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Should You Register Your Yacht in the U.S.?

On behalf of Sayer Regan & Thayer of Sayer Regan & Thayer, LLP posted on Wednesday, July 13, 2022.

If you are considering buying a yacht, your next decision is where to register it. Choosing the right country is important, as your choice brings with it fundamental consequences that can get quite costly if you don’t get the right advice. If you are unsure of where to register your yacht, consult with a maritime lawyer for advice.

Your decision will be based on the following factors:

• Where you live
• Where the yacht is moored
• Where it will be based most of the time
• If you plan to use it for pleasure or commercial use
• If you plan to rent it to third parties
• Whether you will register it as a private entity or through your company

The consequences of those answers can be substantial, which is why you shouldn’t rush the decision on where to register your yacht. One of the considerations to factor in is the sales and use tax implications associated with your yacht registration.

There are many benefits and drawbacks of each registry, and the most well-known yacht registrations currently are the United States, Marshall Islands, St. Vincent and the Grenadines, the Cayman Islands, and the British Virgin Islands.

Documented Yacht Registration

Many new yacht owners document their yacht as a yacht registration and title through the United States Coast Guard. It acts as a title. Most lenders want to see this form of titling, which allows them to legally repossess the yacht in case you default on the payments. When you register as a “documented” vessel, this provides more internationally recognized value for the “flag state” of the vessel – in this case, the USA.

Let’s say you were to have an issue when using the boat abroad in a foreign country. This gives the U.S. government more recourse to get involved when the boat is documented. A documented vessel may claim a home port anywhere in this country. If you intend to finance the yacht, you will have to have a U.S. documentation yacht registration.

Registering a Yacht in the United States

If you decide to document your yacht in the United States with the National Vessel Documentation Center (NVDC), here are the advantages:

• Affordable documentation fees
• Free annual renewal, provided you renew within a month of the expiration date.
• Yacht ownership can be an individual, partnership or company.
• Duplicative names are allowed.
• The Certificate of Documentation (COD) is internationally recognized and notes all important yacht information.
• You may proudly fly the U.S. flag.

There are a few disadvantages to registering in the U.S. though, such as:

• All newly-documented yachts are reported at the end of each month to your State’s Department of Revenue by the U.S. Coast Guard.
• Owners must be U.S. citizens (in most cases).
• Nearly all U.S. companies are required to list directors, officers, and shareholders to the state in where the company was formed, which detracts from confidentiality.
• Only U.S.-built yachts can charter in this country, unless you obtain a MARAD waiver.
• The yacht’s crew must be U.S. citizens as well.
• It’s easy for anyone to record a debt against the yacht with little to no verification.
• The COD (valid for one year) must be renewed annually.
• It takes about two months to get a COD.

Registering a Yacht in a Foreign Country

What about registering a yacht in a foreign jurisdiction? Here are the advantages of foreign registration:

• Citizenship is not a requirement to form a company within a particular jurisdiction.
• Most foreign jurisdictions give owners anonymity and asset protection.
• Crew nationality isn’t an issue.
• It’s harder to record a maritime lien in foreign jurisdictions.
• There are more options when it comes to chartering, especially in the Mediterranean.

The disadvantages to registering your yacht in foreign countries include:

• It’s more expensive to obtain and maintain a foreign registration than registering in the U.S.
• Usually just one name may be used per yacht per port.
• The yacht must clear out and in the port at each Customs when cruising within the United States or you must get a Cruising License, which has to be renewed annually.
• But even with a Cruising License, when cruising within the United States, the yacht must report into each USCG district it enters.

These are all things to consider when buying a yacht. Choosing the right registration jurisdiction is an important decision, and one that will help you get the most enjoyment out of your vessel with the least amount of administrative hassles after closing. If you are unsure of where to register your yacht, consult with a maritime lawyer for advice.

Contact Sayer Regan & Thayer

If you have questions about registering a yacht in the United States, get in touch with our maritime law attorneys for a free consultation today at 866-378-5836. We have a RYA/MCA Yacht-Master and U.S.C.G. Master on our staff.

These materials have been prepared by SRT for informational purposes only and are not intended and should not be construed as legal advice.

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