As a long time resident of one of the offshore company registration centers in the world I can weigh in here for some basic info. As a US resident or citizen you need to examine it very closely as the IRS asks you if you hold any such entities on your tax return. Answering yes may or may not have further implications. Answering no and having an IBC usually does eventually. That said a company is set up, say in the British Virgin Islands or Caymans, or wherever, which can be used for many different purposes. One of which is ownership of items, a boat being one of those items. The company purchases the boat and hold title to it. How you move funds into the company is your business but they won't be financed funds they need to be unencumbered money. Generally a wire transfer is used which of course is a matter of record. Cash isn't. Then again cash raises eyebrows especially with homeland security or the DEA. Assuming that this is an above board situation once the company purchase the vessel or if already owned is deflagged from it present registry, it can be flagged in the BVI, or Caymans, or wherever the IBC has been set-up. A this point it becomes a vessel of that country. Subject to the rules & regulations of it and carries its flag wherever it travels. It has pluses and minuses. The initial company set-up and registration is in the order of $2000 plus an annual fee of about $5-700.00 for both the company and the yacht registration. This compared to the cheap USCG fees ;-) Now that you have this Offshore company and yacht registered you are free to insure it anywhere you like. None of the companies will most likely be US based and their policies will be as different from each other as the US policies are. You may or may not have to meet the MCA standards now or in the future depending on the use and size of the vessel. This includes crewing requirement, radio transmitter requirements and boat structure/gear requirement. Must different that the USCG/FCC requirements. I'll stop here but as you see it in not a win-win for many persons. We choose US Documentation as the expense is less, we know and understand the rules/regulations that Swan Song must meet, we are free to come and go in the US without obtaining a cruising permit, we self insure for the boat but will soon have a liability policy with luck. BTW, most of these offshore jurisdictions are selling a product. It is a major profit center for these countries! Just like any other product the plus's are always put front and center with "some" potential for over selling those plus's. The downside is never on the front page and in fact is seldom in the "brochure". You have to really dig to find the downsides as with purchasing other products! As always YMMV, Cheers Dave & Nancy Swan Song Roughwater 58 Puerto La Cruz Venezuela

In addition to the need to obtain a cruising permit to be in US waters, you have an additional issue to deal with when the vessel is owned by an offshore company. Basically, you can't sell the vessel in the US! This is clearly noted on your cruising permit in the fine print... If you even list the vessel with a broker, and/or advertise it, and/or show the vessel to prospective buyers, you might become immediately liable for various taxes and import fees (duties, etc.) EVEN IF you end up not selling the vessel! Paul Goyette former owner of the 103' Lloydship "Southern Cross II" Documented (at that time) in St. Vincent and the Grenadines Operated in the San Francisco Bay Area Sold in Ensenada, Mexico

I have been an owner of trust companies for 25 years and at one time my group had offices in Gibraltar, Jersey, Bermuda, Ireland, Mauritius, Cyprus, Brunei and the Netherlands and Netherlands Antilles. The decision on whether to register a boat in a so-called offshore jurisdiction depends on your nationality and your cruising plans as well as the size of boat. In the EU, we have seen measures taken against offshore registration where a primary driving force was avoidance of sale tax (UK it's called VAT, Germany call it Mehrwertsteuer - it all stands for value added tax) which is typically around 15%-20% depending on the country. If you have use an offshore company and don't pay VAT, there is a time restriction on how long you may use the boat in EU waters and there are use restrictions such as no chartering. The one thing about boats is they lose value over time so there are no capital gains tax issues. In the EU some countries have wealth tax and again using a company may lower wealth tax. If you are a US national (or green card holder) and your boat will be used in US waters much of the time, unless the value is over $5 million there is no real benefit in registering through an offshore company. Sure, it is a way of flying a different flag where there may be hostility towards US people but that is an extreme case and I doubt that you would want to ever visit such a country. On insurance, I don't think an offshore company has any meaningful benefit because the insurance company will look at your experience and qualifications and through the corporate entity. You are better to search around and find an insurer. If necessary, invest in becoming more qualified to satisfy the insurer. And I would query using an offshore company when an onshore company may be a lower cost solution. Boats do not operate at a profit so an onshore company would not be liable to tax and could reclaim VAT if an EU company. For example, a UK, Irish, Cypriot or Malta company (all part of the EU and within the Customs Union - i.e. subject to VAT) would almost certainly be a superior solution. Also you might choose a Swiss company. It is more expensive to form and subject to stamp duty at 1% on its capital (but you can lend much of the money into the company) but it is a good flag to fly. Onshore companies may get better treatment from insurers too. I hope the above is helpful. Chris (Goleen) On 1/17/07, Paul Goyette <paul@whooppee.com> wrote: > In addition to the need to obtain a cruising permit to be in US waters, > you have an additional issue to deal with when the vessel is owned by an > offshore company. Basically, you can't sell the vessel in the US! This > is clearly noted on your cruising permit in the fine print... > > If you even list the vessel with a broker, and/or advertise it, and/or > show the vessel to prospective buyers, you might become immediately > liable for various taxes and import fees (duties, etc.) EVEN IF you end > up not selling the vessel! > > Paul Goyette > former owner of the 103' Lloydship "Southern Cross II" > Documented (at that time) in St. Vincent and the Grenadines > Operated in the San Francisco Bay Area > Sold in Ensenada, Mexico > _______________________________________________ > > Passagemaking Under Power and PUP are trademarks of Water World Productions, formerly known as Trawler World Productions. > > To be removed from the PUP list send an email with the > subject "unsubscribe" (no quotes) to the link below: > > mailto:passagemaking-under-power@lists.samurai.com > > Passagemaking-Under-Power Mailing List