Sailing unregistered

[Ric]

I wish to buy a boat that is currently lying in New York under US flag. I understand that as I am not a US citizen, I will not be allowed to keep the boat under US flag, even temporarily, and will be immediately deleted from their documentation once I take ownership.

But what happens next? Do I *have* to register the boat somewhere, and if so where? I will not have a land-address when I take the boat as I will be living on it. Any suggestions?

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[AndrewB]

Yes, you MUST register it somewhere. UK is exceptional in allowing unregistered boats belonging to its own citizens to be sailed in its own waters, but for any kind of international travel registration is obligatory.

As you say, you are not permitted to retain US registration. Technically there are ways around this, but in view of the US yacht taxes it isn't worthwhile. If you are a UK citizen, you are automatically entitled to UK registration, by one of two methods. SSR, the Small Ships Registry, is simplest and quickest, but you are supposed to be UK resident. This is not possible (theoretically anyway) if you are formally classified as non-resident for tax purposes, but otherwise have you any friends here who would 'lend' you their address for the convenience of the SSR? Otherwise you will have to apply for Part 1 registration, which requires you to prove absolute title to the yacht.

 

[Ric]

I do have a UK passport, but have not been in UK for fifteen years and don't really intend going back. Also I don't want to pay UK VAT if I don't get any benefit from it. I also have an NZ passport but haven't lived there for 35 years! Are there any cheapo "flags of convenience" that I can register under?

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[AndrewB]

The main 'flag of convenience' for yachts worldwide is also the UK red ensign, but issued by Channel Islands, Gibraltar or the Cayman Islands. This involves company registration, and you need to find an agent in one of these countries to handle the formalities, see for example <A target="_blank" HREF=http://www.henleyglobal.com/yachtregistration.htm>HERE</A>. A Google search will find many others. Obtaining it isn't cheap though, and is normally done because of the substancial tax advantages for the top luxury yachts.

I would still recommend that as a UK citizen you contact the UK registration authorities to find out about obtaining private Part 1 registration for this yacht. Contact details are: Registry of Shipping & Seamen, PO Box 165, CARDIFF CF14 5FU, UK. Tel: +44 (0) 29 2076 8203. The experience of people on this forum is that they are helpful.

As a non-resident, recognised as such by Inland Revenue, you can claim temporary importation relief should you bring the yacht to visit the EU, and you will not be liable for VAT.

 

[MainlySteam]

I don't know what country you live in, but I would have thought that in all western countries, anyway, a non citizen resident is entitled to own a pleasure vessel under the same rules as a citizen. That would mean that it is unecessary to place the boat on the register of any administration (flag) at all, but may mean that it has to go into some local (non internationally recognised) register/licensing arrangement, like applies to ones car, as exists in some countries such as in the USA states.

If you live in the USA the above would most likely apply (you would have to register it on the state register you are in, however, as applies to most every vessel, but would be surprised if you had to document it ie flag it in non USA parlance), if you live elsewhere and have the vessel shipped home then the above would also most likely apply in the country in which you are domiciled, but if you live elsewhere and sail the vessel home departing from the USA then the USA authorities will almost certainly require the vessel to be registered (under a flag to which you are entitled) before clearing it for departure.

Assuming that you are the sole owner of the vessel, then you are entitled as a citizen to flag it in UK or NZ. To do so elsewhere will usually require the vessel to be put into the ownership of a company owned by you but domiciled in the flag country - a process that is not worthwhile for a small vessel (I am assuming that you are not buying a superyacht nor faced with onerous tax complexities).

If you flag it in NZ the boat would be treated if it were to be sailed into NZ, I believe, for GST purposes as a non citizen visitors would be ie it can cruise but must leave the country if the boat is not to be considered imported and GST levied (which is different to the boat owned by a non citizen emigating to NZ who may bring his boat in tax free). I understand that in as far as it would affect you as a citizen of the UK, VAT would be applied in a similar manner if the boat was to be imported but stand to be corrected on that.

John

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[Ric]

I don't live in any country (well when I have the boat I won't).

If I sail unregistered, who exactly is going to fine me?

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[MainlySteam]

If you do not live in any country, assuming that means you will be cruising internationally, you will find that you may be refused entry or clearance for departure (especially from your first port of departure) if your vessel is not registered (flag type register) somewhere.

Also, you would also not be accorded the right to sail unimpeded and under the maritime rules of a flag country. For some topical examples, if your vessel was flagged in NZ, if you sailed into UK waters in which you are a citizen, you would not have to have to comply with the UK's requirements for radio licencing, radio equipment, etc as the vessel does not carry UK nationality - you would just have to comply with NZ's rules. But on the other hand, if your boat was registered in NZ and you sailed to NZ and then wished to clear to go international again you would have to submit to the NZ inspection for such vessels, if you were UK flagged that would not apply.

If your boat was not registered anywhere, and should it be allowed to enter the waters of any country, then what rules apply to it will be entirely up for grabs (perhaps even nabs if the boat is arrested). In a manner, the registration serves the same purpose for the vessel as does your own passport for you.

John

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[AndrewB]

Residency doesn\'t allow foreign registration.

>>... but I would have thought that in all western countries, anyway, a non citizen resident is entitled to own a pleasure vessel under the same rules as a citizen.<<

This isn't true of the UK, at least in respect of part 3 registration. Only certain nationalities may apply: I quote the conditions below from the application form.

<blockquote><font size=1>In reply to:</font><hr>

<font size=1>A small ship may be registered if it is owned by one or more of the following persons who are ordinarily resident in the UK:-
(a)British Citizens;
(b)Persons who are nationals of a European Union or Economic Area country other than the United Kingdom and are established in the UK;
(c)British Dependant Territories citizens; British Overseas citizens; persons who under the British Nationality Act 1991 and are British subjects; persons who under the Hong Kong (British Nationality) Order are British Nationals Overseas;
(d)Commonwealth citizens not falling within those paragraphs.

Ordinarily Resident: For the purposes of registering a ship it means living and sleeping in the UK for a significant part of the year. A person may be considered to be ordinarily resident in the country in which they live for a period of, or periods which collectively amount to 185 days or more in a twelve month period. If you are resident in the UK for tax purposes, you will generally be regarded as resident for the purpose of registration.

Established: It is not sufficient to live in the UK to be ‘established’ in accordance with Articles 48 and 52 of the EU Treaty. To be ‘established’ a person must make an economic contribution to the UK by being the proprietor of a business, being employed, or having very recently retired from such employment, ie within the last 6 months. If you have any doubts about your ‘establishment’ you should consult the Registry. </font size=1>

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The <A target="_blank" HREF=http://www.uscg.mil/hq/g-m/vdoc/nvdc.htm>USCG National Vessel Documentation Scheme</A> (which is the US version of yacht registration) is more restrictive still, refering specifically to 'native-born and naturalized US citizens' who must prove nationality.

 

[AndrewB]

\'Innocent passage\'.

>>For some topical examples, if your vessel was flagged in NZ, if you sailed into UK waters in which you are a citizen, you would not have to have to comply with the UK's requirements for radio licencing, radio equipment, etc as the vessel does not carry UK nationality - you would just have to comply with NZ's rules. But on the other hand, if your boat was registered in NZ and you sailed to NZ and then wished to clear to go international again you would have to submit to the NZ inspection for such vessels, if you were UK flagged that would not apply.<<

This point has been raised specifically in relation to the Prestige disaster, which spurred the Spanish and EU governments to consider introducing new controls on ships entering its waters, specially those under notorious flags of convenience. However it remains very much a grey area. A NZ registered yacht must be granted the right of 'innocent passage' through UK waters (UNCLOS Article 17), and UK authorities can check that it observes the rules for this, but have no right to test whether the yacht complies with NZ regulations. However, once the yacht enters a UK port, a different situation obtains and the port authorities can require compliance with their own safety regulations.

This is a sore point for foreign yachts approaching Florida, where they are liable to be boarded by the USCG about 25 miles off. If you admit your intention is to enter a US port they then conduct an inspection of your safety gear according to their own checklist. I've not heard of any yacht 'failing' this test, but it's irksome and presumably it might happen.

 

[MainlySteam]

Re: Residency doesn\'t allow foreign registration.

I think that if you read my post completely that for flagging a vessel I make it amply clear that one (normally) has to be a citizen of the flag nation or the vessel be owned by a domiciled company (in the original posters case I say NZ or UK).

However, I doubt whether that prevents any non citizen resident in any western country from owning a pleasure vessel there is what I said (neither the USA nor the UK require all pleasure vessels to be flagged - in fact I know of no western country where such would be required). The USA, as does Australia for example, does require state registration but I would be most surprised if that excluded non citizens from boat ownership.

John

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[MainlySteam]

Re: \'Innocent passage\'.

Sorry if I gave the impression that foreign flagged vessels are immune from the law of the countries whose waters they are in - I thought that they were not immune was just common sense and I did not wish to state the obvious.

However, it is so that foreign vessels are protected by treaty from interference in their fitout, condition and crewing (except in inland waters) unless inspection shows those things do not meet the requirements of the flagging nation's or other international requirements or are demonstrably unsafe. They are not, again I would have thought this was obvious, immune in respect to their operations eg they cannot sail anywhere they please and must comply with local pollution regulations, etc.

Again I would have thought that it was obvious that the country whose waters the foreign flagged vessel is in is therefore able to examine a foreign vessel to assure that these requirements are met and to detain it or apply corrective actions if it does not.

Yet again, I would have thought that it was obvious that ports have jurisdiction over themselves and can prevent entry to them or demand compliance in any matter they chose. Taking a marina, for example, I do not think any of us would intepret anything I said as meaning that a foreign flagged yacht could enter free of all interference, rules and other requirements of the marina management - would be nice if it were so, but obviously to all I would have thought, it is not.

John
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[AndrewB]

Re: \'Innocent passage\'.

Serious thread drift now, but an interesting aside.

'Innocent passage' refers only to factors that are prejudicial the security of the state through whose waters the yacht is passing: for example smuggling drugs, weapons or illegal immigrants.

It may seem "obvious" that the country whose waters the foreign flagged vessel is passing through, should be able to examine that vessel to assure that requirements such as fitout, condition and crewing are met, and clearly several countries wish it were so. But this is not in general the case. By international treaty, these things are primarily the duty of the flag state, but of course the problem is that several states issuing 'flags of convenience' ignore their responsibilities in this respect.

'Port state control' has seemed a way by which host countries could enforce standards, but in practice what they do seems limited, perhaps because most ports are anxious to get rid of potential problem ships. See <A target="_blank" HREF=http://www.uctshiplaw.com/portstat.htm>HERE</A> for a full discussion.

 

[Gypsy]

It seems to me that your greatest issue is where you plan to sail the most. If you want to sail in EU waters you will need registration either in a EU country (which may imply VAT payment) or a non-EU country and sail as a visitor. Under current rules you can be a visitor in EU waters for up to 18mths but then have to leave or pay local/EU VAT. In the Med all countries require you to present Ship's Registration Papers to be allowed to sail in their waters. My boat is registered in Australia even though it has never been there - yet. In Australia a boat MUST be registered before it can leave the country legally but it is not yet necessary to register this type of boat if I just want to sail in Australian waters. Of course there are no physical gates to pass as you leave Australian waters but I am sure that whatever country I sail to will expect formal registration papers at some time or another - even if I make landfall in some remote location.

It sounds like Gibralter may be your best choice if you want to sail around the Med or EU. Malta used to be a good alternative but it joins EU next month.

You may be a citizen of the world but I think your boat will have to be a citizen of a country somewhere fixed even if you don't stay there.

PS. I should add that it is my understanding that a Non-EU flagged yacht may re-enter the EU from a Non-EU country and the 18mth clock starts again.

<hr width=100% size=1><P ID="edit"><FONT SIZE=-1>Edited by Gypsy on 15/03/2004 10:11 (server time).</FONT></P>

 

[applepip]

I have been informed when Malta enter the EU there will be boats queuing to pay VAT at 5%

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