How to keep yacht listings compliant with U.S. CustomsOct 17, 2016 by Guest Writer
As U.S. Customs has taken a more pronounced stance lately in looking at the foreign yachts coming into the United States, it will be extra important to make sure yachts are in compliance with federal laws this boat show season.
The private owner of a foreign-built hull looking to offer the yacht for sale in the United States wants to make sure to have proper import paperwork available to legally list the boat for sale to U.S. citizens. A foreign-built yacht must have an entry summary (U.S. Customs form 7501) to prove the yacht has been imported and has paid the proper import duty of 1.5 percent of the value of the yacht to customs. The 7501 form is the only way to prove duty has been paid to U.S. Customs.
A foreign-flagged but U.S.-manufactured yacht will want to have the paperwork to show that the boat was purchased in U.S. waters so it is not considered an exported good that needs to be re-imported. If the U.S.-built yacht was purchased outside of the U.S., it is necessary to file a U.S. Goods Returned entry to reimport the U.S. good into the United States for sale. The duty rate on a U.S.-built yacht is zero percent, so it is quite a small expense to make sure the yacht is legal to be offered for sale in the United States.
The same applies to yacht brokers. Do due diligence on the listed yacht, or on a potential listing for a client’s boat, to ensure the yacht is protected from any complications that can arise from listing a boat that cannot be legally offered for sale in the U.S. to U.S. residents.
For yachts greater than 79 feet, it is possible to purchase a boat show bond, which allows the yacht to be offered for sale to American buyers free from import duties during a boat show. The yacht can continue to be shown to U.S. buyers after the boat show is over but cannot be marketed to new U.S buyers that did not come in contact with the boat at the show.
These bonds are good for six months. For example, when purchased for the Fort Lauderdale International Boat Show, they will still be good through the shows in Miami in February (Yachts Miami Beach and Miami International Boat Show) and the Palm Beach International Boat Show in March. It is important to note that a boat show bond must be closed out before it expires or duty will be due on the yacht. There are no extensions available for boat show bonds. The way to cancel a boat show bond is by clearing the vessel out of the United States to a foreign port such as the Bahamas.
The other way to close the bond is to pay the duty before it expires. If the bond expires and duty has not been paid to customs within 15 days of the expiration, customs will then collect double the duty of 3 percent of the value of the yacht.
Trey Reeder is director of the yacht division at Howard S. Reeder, a customs brokerage and marine documentation company in Miami.