new or used yacht? Why should I buy my yacht in a corporation or LLC?
Are you aware that all of your
personal assets are in jeopardy if you own your yacht as an individual or as a
partnership. To shield yourself from total financial disaster take advantage of
the limited liability offered by a Delaware Corporation or a Delaware Limited
Liability Company. Owning an yacht in this manner can offer you asset
protection, privacy and tax savings.
Delaware is recognized as having a
favorable tax climate. Delaware has no sales tax, personal property tax,
intangible property tax or stock transfer tax. Additionally, no Delaware
corporate income tax is assessed for income derived outside of the State of
We have partnered with Global
Corporate Services, Inc., registered agents in the state of Delaware for
over 31 years to prepare and file your corporate charter. To get started with
your new corporation or LLC and have it filed in only 24 hours just click
When initially purchasing the vessel a sales/use tax may be due in the state
they are actually keeping or using the vessel. The advantage of purchasing the
vessel as a corporation truly comes into being when they opt to sell the vessel.
Note: It is important to understand that sales tax shelters are situational. Many states
have "user taxes" and the like. One should consult with a legal or tax advisor
to determine if a tax on a yacht will be due in the State in question.
What are the advantages of selling the
stock and assets of the corporation or LLC in lieu of the sale of the vessel.
In most cases, the prospective owner will
have to pay a sales tax again on the purchase of the vessel. With this in mind
from the outset, not only will the prospective owner derive the advantages of
ownership as a corporation, when the vessel is subsequently put up for sale, the
owner has the flexibility of selling the vessel as an asset of the
corporation or selling the entire corporation of which the vessel is an
asset. The latter circumstance is accomplished by simply transferring the shares
of stock in the corporation over to the new owners.
This arrangement can be very attractive to
the prospective purchaser because title to the vessel has not changed hands
since it is still registered to the corporation. Therefore, no sales tax may be
assessable on the transfer, and, no re-registration costs are incurred.
In fact, an additional savings occurs
because the vessel does not need to be re-documented with the US Coast Guard or
To protect yourself and your
family you might want to own your yacht as a corporation or an LLC.
What is US Coast
Documentation is the
national form of registering vessels. It is handled by the US
Coast Guard and establishes unquestionable ownership and acts as the
vesselís passport in foreign waters. Documentation is required for the
operation of vessels in certain trades and serves as evidence of nationality.
evidence of nationality for international purposes
unhindered commerce between the states
vessels into certain restricted trades, such as coastwise trade and the
an internationally recognized maritime title for the vessel
acts as the
vesselís passport in foreign waters.
cruise ships and boats for hire must be documented with the USCG.
Once a vessel is
documented there are no further fees to remain a documented vessel. However the
documentation must be renewed on an annual basis. A documented vessel is
exempt from displaying state numbers on their hull. However, all documented
vessels must comply with the laws of the state in which they are operated.
States may require documented vessels to be registered (but not numbered) and to
display state validation showing that they have complied with the state
require that a vessel being financed be documented and provide them with a First
Preferred Ships Mortgage recorded with the US Coast Guard. Vessel financing has
been enhanced through the availability of preferred mortgages on documented
A vessel must
measure at least five net tons
be owned by either an individual who is a citizen of the United States or a corporation
in which 75% of the directors are American Citizens
vessel 25í in length can qualify for documentation
is determined by volume of the vessel, not by how much the manufacturer says
the vessel weighs
allows for easy entry into foreign ports.
The chain of
ownership of the vessel is maintained in one registry, a registry of
history, pride, tradition and prestige.
facilitates the sale of a vessel, particularly when financing is involved
What is a first
preferred ship mortgage?
A preferred ship mortgage is a mortgage that is given status as a maritime lien.
many financial institutions require vessels that are eligible for documentation
to be documented and to have preferred ship mortgages recorded against them. The
owner of the vessel is prohibited from making certain changes in documentation
such as change of vessel ownership, name and hailing port without the consent of