Call of Duty

Fall for a foreign-built lovely? Play fair and she's yours.

ytgapr09broker525.jpg

Perusing the brokerage advertisements in this magazine, you may see certain boats labeled "Not offered for sale or charter to U.S. residents while in U.S. waters." Now, that wouldn't seem to make sense. The yacht is taking up valuable real estate in a brokerage ad in a magazine that reaches mostly U.S. residents. Why is it even here?

It's not just to tease you. The ad is there for the same reason you may see that same yacht at an American boat show-because it's for sale, and the U.S. market is still the single biggest venue to sell a private yacht. But the problem is it's a foreign-built vessel.

"We're talking about a customs duty issue," says Danielle Butler, a partner in the maritime practice of Fowler White Burnett, a Florida law firm. "If it's a foreign-made product being sold here in the United States, then that owner needs to pay that duty on that vessel or product. If it's built here in the United States, then obviously there's no duty issue."

An advertisement for a foreign-built yacht, or a slip for it at a boat show, or the yacht itself with a "for sale" sign on it, counts as international commerce, regulated by U.S. Customs.

"If the duty was not paid, and that owner wants to bring that vessel into the United States and list her for sale, then-unless they do pay the duty-she cannot be shown to any U.S. citizen or any U.S. resident," says Butler. "If the owner wants to overcome this problem, then they must pay the duty. If they don't [want to pay the duty], then all advertising, vessel brochures, marketing materials and the vessel itself has to list the Customs disclaimer on it. If you are a U.S. citizen or a U.S. resident, you cannot go on that vessel for purposes of buying her or chartering her. If that's violated, then there is a fine, paid by the owner."

That's a fine mess, indeed. Of course, the marine industry has created a way around it: "There is an exception for boat shows because they bring in so much revenue to the individual states who host the boat show, and also to the federal government," says Butler. "There is what is called a boat show bond, that's issued by U.S. Customs. Prior to the boat show, the owner can obtain a boat show bond, which lasts for six months. Typically in Florida, since the Ft. Lauderdale show, the Miami brokerage show, and the Palm Beach show are within a six-month period, most owners purchase the bond right before the Ft. Lauderdale show and that covers them for that six-month period."

The bond comes with certain responsibilities that the owner must uphold. "The bond requires that only those boats can only be shown to U.S. citizens or residents during the actual dates of the show," says Butler. "And any follow-up visits can only happen to those people who saw the vessel during a boat show and registered with the owner and/or the broker who's displaying the vessel." And if you think this seems complex, don't even ask about the state sales tax, because that leads us to an additional set of rules and exceptions before you cruise off into the sunset.

So if you find yourself smitten with a foreign beauty, do yourself a favor and work within the restrictions of the bond when you come courting. And maybe get yourself an attorney to help protect your interests when the deal is going down.

Contact Danielle Butler at Fowler White Burnett at (954) 377-8100.

Editor's Picks

| | |

Good to Go: GiGi is a 97-foot Hargrave built in 2004. With a layout that includes 5 staterooms, this raised pilothouse offers a handsome profile and well-designed living spaces, both inside and out. Contact Northrup and Johnson at (978) 921-6600 or www.nandj.com.

| | |

There's a Good Chap: Range far and wide in high style on High Chaparral, a 164-foot Feadship ready for a dozen guests to spread out in 5 en suite staterooms and a convertible fitness room. Contact Camper & Nicholsons International at www.cnconnect.com

.

| | |

Precious Metal: Silver Angel, a 211-foot steel and aluminum build from Benetti, boasts 7 en suite staterooms, a 5,000 nm range, and systems to comply with strict environmental standards. Contact Camper & Nicholsons International at www.cnconnect.com.