Experts close to the issue weigh in on the problems encountered when offering a foreign-flag vessel for sale in U.S. waters—and what’s being done to solve them.
There is an antiquated law—originating in the late 1800s or early 1900s—that does not allow foreign-flag vessels cruising and listed for sale in U.S. waters to be viewed by or sold to U.S. residents while in U.S. waters, unless the boat is officially imported and the duty is paid on the appraised value. The law states:
- Pre-sale duty is assessed on an appraised value rather than on the actual selling price.
- Only U.S. residents are prohibited from viewing these boats while in U.S. waters.
- When a boat is sold to a non-U.S. resident or doesn’t sell while in U.S. waters, duty is not due.”
In effect, this is like listing your house for sale and paying the transactional document stamp taxes for an appraised value the day you offer it for sale instead of when it is sold. Jeff Erdmann, director of public affairs at the Florida Yacht Brokers Association (FYBA) and sales executive at Allied Marine/Ferretti Group, says recent industry efforts aim to countermand this law. Erdmann, who has traveled between Fort Lauderdale and Washington, D.C., during the past few years to garner steam for the cause, says FYBA is advocating a less restrictive cruising license, which would allow used foreign-flag vessels to be offered for sale to U.S. residents while cruising in U.S. waters.
“Boat sales are the epicenter of Florida’s $17.2 billion marine industry, and boat listings are the catalyst of sales,” said Erdmann. “Encouraging foreign-flagged boats to come to the U.S. and allowing them to be offered for sale to U.S. residents while in U.S. waters will boost the marine industry and create much-needed, well-paying jobs at no cost to the government. It’s a win-win. If the restrictions are lifted, there’s a case to be made that there would be more money spent in the U.S. from those cruising here, and even more state and federal revenue.”
Bob Denison, president of Denison Yacht Sales and a FYBA board member, naturally has a vested interest in the topic.
“At any given time, there are around 350 used boats with foreign flags on the market at a combined estimated value of over $2 billion that cannot be offered for sale to U.S. residents while here in U.S. waters,” said Denison. “These yachts can be listed for sale, but can only be viewed by potential buyers that are not U.S. residents. Imagine having your house for sale, but not being allowed to sell it to an American.”
In 2011, after much colloquy, a group of marine industry professionals engaged an international law and customs attorney to determine how to change the language of the law in a way that would not produce unintended consequences. Nearly 80 U.S. manufacturers, trade associations, brokerages and suppliers, including the National Marine Manufacturers Association, BoatUS and Show Management, have given their support to the idea of deferred importation.
The law represents an inequity on an international scale. While the United States has a treaty with our “most favored nations,” we remain the only country that does not reciprocate in kind. FYBA is recommending that importation and payment of duty for used foreign-flag boats be deferred—that it be paid the day a boat is sold rather than the day it is offered for sale.