[foxhunter]

U.S. residents can’t even step aboard to view a used, foreign-flagged vessel that is listed for sale in U.S. waters, unless the boat is first imported and the seller pays a duty on its appraised value. That duty is assessed at 1.5 percent of the yacht’s value. (On a $10 million yacht, the duty would be $150,000.) The law applies to all foreign-flagged brokerage yachts listed for sale in the United States, even those owned by U.S. citizens. Duty is not assessed on a foreign-flagged brokerage yacht sold to a non-U.S. resident in U.S. waters. here

[Maxalu]

Have you ever walked the docks at a boat show and seen a sign next to a brokerage yacht that states: Not for sale or charter to U.S. citizens while in U.S. waters?

[sstsf]

Those signs exist because, ever since the Tariff Act of 1930, Americans have been barred from buying a foreign-flagged brokerage yacht in their home waters unless the seller first pays a duty. Today, many in the U.S. brokerage industry consider revision of the Tariff Act—a campaign known as “deferred importation”—one of their top legislative issues.

[cacba]

Two bills now pending in the U.S. Congress would amend the law to allow all sellers of foreign-flaged brokerage yachts to delay payment of the duty until the boat’s sale, or do away with the duty altogether. In May, U.S. Reps. Lois Frankel, a Democrat, and Ted Yoho, a Republican, both from Florida, introduced legislation that would maintain the duty but defer its payment until the time of the yacht’s sale. Then in August, U.S. Rep. Brian Mast, a Republican from Florida, introduced the “Maritime Industries Relief Act of 2017,” which would eliminate the duty. more

[bdimych]

If the elimination were enacted, it would save a potential seller thousands or even hundreds of thousands of dollars, depending on the yacht’s appraised value. In addition, the International Yacht Brokers Association (IYBA) says, the changes would create marine industry jobs by encouraging more owners to offer their yachts for sale in the United States. Marinas, yacht service and maintenance yards, yacht brokers, yacht crew and other marine service providers all would benefit from either bill becoming law, the proponents say.

[checkmark91]

In 1983, Customs added a warning regarding dutiability to the text of the cruising license, which is prescribed by regulation [48 Fed. Reg. 48,653 (Oct. 20, 1983)]. The warning advises owners that offering a foreign-flagged yacht for sale or charter generally triggers liability for duty. At the time, Customs explained that it was adding the warning to alert owners of foreign-flagged yachts to existing law regarding dutiability. Customs did not suggest that the warning was meant to expand the requirements for issuing a cruising license, which have nothing to do with a yacht’s duty status. Customs also acknowledged that the warning would not apply to all foreign-flagged yachts, some of which are not dutiable because they are already duty-paid or were U.S.-built and never exported.

[bethany_dale]

Under federal law, a foreign-flagged vessel “used only for pleasure” is eligible for a cruising license, which enables the vessel to cruise freely in U.S. waters, provided the vessel’s flag state recognizes similar privileges for U.S.-documented vessels cruising in the flag state’s waters [46 U.S.C. § 60504 (2012)]. A federal regulation, 19 C.F.R. § 4.94 (2016), in addition to listing compliant flag states, provides that a cruising license will be issued to a foreign-flagged vessel “subject to the condition that the vessel shall not engage in trade or violate the laws of the United States in any respect.” The regulation does not say what it means to “engage in trade.”

[Psychoactive]

Several U.S. Customs and Border Protection (CBP) offices in Florida recently have taken the position that foreign-flagged yachts that are offered for sale or charter are ineligible for a cruising license regardless of the yachts’ duty status. Customs reasons that any offer to sell or charter a yacht, even an offer that does not trigger liability for duty, amounts to engaging in “trade” and that vessels engaged in trade are ineligible for a cruising license. This article briefly explains the legal background to the current controversy about cruising license eligibility. more

[AStephen2011]

Against this background, Customs recently has taken the position that the warning means that a foreign-flagged yacht offered for sale or charter is ineligible for a cruising license, even if the yacht is non-dutiable. Customs apparently reasons that the language regarding offers to sell or charter relates to the prohibition on engaging in trade: a foreign-flagged yacht is engaged in trade, and therefore ineligible for a cruising license, if offered for sale or charter. However, as explained above, the language about offers to sell or charter was added only to alert owners to existing law regarding dutiability, not to expand the requirements for issuing a cruising license, which are unrelated to dutiability. [links]

[Suggester]

Moreover, although the relevant regulation does not specify what it means to “engage in trade,” the interpretation of related statutes strongly suggests that the term does not include offers to sell or charter. For example, federal law provides that a U.S.-documented vessel that carries only a recreational endorsement, much like a foreign-flagged yacht with a cruising license, “may be operated only for pleasure” [46 U.S.C. § 12114(b)]. This restriction means that a vessel with a recreational endorsement may not transport passengers or merchandise; however, it has never been interpreted to prohibit such a vessel from being sold, chartered under a bona fide bareboat charter, or offered for sale or charter, provided the end use is for pleasure. Under the vessel documentation statutes, a vessel is “engaged in trade” when it is used to transport passengers or merchandise, not when it is merely offered for sale or charter. There is no reason why a foreign-flagged yacht operating under a cruising license should be treated differently when the two statutes use almost exactly the same language to describe the pleasure-use restriction. more

[huesped]

Removing the restriction to offer for sale will encourage more used foreign-flagged vessels to visit the U.S., offering their vessels for sale, creating well-paying American jobs.

[freetx]

FYBA believes a less-restrictive cruising license, which allows used foreign-flagged boats to be offered for sale to U.S. residents while in U.S. waters, would benefit American marine-industry workers and generate additional state and federal tax revenue.

[Ricochet]

Pre-sale duty is assessed on an appraised value rather than on the actual selling price. (This is like listing your house for sale and paying the transactional doc stamp taxes for an appraised value the day you offer it for sale instead of when it is sold.) more

[joeydangerous]

Each of these boats spends an average 10% of its value annually on labor, goods, services, and maintenance, contributing about $200 million yearly to the local economy. [links]

[MagicalTux]

Currently, boats under a cruising license, while in U.S. waters, are forbidden to offer their boats for sale to U.S. residents until the boat is imported and duty is paid on the appraised value. more

[badjava]

The current cruising license policy is discouraging about $2.46 billion in U.S. economic activity that could be generating thousands of well-paying American jobs. [links]

[greene63]

The demise charter (aka bareboat charter) agreement’s main characteristic is that it places possession of the vessel in the hands of the charter party. Simply put, at the time the charter starts, the owner relinquishes possession of the vessel and the charterer takes over crew selection, vessel operation and management. To use the legal terminology, the owner must relinquish “possession, command and navigation of the vessel” as to be “tantamount to, although just short of, an outright transfer of ownership.” While the charterer is responsible for hiring and maintaining a crew and for the vessel’s operation, he or she assumes responsibility for the vessel and its activities.The obvious advantage is that it limits the owner’s liability. But the owner must have no ties to the crew selection or a company employing the crew (which the law may construe as retaining some control over the vessel, in breach of the basic premise of this agreement). Also on the plus side, the charterer is obligated to maintain the vessel in a good state or repair during the charter and must return it in the same condition it was when it was received, ordinary wear and tear excepted. [links]

[Sarahb1966]

Time and time again, yacht buyers and owners find themselves contemplating the same question, “Should we charter the yacht or not?” It isn’t rare for us to hear owners new to charter voice ambitious goals for 20 weeks of charter a year. They may lack a qualified charter captain and maritime legal advice but, having gleaned information from friends who were “successful” in chartering their own yacht, they forge ahead, overlooking in the process the numerous laws regulating charter in US waters. So what is involved in chartering legally and correctly? We don’t have room here for a comprehensive exposé but offer a few pointers. more

[zadolphnealr]

Taking charge and assuming responsibility: The time and voyage charter agreement

[Harmton]

Before you turn over the yacht keys make sure you’ve crossed your Ts. Chartering a yacht isn’t as simple as handing over the keys to a friend who’s paid $1,000 to go cruising during the weekend. This article attempts to shed some light on a few fundamentals of yacht charter in the United States.

[replicawatch]

Story by Danielle J. Butler

[dduane]

Turning over the yacht to the charter party: the bareboat charter agreement

[fantomas]

The waiver cost is $500. You may file the application on-line. You may access additional information, as well as the application, here. [links]

[Poincare]

The Passenger Vessel Service Act (46 U.S.C § 55103) (contained within the Jones Act) restricts the use of foreign-built vessels to carry passengers for hire or trade between US ports. Foreign-flagged, owned and built yachts can operate only non-commercially in the United States. Although the carrying of passengers for hire is considered to be a commercial use, demise (bareboat) charters are not considered to be commercial uses, so long as the charterers are using the vessels non-commercially. more

[bit-numismatist]

Absent a waiver, bareboat charters are the only option for this client.

[chris200x9]

A client asked me the other day whether she could put her french-built sailboat into a charter program in the US. The answer is yes, but only as a “bareboat” charter unless a Jones Act Small Vessel Waiver has been obtained.

[thrillkisser]

The use of foreign owned or foreign built yachts in a commercial application is strictly prohibited by the Jones Act (46 U.S.C. § 55102). However, foreign-built and foreign-owned yachts may operate in U.S. waters for pleasure and non-commercial purposes. These vessels may also be chartered in U.S. waters, as well, but only for non-commercial purposes.

[ysilk]

To be eligible for a Small Vessel Waiver, the vessel must: