USCG Documentation vs Foreign Flag

This may be the wrong place for this post and I will apologize up front if it is. We are within 3-4 months of taking delivery on a new vessel that will be used privately but owned through a coporation. We do not anticipate ever chartering and we are US citizens. Our cruising plans could take us anywhere in the world and we will spend the majority of our time living aboard, sometimes with a paid crew member and sometimes without. All of our previous boats have been USCG documented but we are considering a foreign flag for this vessel, possibly the Marshall Islands. I would appreciate any thoughts, suggestions, potential problems, benefits that may make one direction better than another. Also, if there is any helpful literature, books, websites, etc. please don't hesitatet to suggest these to us.

 

I would recommend you contact a good lawyer and accountant to get legal advice. If you don't have anyone you trust there are a couple I can recommend.

 

Gonzo, I appreciate the post and I already have those people but I am looking for some feedback from operators, be they captains or owners. As an example, I have recently read where foreign flagged vessells may leave one US port enroute to another US port and have to clear out on the departure and back in on the entry. In my opinion this would be a negative associated with being foreign flagged. While I am aware of some of the plusses and minuses I am hoping to hear from the people who use foreign flagged vessels day in and day out who are in the know. I don't get this information from the paper pushers.

 

The Marshall Islands are not really a foreign flag. The problems you may run with foreign registry are, for example, the length of stay in US waters.

 

Goslow
good question and one that I will be having soon enough so thank you for asking

we have some very experienced hands here and Im sure someone or several have studied this exact same issue

my two cents is
accountants and lawyers rank about one step higher than politicians on the dont trust them scale ( keeping it polite today )

if you own a business you know exactly what Im talking about
they are schisters one and all

I agree you might want to do some consulting with these vultures but I would await some additional responses here as there is not better advise than from someone who has actually done it and seen the results of his decisions

give it time and I think you will receive your best advice right here

although you might need a professional liar or thief to pull it off you are spot on when seeking to gain a little knowledge before going to those vultures for "assistance"

best of luck
B

 

GoSlow,

You mention that the yacht will be owned by a corporation (presumably one you own) although it is for your private use.

There are plenty of yachts in such situations that fly "flags of convenience". For yachts that do, it seems to be mainly a question of whether the tax and inspection requirements of the flag state are sufficiently loose to compensate for the nuisance it can pose with customs officers. And if the flag state's inspection rules are unusually loose, you may encounter trouble when entering areas with stricter regulations.

Quite a few years ago, Canada Steamship Lines reflagged a bunch of their Canadian vessels in this manner. As many of the ships involved were physically incapable of getting through the canals to leave Canadian/American waters, this drew much criticism and their management was the subject of many scathing editorials. If you go with a Liberian or Nigerian flag, expect a lot of raised eyebrows and perhaps an unusually intensive search when you try to clear customs. A more widely respected flag, such as that of a US or UK protectorate or a major Caribbean port, may be OK for your situation.

Even if your boat is not in charter, the fact that its ownership is in the name of a US corporation would lead many officials to expect it to hold US registry. Perhaps, if corporate ownership is necessary, a holding company could be set up in the flag state? Not sure if it would help the books, but it might ease tensions a little at the border....

 

Delaware registration or national register are the usual choices for those in your position. Foreign flagged vessels in light of 9/11 changes will likely cause issues and unwanted inconveniences.

 

Hello Goslow,

Really convenient flags of convenience are Cayman Islands, Antigua and Barbuda, Luxemburg, Isle of Man and, in general, all British -overseas -territories.

The Cayman´s have the most suitable taxation (None) and still a valid and accepted requirement for class and manning. I flew the flag for 14 years.

Flags like Liberia, Nigeria, Panama, Cyprus, you should quickly forget for a yacht register.

The procedure of registering is almost the same in all of the "interesting" countries. You will have to establish a company owning the boat. If you charter her, you can register as a commercial vessel, having all the benefit of such status, and all the disadvantage too! The far cheaper fuel is one of the former, the IMO regulations for manning one of the latter.

When you do some internet recherche, I am sure you´ll find the official bodies and the information they provide.

It is worth to compare them!

After some studies you will have to pay a tax accountant to tell you what is applicable when entering the US and what is´nt.

I know from hearsay, that US citizens have several problems other nationalities do´nt have when entering US waters. But I do´nt know first hand, I never went to the US by yacht.

Worldwide you will not find any problem with the flags I mentioned.

In Europe (as in many other countries) you are given leave to enter and stay for 6 month, without trouble. Although there are different rules from country to country for how long you have to leave before you can re- enter.
After that period you will be seen as a resident and have to pay import tax and duties.
When leaving these countries, make sure you have checked out properly!!!!!!!

It is helpful to have some "personal contact" to the port authorities of the last port you leave, and to ask them for how long you have to be abroad before you can enter again. Quite often that is in the hands of some officials and there are no fixed rules. Coming back then into the same port can save a fortune.

Take care entering the former Soviet territories! It is not uncommon that you have to "pay" a deposit . The term "pay" was not choosen by coincidence!

I hope it did answer at least some of your questions.

Regards
Richard

 

You will find some anechdotal information, and some libelous comments like the ones by Boston here, but a good Admiralty lawyer will give you facts instead of opinions. Basing your decision on wild stories is unadviseable. What kind of vessel is this? Are we talking of a 19' Monterey?

 

Not that I take it personally Gonzo, but thanks for the "wild stories"....

Richard

 

if I remember it right libel only counts if its not true
(and the brawl begins)

best of luck Goslow

cheers
B

 

You guys are a riot! I immensly appreciate all of the information and if anything else comes to mind please don't hesitate to post. I will get the advice of the appropriate accountants and lawyers; actually have already started that, but as I mentioned, the day-to-day good/bad/indifferent experiences hidden under all of the stones that I might not otherwise uncover is what I am after. One little nugget of information like that is more than worth the effort of this exercise. This will be a 70 trawler primarily operated by my wife and myself and we expect to travel worldwide and will also probably be out of US waters most of the time. We are being advised to set up a holding company in the eventual flag state and while I understand that a consideration for a foreign flag may be tax avoidance or minimizing inspection rules that's not really our basis for this approach. We are just trying to consider all of the good and bad points to make the right decision for us personally.

 

Consider your cruising ground (the countries you would like to visit) and research how they perceive USA, or the country under which you are flagged - - It may even appropriate to carry passports of another country in order to smooth your way, particularly when the US economy collapses as there may be doubt of your capacity to "pay your dues" as has happened very occasionally, and caused grief for those that follow...

 

you forgot to tell him to bring gold

 

Preferable to most fiat currencies soon, difficult to secure as problems of "secrecy" if carried on a boat, unless stored on land - - some in HK, some in Switz, some in Perth Mint....