Today we have Jay Reynolds of JP Reynolds who talks about the basics of importation for your catamaran. If you considering buying one of the catamarans listed in the Caribbean on our website and sailing back to the USA or if you are selling a catamaran in the USA that you purchased in foreign waters, then this Q&A with Jay will give you an idea of the complexities of those details. If you are unsure whether importation is a concern, the best decision is always to contact a Customs Broker like Jay and get a quick opinion of if you should be concerned and what the key variables for your decision are. His details are below.
- Jay Reynolds
- All catamarans purchased in foreign waters and then US registered are dutiable on arrival.
- Foreign flagged vessels are not dutiable if they are only used for pleasure. They may be offered for sale to only non-US residents and display a disclaimer such as “Not For Sale to US Residents while in US Waters”. Yacht must be duty paid if the yacht will be offered for sale to US residents.
- The only way as a buyer to for sure know a catamaran has been imported is to receive a copy of the entry summary.
- For a seller, you can sometimes track down old entry summaries. Without a copy you may run into issues with buyers.
- The duty rate is pretty standardized at 1.5% of value. Value can be determined by a number of ways and is not necessarily sale price.
- Every situation is unique and there are many nuances to US customs. When in doubt, contact a Customs broker for advice.
So I am a US citizen and I want to buy a catamaran that is let’s say in the Caribbean. It’s foreign flagged, and I want to bring it back to the United States. What do I need to be concerned about as a as a purchaser?
The first thing you have to be concerned about if you’re planning on bringing the boat back into the United States is how you’re going to flag it. If you’re going to keep as a foreign registration or if you’re going to US flag it or US register it or be the sole owner as a US citizen.
So if the boat is going to be foreign registered when it comes back into the United States, you’re not required to pay duties on the boat under that foreign registration as long as you intend to use it for pleasure cruising only and that’s a very strong caveat there. If your intent is to bring it here and offered it for sale or charter in the United States, then you are required to pay the duty on the boat first before proceeding any further.
If you’re going to US register the vessel and you’ve purchased it in the Caribbean when the boat arrives here in the United States, like anything else a US citizen purchases overseas, the first time it hits the United States it is dutiable and you are required to pay the duty on the boat. Even if when you sail in and you go to immigration and you go to the customs marine desk and you tell them hey I’m an undocumented US flag vessel, they may or may not tell you you have to pay the duty.
It’s on you as the owner to follow the regulations and pay the duty on the boat and formally import it into the united states and that’s going to be an important component later on if you decide you want to sell the boat in the future. You’re going to need that piece of paper. That entry that shows that you’ve formerly imported the boat in the United States and paid any applicable duties.
Now let’s say I have brought my boat into the the United States from from another country and i have not paid that duty. Are there any special considerations that I need to do when I’m advertising the the vessel? For example do I need to to say in the advertisement that this boat is not for sale in US waters to US citizens? Is that something that you need to consider?
Yeah that’s a pretty common phrase in advertising for foreign registered yachts that come to the United States and they’re pleasure cruising and at some point in time the owner decides that they want to sell the boat. The provision in the regulations is that the the yacht is allowed to be offered for sale to non-residents of the United States while the boat is here. That obviously restricts your market considerably because you can only offer the boat for sale to non-residents of the United States.
As soon as you want to offer the boat for sale or charter to a US resident then you first must have formally imported the boat and paid the duties.
What are the duties typically run? Does it matter what the size of the vessel or the cost of the vessel? How do they determine those duty fees?
Well the duty rate is pretty standard across the board at 1.5% of the value of the boat with the exception of boats made in China at this time. You know there are some additional duties but one and a half percent is the duty rate.
For valuation customs accepts the current market value of the boat. That’s not necessarily the selling price or the offered sale price. Customs is using the same thing that the brokers and buyers are using. They’re going on the internet looking at similar sales – make, model, year and condition – to determine what the current market value is. Customs always has the right to question that value and have in the past and if that’s the case then that’s usually easily settled by getting a licensed marine surveyor to establish what the current market value is. But at the outset of it customs just accepts the owner’s numbers.
So let’s say I am a US citizen looking at a boat that is currently flagged in the US. It is located in the US but it was previously in the Caribbean and charter. How do I know for sure if that boat has been properly imported?
The only way to find that out for sure is that the owner is supposed to have proof of that payment of duty as I mentioned earlier as a US citizen. When you bring that boat in the first time it is dutiable and you are supposed to formally import and pay the duties and you’ll get a document called an entry summary document that shows that you imported and paid the duties. Without that the seller basically has an issue here because you almost don’t have clear title to the boat, if you will, to that yacht in that it meets all the US standards of having been formally imported.
Many yacht brokers and attorneys and banks have become much more aware of the requirement of this document. It can be researched generally back to the owner, maybe the owner’s broker when it came in or the customs broker that may have done may have done the import work, but the onus is then on the seller to provide that document.
Let’s say they can’t provide that document and I went ahead and purchased the boat anyway. What’s the risk to me as as a purchaser in that case?
Well once again the risk to you is the duties on the boat. Customs wants the duty from somebody and you know in order for you to be legal that boat has to be duty paid so before the sale I would go to the seller and say, “hey you have a responsibility here to formally import this vote and show that you paid the duties on this boat”, and then we can talk about the sale if you’ve gone ahead and already made the sale and it went through which I would be surprised at but it it could happen then my advice would be that you then formally import that boat and pay the duties so that you have proof of payment of duty just in case customs questions it.
And once again if in the future you’re ever going to want to sell the boat that piece of paper is going to be necessary.
Talking again about coming in from another country with a vessel. Can you talk about the differences in whether it’s a foreign flag vessel versus a US flag vessel that you’re bringing back into the United States?
Sure. Foreign flag vessels, foreign registered vessels. When they come into the United States there’s a procedure that they have to follow They have to call customs prior to arrival. There’s an 800 number (800-432-1216) depending on where you’re arriving at but you call customs and you announce your arrival. you then have to go to immigration and you have to go to the U.S. customs marine desk at the port that you’ve arrived at and the purpose of the marine desk is because as a foreign registered vessel you fall under the jurisdiction of the marine desk regulations that allows foreign registered yachts to sail the USA waters without payment of duty up front as long as it’s for pleasure cruising only. And you also have the ability depending on your circumstances to request what’s called a cruising permit and as a foreign registered yacht with certain registrations – and most of the Caribbean ones are included – you can request a cruising permit for pleasure cruising to cruise the USA waters. That lasts for a year but it’s renewable every year until such time as you want to either take it out of the United States or pay duties on the boat to offer it for sale or charter.
If you’re an American buyer and the boat is going to be in America and owned by an American, or an American company, when it arrives in the United States you’re considered an undocumented US flag vessel until you actually get a U.S. registration from the Coast Guard. But as an undocumented U.S. registered vessel you’re still required to make that 800 number call and you are required to do immigration but you don’t need to go to the U.S. customs marine desk as a US registered vessel.
Is there anything that I haven’t asked you that you would caution new purchasers or new sellers on with bringing foreign flagged vessels into the United States?
Not really. This is a very general conversation obviously. One thing I’ve learned over these many years is that every vessel purchase, every owner, every yacht is different in documentation and what they want and what they have. I highly recommend that you contact a customs broker familiar with yachting like myself to discuss it prior to arrival into the United States just to find out what your options are.
Size makes a difference in what some of the options are for import. There are other arrangements that can be made that don’t require payment of duty up front depending on the circumstances.
So I would strongly suggest contacting a customs broker particularly if you’ve made a purchase or prior to making that purchase. What’s going to happen when I get here? What kind of paperwork do i need? What is it that i’m going to be faced with in costs and you know how can i make this process as simple and smooth as possible?
So do you normally work with buyers or sellers or kind of equally both?
Actually both. Most of the time it’s with the seller because the seller is the one with the liability in the United States If the purchase is being made foreign it’s obviously with the buyer. The buyer is going to make this purchase foreign and that automatically makes the boat dutiable at some point or a it requires an entry at some point if the boat was manufactured in the United States it may be non-dutiable but you’re still required to do all this process to formally bring it into the things belonging to the United States.
Sounds like you provide a pretty decent service for people just to keep them out of trouble.
We try like I said, I love this part of the business because every single one of these is unique in their sale. There are some very general you know possibilities and probabilities but every single one of the paperwork and the documentation and the and the circumstances are unique. So yeah we welcome it. It’s fun.
Well how would somebody contact you if they wanted to to get a hold of you?
We have a website www.jpreynolds.com or you can call me at 954-522-3763 or email me at email@example.com
Fantastic thank you so much for your time Jay. I really appreciate it. Again I am River Braun with catamaransite.com.
It was great talking to you. Thank you river it’s been great i really enjoyed it. All right take care thanks.