Story by Andrew Holland / May 15, 2018
It is a common theme for our clients to ask us how they can legally avoid paying US Duty and Import tax on their boat when they are entering US Waters. So, is there a way for you as a boat owner to legally avoid paying US Duty when entering the US?
The simple answer to the question is yes, you can avoid paying duty on a vessel when sailing into the US. However, this does not necessarily mean that it would be beneficial, or financially prudent to do so. So, how can you legally avoid paying Duty on a vessel?
The only way to legally avoid paying US Duty on a boat when first clearing into the US is by foreign flagging the vessel. Whether through a Virgin Island Corporation, Jamaican corporation, Cayman Corporation, or many others, a boat owner may choose to create a corporation and foreign flag the boat under this corporation. The downside of this approach of course is the cost to set up the corporation and any annual maintenance fees that may be due on the corporation. Depending on the type of corporation being set up the costs can vary, but can exceed several thousand dollars.
Foreign flagging the vessel will enable a boat owner to enter into the US under what’s known as a Cruising Permit which allows foreign flagged boats to cruise in US Waters for a period of up to 12 months, before being required to clear out of US Waters. It is important to note however that a foreign flagged vessel lying in US Waters that is in the US on a cruising permit cannot be sold to a US Resident while in US Waters without paying US Duty. This is often why you will see the “Not For Sale in US Waters to a US Resident” tag on certain vessels. (Read more about this here)
The trade-off of foreign flagging your vessel will be determined by the value of your vessel, and your plans moving forward with the boat. If it’s your plan to cruise up and down the eastern seaboard on a boat with a value of $200,000 with plans to eventually sell her in the US at the end of your cruise, the tradeoff of paying a few thousand dollars to set up a corporation and having to clear out of the US every 12 months is likely not worth it to save the cost of paying US Duty that would amount to approximately $4,500. (Read more about the cost of US Duty here)
However, if you have a larger yacht or mega-yacht, only plan to occasionally cruise in US Waters, and eventually sell her offshore, the benefits of foreign flagging your vessel which enables you to obtain a cruising permit during your time in US Waters may be worthwhile.
We had an outstanding experience working with Andrew Hodgdon to find our dream boat, an Outremer 52.
We were actually referred to him by several different people—clients who had been very happy working with him, as well as boat owners who were planning to use him to sell their own boats. After working with Andrew ourselves, we completely understand why he came so highly recommended.
We worked with him for several months, and from start to finish, he was exceptional. Andrew is incredibly knowledgeable and truly an expert when it comes to performance catamarans. He took the time to understand exactly what we were looking for, was always responsive and organized, and never made us feel pressured throughout the process.
Andrew went above and beyond to arrange showings for us in multiple states and even traveled to another state to be there with us for the sea trial. His expertise and guidance gave us tremendous confidence as we evaluated such a significant purchase.
The entire process could have been overwhelming, but he made it remarkably smooth. He was on top of every detail and made the paperwork and closing process easy, working seamlessly with his team at The Multihull Company.
What impressed us most was that he genuinely had our best interests in mind. And his support didn’t end when the sale was completed. He has continued to stay in touch and has made it clear that he is still available to help us if we ever need him. That kind of follow-through is rare and speaks volumes about the kind of broker he is.
Buying an Outremer 52 was a huge decision and a major investment, and having someone with his knowledge, experience, responsiveness, and integrity made the entire experience so much easier and more enjoyable.
We couldn’t recommend Andrew Hodgdon more highly. If you’re looking for a yacht broker—especially if you’re considering a performance catamaran—we would choose him again without hesitation. The fact that so many people recommended him to us was the reason we called him, and after working with him, we would be one of those people recommending him to others.
I highly recommend Andrew Hodgdon. He served as our buyers broker. He is responsive, highly knowledgeable and very experienced. He is also an excellent guide and counselor before, during and after the boat purchase process. If you are looking for a good-sailing cat, he seems to collect most of the available boats on the better-sailing side of the market. Top marks.
Andrew did an excellent job getting me started on my new adventures. Worked with my conflicting schedule. Is very knowledgeable in the catamaran industry. 😎
I recently sold my Lagoon 450 with the Multihull Team. I would highly recommend their services. The professionalism and personal treatment I received was greatly appreciated.
Great Service, Great People
Helped me through the process.
I would go through them again in a future purchase.
Successful relationships cannot exist without it. At The Multihull Company we base every relationship on a firm commitment to earning and retaining our client’s trust.
Advice of any kind is valuable only when grounded in hard-won expertise. It too, must be trustworthy. Trust and expertise define the heart and soul of The Multihull Company. We are a team of skilled professionals who thrive on providing expert, trustworthy advice and service to catamaran and trimaran sailors around the globe.
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