Again unless the sales tax gain is a significant advantage , there is zero advantage to you buying the company. The sales tax can be avoided anyway by an international sale anyway

The registration is largely irrelevant as far as tax is concerned

[jmschmidt]

I don't know about other jurisdictions but if you purchase a boat owned, or to be owned, by a US entity (Corp, LLC, etc.) that entity must be owned and controlled by more than 50% of a US citizen or citizens.

I'm sure you can deflag Marshall Islands and reflag New Zealand. I deflagged a French boat (South African built) and reflagged it US. Now problem. I also bought a US flagged boat owned by a US individual that I purchased through a US LLC which I controlled.

[Benelorn]

Thanks for all the contributions, here is where I believe I am heading now....

- Buy the boat from the US company in my personal name.
- Transfer registration from MI to NZ
- Sale to be completed in international waters (no sales tax or duty implications from the US or NZ)
- Deal with duties/tax and any reg change if and when a sale happens in AU down the track.

cheers B

[chrisr]

presume you are aware of the safety restrictions imposed by nzmsa ? you will need a nz cat 1 safety cert - have a look at the discussion in another thread

anyway, happy sailing

cheers,

[fxykty]

Your citizenship may play a role in your decision. If you are an Australian citizen and own a boat then you must register your boat in the Australian registry. https://www.amsa.gov.au/vessels-oper...-fishing-boats. Here’s an excerpt: “It is an offence for an Australian-owned vessel to sail to a foreign port unless it is registered on the Australian general shipping register.”

If you have dual citizenship or non-Australian citizenship then you can register however you like, according to your eligibility for a registry. This could favour maintaining the boat’s ownership in a non-Australian company.

On arriving in Australia and regardless of your boat’s registration country it is your residence status that determines whether you need to import and pay tax on the boat on arrival or whether you qualify for a control permit, which allows you to temporarily bring the boat into Australia without importing.

Regarding New Zealand registration, you only need to get a Category 1 certificate if you want to leave New Zealand with the boat. If you never arrive in New Zealand then you will not need Category 1.