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US Registration versus Foreign Registration

Discussion in 'General Yachting Discussion' started by goplay, Jul 6, 2008.

  1. goplay, Jul 6, 2008
    #1
    goplay

    goplay Senior Member

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    There has been some discussion and speculation on the practical aspects of a US Flagged boat versus a Foreign Flagged (say Cayman Islands) entering and visiting US waters.

    Can anyone comment on what they have seen or experienced?

    Do FF vessels actually need to report each time they move port? Are they searched more often (which is just time consuming)?

    I am trying to weigh the pros versus the cons of country of registration. My take so far:

    Liability
    -> No Jones Act for Foreign Flag. (+1 Foreign)
    Big plus if you have crew.

    Taxes
    -> Shouldn't make a difference if operated similarly. (Neutral)

    Time to Register
    -> 1-2 days for Foreign Flag. (+1 Foreign)
    US registration can take 6-8 weeks, which depending on circumstances can be problematic.

    Length of Stay in the US
    -> Limited for the Foreign Flag (+1 US)

    Thanks!
  2. Pascal, Jul 7, 2008
    #2
    Pascal

    Pascal Senior Member

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    yes, FF vessels need to report when they move from one port to another.

    There are also a number of ports or areas where FF vessels must have a pilot on board above a certain LOA / tonnage. requirements vary...
  3. MacMcL, Jul 7, 2008
    #3
    MacMcL

    MacMcL Senior Member

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    US vs. Foreign Flag Registration

    Goplay,

    Not only are Jone Act issues a consideration for US Flagged vessels, but so are US labor laws - overtime, and perhaps EEOC issues, etc. Also, depending upon where you will be cruising, I believe that many foreign ports, or perhaps foreigners, do not view a US Flagged vessel as they once did.

    If you are not involved in trade or commerce the question is why should I flag US at all? If you are financing your yacht, marine lenders are now comfortable with many of the foreign registries. You need to fully understand the on-going inspection requirements of what ever flag you select, as well the costs to maintain the foreign flag. A good maritime attorney can steer you in the right direction.
  4. goplay, Jul 7, 2008
    #4
    goplay

    goplay Senior Member

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    Thanks I am somewhat familiar with the legal topics. For pleasure craft, and of the size I that applies to me (27m), the one-time and ongoing costs are low, and inspection is not required (at least for Marshall Islands and Cayman Islands). The biggest plus is definitely, Jones Act, related labor laws, and associated liability.

    The unknown for me is how FF vessels are "treated" in the US. Are they treated with anymore suspician than US Flagged vessels and therefore, exposed to greater delays, processing and potentially damaging searches?

    Pascal, to your reply, I have been searching for an official reference to the port reporting requirement. Can you point me to one?

    Thanks!

  5. ychtcptn, Jul 7, 2008
    #5
    ychtcptn

    ychtcptn Senior Member

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    I have run many foreign flag yachts in the US, and have not had any problems because I did not have a US flag.
    Some issues to note:
    If you spend more than 90 days in any one state, you might be liable to pay thier sales tax.
    You must report in everytime you change ports. Some states like MD, you can check in once, and then cruise anywhere in MD you like with out checking in.
    If you have foreign crew onboard and they are actually working most of the time in the US, the might be liable to pay payroll taxes.
    If your boat is under 100'/100 tons you will not have to worry about pilots.
    Foreign crew wil need to leave the country every 6 months, and if they get a nasty Immigration officer it could be 3 months.
    You will have more crew choices if you can hire foreign.
    Hope this helps.
  6. yachtbrokerguy, Jul 7, 2008
    #6
    yachtbrokerguy

    yachtbrokerguy Guest

    "NOT FOR SALE TO US RESIDENTS WHILE IN US WATERS"
    If a foreign flag yacht is in the US on a cruising permit, the permit spefically states that no commercial use of the yacht is allowed, including listing the boat or offering it for sale. So when it is time to sell the yacht there are drawbacks to foreign flag.
    If the yacht was built outside of the US and an import duty was paid when first brought to the US, and then foreign flagged, there are circumstances when the duty might have to be paid again by the next buyer.
    Talk to your maritime attorney.
  7. Pascal, Jul 7, 2008
    #7
    Pascal

    Pascal Senior Member

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  8. C4ENG, Jul 8, 2008
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    C4ENG

    C4ENG Senior Member

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    Isn't it illegal for a F F vessel to charter in US waters?
  9. goplay, Jul 8, 2008
    #9
    goplay

    goplay Senior Member

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    Jones Act does not allow FF vessels to charter in US waters.
  10. yachtbrokerguy, Jul 8, 2008
    #10
    yachtbrokerguy

    yachtbrokerguy Guest

    Foreign flag yachts charter in the US all the time. The type of charter agreement such as a bare boat demise, and whether the duty was paid on the boat affects what can be done.
    Many yachts take advantage of the loopholes in the laws, completely legal.
    There are are reasons why there are maritime attorneys, and anyone who is considering using foreign flag laws to their advantage, should hire an expert.
  11. Ken Bracewell, Jul 8, 2008
    #11
    Ken Bracewell

    Ken Bracewell Senior Member

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    Mariners are exempt from mandatory overtime as stated in the US Fair Labor Safety Act.
  12. C4ENG, Jul 8, 2008
    #12
    C4ENG

    C4ENG Senior Member

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    Isn't the Jones Act laws for ship owners having to take care of there crew in the ways of medical emergency needs for all flaged vessels?
  13. goplay, Jul 8, 2008
    #13
    goplay

    goplay Senior Member

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    Jones Act only applies to US Flagged Vessels for those aspects. It was originally created to support the maritime industry in the US, allowing, historically, vessels engaged in trade within the US (i.e. US port to US port) to be crewed by US citizens or permanent residents, as well as, only US made late model boats.

    FF vessels can completely avoid Jones Act, allowing foreign crews, and a pile of other things. Of course, the applicable laws of the flag country do apply. Some countries are more popular because the rules favor the boat owner. Marshall Islands, for example, permit a limited amount of charter, before the vessel is deemed a commerical vessel (where a different set of rules apply).

    FF charters (or cargo transport) are possible, I recall correctly, if only one end of the trip is in US. That's why Dockwise and Yachtpath only pick-up and drop off in Florida.

    Jones Act is an interesting read... if you care to read legislation!
  14. K1W1, Jul 9, 2008
    #14
    K1W1

    K1W1 Senior Member

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    Hi,

    The yacht transport vessels are not the only FF Commercial vessels that operate that way in the US.

    Look at all the Container ships, Tankers etc that do the same and what about Cruise Ships that pick up and drop off in the same place or those others that do a cruise to nowhere.
  15. goplay, Jul 9, 2008
    #15
    goplay

    goplay Senior Member

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    Yacht Transport vessels were only cited as an example of a commerical vessel, since this is a yacht forum and some of the audience might have wondered why there wasn't transport from FL to CA -- at least I did!

    The point is Jones Act prohibits commerical vessels (Container Ships, Tankers, yacht transport, whatever), that are foreign flagged from doing trade within US waters, namely go to one US port then to another US port.

    I believe it actually calls out cruises to nowhere as acceptable, but I may be thinking of Canadian legislation.