International Boat Purchase

Good afternoon all,

I'm getting close to purchasing a boat that is located in Bermuda and bringing it back to the States (CT to be exact). What hurdles or problems should I anticipate in executing this transaction and what is the process that I should expect? I have never purchased a boat internationally, so any words of wisdom are welcome.

I know not to move the money until title and documentation is in my hands.

Thanks

There are brokers that deal with this. I would find one and ask them.

I’m doing this right now. You need a broker. They will tell you what to fill out and then create the package and documents that have to go to customs.

Ken

I bought mine in canada. If the boat was built in the United States originally then it's pretty easy to import. If it was build outside the United States there may be some issues. I spoke with the CBP people at the Port of Entry I was bringing the boat into to get information on it. Because my boat was built in the US it was pretty easy. It's not rocket science, so you can do it. You just have to be diligent, or hire a customs broker.

I would NOT relay on the sales broker. By all means ask him or her, but check and verify everything independently. In my experience brokers are focus on closing a sale, and will down-play or trivialize anything that might complicate the deal, or in any way become a deterrent.


If in doubt, close the deal out in international waters.

I strongly suggest you hire a customs broker. I have used Steele Reeder for years and find him invaluable. Look up Howard Reeder in Miami

Thank you for the advice everyone.
I have contacted Howard Reeder.

Good move. Glad that worked out for you.

I’ve surveyed quite a few offshore yacht deals and never any problems with Bermuda. It was treated pretty much like Canada. Venezuela on the other hand was almost traumatic for one poor buyer who was made to jump thru hoops for months. The boat was built in Argentina, high quality builder who went out of business so builders documentation was unavailable. Every broker I know, or knew years ago, always enlists a good savvy custom broker to handle the deal.

Rick

So as I move this purchase along little by little, the customs broker hit me with a shocker. There is a 25% tax on chinese boats, and of course, the boat that we have had our eyes set on is a Cheoy Lee 61 LRC.

Now, considering how US/China relations are, I expected some sort of ridiculous tax, but 25% made my eyes roll into the back of my head.

Has anyone here had any experience with importing or dealing with Chinese built boats? This one was built in 1984.

I might be married to an attorney, but she's not a tax attorney, and I'm not one and I don't play one on TV, but a 25% import or customs tax definitely does not sound right on a used, 1984 boat.

When we bought our boat I spent an inordinate, thoroughly unnecessary amount of time studying tax laws and regs on boats. At least now I understand that phrase you sometimes see in some superyacht listings - "not for sale to U.S. residents in U.S. waters" - and yes, we didn't take possession of a Massachusetts boat until we crossed the Rhode Island border - but a 25% tax on a used, probably multiple-owner 1984 recreational boat does not sound right. I'd get a second opinion.

That’s the thing, it’s not a tax, it’s an import duty. I just went through the same thing, though fortunately not with a boat made in China. It does not matter if the boat was imported before or not. To import a boat into the US from a different country, one must pay import duty on it.

Ken

Any relief based on the current import duty maybe not in place when the vessel was originally built?

Any relief based on Cheoy Lee being a Hong Kong entity? (Pre- Hong Kong reversion to China?)

-Chris

Found a boat sitting on the hard in Stonington Connecticut. Saw repetitively over a couple of years. Asked around and found out it was a one off used for one transatlantic race built in and used by a Englishman. After much back and forth although I found the boat and dealt initially with the owner there were definitely enough devils in the details so did involve a broker and lawyer skilled in maritime tax, documentation and law. Seller absorbed the costs (probably raised selling price to reflect that). I had my own lawyer and accountant review all paperwork. Soft costs higher than usual. Had clear title and confirmation that US documentation wouldn’t be an issue. Important that you confirm those two things before signing any contract.
England isn’t China but it was still the most involved boat purchase I ever made. Still I would do it again if a similar opportunity arose. Got a remarkable boat at a great discount.

Btw purchase isn’t the only reason to import a boat. That part isn’t difficult depending upon country . I imported my last boat into the BVIs. That year we were in and out of there so many times it was cheaper and easier to import and decrease fees/hassles with every entrance. Countries vary as to the definition of “import” and whether it’s for commercial or recreational use. Know some folks game the system flagging in a low tax/fee country and operating on cruising permits.

ranger58sb said:

Any relief based on the current import duty maybe not in place when the vessel was originally built?

Any relief based on Cheoy Lee being a Hong Kong entity? (Pre- Hong Kong reversion to China?)

-Chris

Click to expand...

When the boat was built is not the issue. Any foreign commerce brought in to the US is required to pay duty of 1.5%. That is whether it is food, appliances, cars, or boats. The duty is almost always paid before it hits our shelves, so we are oblivious to it.

I believe in this particular case, the additional amount is because of tariffs "recently" placed on Chinese imports as a way of encouraging Americans to purchase products made in the US.

Judy at JWY said:

When the boat was built is not the issue. Any foreign commerce brought in to the US is required to pay duty of 1.5%. That is whether it is food, appliances, cars, or boats. The duty is almost always paid before it hits our shelves, so we are oblivious to it.

I believe in this particular case, the additional amount is because of tariffs "recently" placed on Chinese imports as a way of encouraging Americans to purchase products made in the US.

Click to expand...

Yes. I wondered if, assuming the import duty was lower back in 1984, whether that rate might apply -- instead of today's punitive rate.

-Chris

The 25% tax is only on the Chinese sourced parts of the boat. So engines, generator, and much of the other equipment that makes up the boat is likely not subject to the tax. The key to taking advantage of that would be a breakdown of the boats value into the constituent parts, done by a credible 3rd party.

I’d also confirm with the import broker that the tax applies to used goods the same as it does for new goods.

Yes, I think a 25% tax is inordinate, so I’m talking to a maritime attorney to see what we can do.

I don’t like the hassle of a foreign purchase, but I can deal with it for the boat we want. I was a federal govt contractor for over 20 years, so I’m somewhat conditioned to red tape and useless bureaucracy. It’s the 25% tax that has my head spinning.

This is the result of a random internet search so I'm not sure about reliability, but if you're buying a 61-footer, it looks like this exclusion to the 25% tariff (duty) applied, at least until the exclusion expired in August, 2020. I wonder if that exclusion was renewed or extended.

https://www.mcswift.com/news/boats-... made in China were,rate was increased to 25%.

I found that web page also. The boat was previously registered in the US, so I would think that the duty was paid then, but I won’t be surprised at all if the govt taxes it twice.

Rather than speculation you need expert advice. As stated above obtainable with a lawyer, broker and accountant skilled in maritime affairs. Unfortunately nothing else will serve. Only that way once they sign off you have recourse if things go badly and have the reassurance you are in compliance with applicable statutes.

PPD said:

I found that web page also. The boat was previously registered in the US, so I would think that the duty was paid then, but I won’t be surprised at all if the govt taxes it twice.

Click to expand...

Definitely get expert advice.

From memory, the US will charge import duties each time. Canada doesn’t (just once). Again, don’t rely on any of us so use your expert. I don’t think a boat broker is who I’d go to. I used a title agent for the transfer but also an import agent.

We’ve used import agents when forced to. Some are worst than used car salesmen than used car sales in my experience. But others quite honorable and ethical. As an example there was a ten fold difference in quotes to do the paperwork involved in importing a US flagged boat back into the US as deck cargo.
Given there’s difficulty in ascertaining skills and ethics of a individual you never used and with them knowing you probably will never use again I would definitely do due diligence. I had my insurance agent and lawyer choose and negotiate price. I took no advice from the import export agent at either end. For purchase didn’t hire one. Don’t know if lawyer or broker did.

I am not up to speed on this subject. I just know that most boats can be imported between Canada and the USA with little issue. Until you run into one
Of those made in China boats that has never had the import duty paid on it. I know there are a few North Pacific yachts that look like good deals in BC but when you add the 25% fee to bring them into the US they are no longer good deals. Then there are other NP’s that have had the duty paid and they can be imported no issue. My neighbor is a factory Rep for NP and talks about tHis issue all the time to people. I’m out on my boat so I can’t ask him for details but it sounds like the OP is already seeking professional help.

I know that in Canada, if you have a serious inquiry to make, you can ask for a ruling and the tax dept will give you a letter to say how the law will apply to your particular case. Is that the same in the US?

OTOH, I sold a property in the US 2 years ago next month, on which proceeds they withheld 15% against possible Capital Gain tax. I have had my first actual communication with the IRS this month, so I wouldn't have high hopes you can get their attention when you want to.