Will The Boat Be Kept Full Time In A Single State?
If your boat will spend most of its time in one state of the United States, it will need to be identified to that state. If it is under 5 tonnes of admeasurement (roughly 30 feet for a conventional vessel) it cannot be documented with the Coast Guard, so it must be registered to the State. If it can be documented, but will remain in the state, it should be identified to the state and registered (but not titled) as appropriate.
Is the Boat Eligible for Federal Documentation?
If the boat is large enough, and its owner is a citizen of the United States, it is eligible for documentation with the Coast Guard. Many banks will require federal documentation in order to issue a loan so that they can be protected by a First Preferred Ships Mortgage. Federal Documentation is also useful if the boat travels between jurisdictions. A federally documented vessel must still pay taxes pursuant to state law, but if it moves between jurisdictions sufficient to avoid local registration requirements in locations that impose tax, it may not ever become subject to tax.
Is the Boat Appropriate to Be Flagged Offshore?
A vessel that is flagged in an offshore location will pay tax according to the laws of that location. Some foreign jurisdictions have favorable tax treatment for vessels and other advantages for vessel owners. For a boat that is high value, significant savings may be achieved by operating under a foreign flag, and only bringing the boat to the U.S. under a customs cruising permit. There are additional carrying costs for foreign flagged vessels, so we generally only recommend this approach for high value yachts and commercial vessels that do not operate primarily in a single jurisdiction of the United States.
For High Value, Mobile Vessels, Contact Counsel
If your boat is one that is not likely to be located in single jurisdiction, and is of sufficient value to justify making a float plan to address taxation, or to flag offshore, contact counsel. The nuances and changes in local jurisdictions are so constant as to require professional time investment.
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