A perusal of brokerage ads in any yachting magazine will often turn up an ad for a boat listed as “Not offered for sale or charter to U.S. residents while in U.S. waters.” This isn’t simply a teaser: the boat really is for sale. But it is foreign-built, and that makes a sale to the American market complicated.
When a foreign-built yacht enters American waters, it has to check in with U.S. Customs and Border Protection within 48 hours and get a cruising permit that’s valid for one year if it is foreign flagged with an approved country. This permit allows for personal use of the vessel. But if it is brought to the U.S. to be sold, certain formalities have to be observed to validate the sale. One of them is the boat show bond.
Boat Show Bonds—What They Do
Obtaining a boat show bond allows yachts longer than 79 feet to be shown to American buyers during boat shows in the U.S. The owner temporarily imports the vessel by filing for a bond that amounts to 3% of its value, enabling them by avoid paying hundreds of thousands in federal tax by pledging to pay the bond if they do not abide by the terms of issue. Although the bond is technically purchased, no money is paid to customs unless the rules are broken.
When filing for a boat show bond, the yacht’s captain must surrender its original registration and cruising permit to U.S. Customs. Once issued, the bond requires the seller to abide by certain boat show rules. If they are broken, the bond will be forfeited.
Boat show bonds require the yacht to be shown to U.S. citizens or residents only during the actual dates of the show. Any follow-up visits are restricted to those who viewed the boat during a show and registered with the owner and/or the broker showing the yacht.
Closing the Bond
Vessels have exactly six months to use a boat show bond. After that time, they must close it in the same port that they received it and leave the country. They may apply for another cruising permit provided:
- At least 15 days have passed since the earlier permit expired
- They leave the United States for a foreign destination
- They return from that destination
- They are flagged with an approved Foreign Flag and are no longer offered for sale.
If you have a foreign-flagged yacht that you would like to sell at an upcoming boat show, contact the experts at Howard S. Reeder, Inc. We will advise you on how to apply for the bond, abide with its restrictions, and even display the vessel on your behalf at designated boat shows. For more information, call or email today.
- Understanding the Cruising License Renewal Process - May 20, 2020
- What You Need in Order to File Entry on a Vessel - December 20, 2019
- 3 Steps to Document Your Vessel with the Coast Guard - October 20, 2019
