Sales tax and boat registration question

[pred02]

We are purchasing a boat in the Northeast US and would like to ship the boat overseas (boat will not be driven in US waters). To avoid import tax and customs abroad, we would like to have the boat registered in the US. We live in MA. I believe there are some states where if you were to register a boat you need to pay the sales tax (MA is one of them). Other state, however, such as NH and RI do not have the sales tax.

If we purchase the boat in another state and register it there (with renewal of registration by mail) where can we register the boat and not have to pay the sales tax?

thanks!

 

[JimKW]

Re: Sales tax and boat registration question

No expert on this, but I believe you have to register it in your residence state. Otherwise people would just register their boats in a state where they do not pay sales tax on registration.

 

[109jb]

Re: Sales tax and boat registration question

People register things in states where they DO NOT live all of the time. For example, I live in Illinois and the DNR handlles boat registration. If you are from another state, but use your out of state boat is in Illinois for more than 60 consecutive days you are supposed to register it in Illinois. Like the folks who slip their big boats in Chicago but maybe live in Wisconsin or Indiana. Also, the Sea Ray you see in my avatar was bought in Wisconsin. Guy didn't have a Title in hand, so went to Wisconsin DNR office with the bill of sale and they titled and registered the boat in my name using my Illinois address. Another example is my father's motorhome which is titled and registered in Montana, and yet he lives in Indiana. As a matter of fact I don't think my father has ever been in Montana. As far as which states don't charge the tax, I'm not sure. I know that in some states you are charged a sales tax and in others it is a "use" tax.

 

[pred02]

Re: Sales tax and boat registration question

So if I purchase a boat in MD and say I intent to use it in NH can I register it in NH and then ship it overseas?
Thanks!

 

[caver95]

Re: Sales tax and boat registration question

Why would you need to registar it in the US?

 

[pred02]

Re: Sales tax and boat registration question

Why would you need to registar it in the US?

Not to pay the customs and sales tax in Croatia (which is 40% of the total value of the boat). Besides, we are US citizens and live in the US just "temporarily" use the boat in Croatia.

 

[pred02]

Re: Sales tax and boat registration question

I am following up on this question from the old thread not to recreate a new thread.

If we purchase a boat in NH/CT/MA and export it abroad where its going to reside 365 days out of the year - is there a way we can get an exemption on the MA boat excise tax if the boat is located and used exclusively outside the US?

Note that we need to have the boat registered in one of the US states (MA/RI/NH) as we do not have residence/domicile in the foreign country (that being Croatia) we just go there for a few months out of the year to spend summers and use the boat.

Kind regards,

 

[Silvertip]

Re: Sales tax and boat registration question

I sense a "motive" here. The cost of shipping a boat to Croatia will likely represent a large percentage of the cost of the boat. Then using it "temporarily" in Croatia sounds a little strange since that "implies" you will ship it back. Why do I feel you want to maximize your investment in a boat, cheat the state out sales tax, ship the boat to Croatia, avoid import duties -- perhaps then sell the boat in Croatia?????????????????

 

[DuckHunterJon]

Re: Sales tax and boat registration question

So, maybe a dumb question, but wouldn't it be alot less work to just buy a boat in Croatia?

I understand you don't want to pay taxes, but as I always tell people, taxes are 100% optional: if you don't want to pay income taxes, don't make income. If you don't want to pay property tax, don't own property. And if you don't want to pay the tax on the boat (either sales tax here, or import tax there) don't own a boat. Not sure why everyone wants a free lunch.

 

[Fireman431]

Re: Sales tax and boat registration question

I was reading a post on YachtForum and this was discussed at length. They advised when registering a boat in a different state than it primary use can still have tax problems. There are quite a few states that have limits (say 90 days) on the amount of time you can keep a boat in their waters without paying tax to their state.

Look into it deeper than a blog site with personal adaptation (mine included). Get legal advice.

 

[The Famous Grouse]

Re: Sales tax and boat registration question

I suspect this is a question that you'll need to get on the phone to really answer.

I'd be surprised if it were possible to do what you're trying to do because if it were, everyone would be doing it. Conside what's at stake here, boats aren't exactly cheap so the ability to dodge sales tax would be a huge incentive.

The fly in the ointment here is that to register a boat, you need a title (in most states) or other registration document. To get a title or these docs in your name, you have pay the tax (again, in most states). That's how most states prevent you from doing exactly what you're trying to do: dodge the sales tax.

I personally think it would make more sense to find a state with a lower sales tax AND one that would allow non-residents to register and title the boat with relatively low fees. Obviously this means avoiding MA.

BTW, just a bit of advice: If your plans include selling the boat after your little overseas stay, be aware that this may not be possible.

Back when the British Pound was very high against the dollar, a friend in the UK wanted to start a business importing used boats from the US. The economics made complete sense, as long as they fit a standard container.

But aye, here's the rub: EU law. No boat can be sold in the EU unless it meets a ridgid mandatory certification at the time of construction. So basically that eliminates 90% of the boats made outside of the EU and these boats can NEVER be registered in any EU country.

Not sure if this applies to Croatia, but they could have a similar independent scheme that does effectively the same thing.

The bottom line is I think you'd better be willing to a lot of time into researching this if you're wanting it to go off without a hitch.

Grouse

 

[pred02]

Re: Sales tax and boat registration question

I sense a "motive" here. The cost of shipping a boat to Croatia will likely represent a large percentage of the cost of the boat.

No, there is no ulterior motive. My family has a house in Croatia and we go there every summer. My parents are going to retire and spend 3-6 months there so it would be nice to have a boat there (hence the temporary). They currently live in the US, I live in the UK.

There are two reasons why we want to purchase a boat and ship it 1. Price, 2. Convenience of currently living in the US and having the time to find the right boat.

For price, please check out this Sea Ray and how much it goes for in Croatia. This boat is not been registered in Croatia even which means Croatian taxes have not been paid on it.

To register a boat in Croatia, we would need to pay 40% customs then 23% VAT and a special tax for purchasing a non-Croatian manf. boat.

The shipping costs we estimated approximately $4500 to Germany, and another 2000 Euros to Croatia overland.

Foreigners can drive foreign registered boats in Croatia for up 6 months (which is fine because the boating season there is about that long). As most of Croatia's tourism comprises of foreigners coming to visit, they have set up a system where foreigners can leave their boats in Croatia all year long and use them in the summer. This works as the "dry marinas" where the boats are stored over the winter are also customs zones, which means by keeping it there you are satisfying the requirements.

You would be surprised how many US registered Cruisers did I see at a local marina when I was in Croatia last week. Here is a

of a brand new Four Winns, registered in Delaware, owned by a German, and sold by a Four Winns dealer in Croatia. I took this photo in the summer.

But aye, here's the rub: EU law. No boat can be sold in the EU unless it meets a rigid mandatory certification at the time of construction. So basically that eliminates 90% of the boats made outside of the EU and these boats can NEVER be registered in any EU country.

Not sure if this applies to Croatia, but they could have a similar independent scheme that does effectively the same thing.

Right. This is called a CE certifications and most US built Cruisers do not have it. I contacted the CE authorities and this can be done however it is time consuming and expensive. It can be done in the US (at US Sea Ray dealer) or a guy in Croatia can do it. There is also a company in the UK that does these however it's not practical to ship a boat from NA to Croatia via the UK.

However, keep in mind two things. I need to do this only if I want to register and import a boat into the EU which is not something I intent to do as I am buying a boat for myself and not to resell, and 2. I can always sell to another foreigner who can register it at a non-EU country and then drive it in Croatia like I do. Note that most better boats in Croatia are flown under foreign flags for the pure reason to avoid the extremely large taxes that exist over there.

The bottom line is I think you'd better be willing to a lot of time into researching this if you're wanting it to go off without a hitch.

I have already and I am as we are dead serious about this.

They advised when registering a boat in a different state than it primary use can still have tax problems. There are quite a few states that have limits (say 90 days) on the amount of time you can keep a boat in their waters without paying tax to their state.

So let me ask you why this work wouldn?t.
1. I go to RI dealer and buy the boat.
2. I bring the paperwork (title) to NH and register the boat there. (Which I confirmed can be done)
3. I keep the boat in my backyard in MA for 30 days and then ship it Croatia.
4. The boat stays in Croatia forever

Why wouldn't this work? Why would I need to pay a sales tax and excise tax in MA? The boat is not in MA and it is not registered in MA.

 

[QC]

Re: Sales tax and boat registration question

Check AZ. VERY easy to do what you want. I did mine all by mail. Mine stays there, but it doesn't matter. They effectively encourage out of state registrations. There is no sales tax and they have an out of state registration program. They're cost of registration has gone up thought to $259 a year for non-Residents.

http://www.azgfd.gov/outdoor_recreation/WatercraftRegistration.shtml

 

[The Famous Grouse]

Re: Sales tax and boat registration question

So let me ask you why this work wouldn?t.
1. I go to RI dealer and buy the boat.
2. I bring the paperwork (title) to NH and register the boat there. (Which I confirmed can be done)
3. I keep the boat in my backyard in MA for 30 days and then ship it Croatia.
4. The boat stays in Croatia forever

Why wouldn't this work? Why would I need to pay a sales tax and excise tax in MA? The boat is not in MA and it is not registered in MA.

The fall-down point I can see is that you're missing step that falls between 1 and 2: Getting the title transfered to your name.

In order to get a title in your name to bring to NH, you need to do a tiltle transfer somewhere and that's where most states hit you with the sales tax. When you apply for a title transfer, you have to state the purchase price and whammo, and here's where you get slapped with the tax.

The only way the steps above would work is if they don't check to see who's name the boat is titled to when you go to register it. I know for a fact you can't do that in MN, WI, and several other states.

Now I don't know, it's possible that as another poster has stated, Arizona will let you do a title transfer AND register the boat in that state even if you're not a resident. So the boat would then be titled and registered in AZ, but the key is can you do this without incuring a tax? I doubt it.

Grouse

 

[ajgraz]

Re: Sales tax and boat registration question

I wouldn't doubt AZ could be the answer. Many of the big-dollar boats moored in San Diego slips are registered there, no doubt to avoid taxes.

 

[pred02]

Re: Sales tax and boat registration question

The fall-down point I can see is that you're missing step that falls between 1 and 2: Getting the title transfered to your name.

RI does not charge a sales tax on boats, and neither does NH. The only problem I see is if I was to buy a boat and a MA dealer, however I am pretty confident they have a process for people buying boats to use in NH on the lakes. Will investigate further and report back.

MA would be the only tax that might be after the sales tax and excise. However, I believe if we have the boat in MA for less than 60 days (i.e. ship it abroad) this should be cleared up.

 

[MrBigStuff]

Re: Sales tax and boat registration question

It's a SALES tax, not a registration tax. MA requires residents to pay sales tax on all purchases regardless of where you bought it. If MA has a reciprocity agreement with the other state, you may only have to pay the difference if any. If you register the boat elsewhere you still owe the tax.

 

[pred02]

Re: Sales tax and boat registration question

It's a SALES tax, not a registration tax. MA requires residents to pay sales tax on all purchases regardless of where you bought it.

By that logic, for all items I purchased off Amazon or Newegg I would have to pay the sales tax on even though I do not?

 

[DuckHunterJon]

Re: Sales tax and boat registration question

Actually, you do have to. Most don't report it, but as of a couple of years ago, you are supposed to report all out of state purchases (mail order) and pay sales tax on them. I should say, I know for a fact this is the case in NY, may not be elsewhere. I order woodworking tools from Grizzly Tools, and have paid taxes on every one of them come April 15.

I know nobody wants to hear it, but taxes are nessecary if we want to enjoy the benefits afforded to us. Skimp out on them, and all you do is decrease the tax base, and therefore increase the tax percentage for the rest of us.

My take - pay the state sales tax. You already stated that you are getting around the 40% and 23% taxes in Croatia - is it that hard to pay the 6 or 7% here?

I'm not trying to start anything, I just am failing to see why you shouldn't pay the sales tax.

 

[iBrent]

Re: Sales tax and boat registration question

I live in MA and bought my boat last year in NH. The sales person I bought it from even suggested registering the boat in NH because the MA law says you have to register your boat in MA if it is IN THE WATER for 60 consecutive days. On a trailered boat, that will never happen. This way I could have avoided sales tax. I chose not to do this because I have seen people with out-of-state registrations at my local ramp get hassled by the Environmental Police.

In MA you pay the sales tax when you register the boat with the Environmental Police. If you never register the boat in MA, you are not required to pay sales tax. You will not be billed excise by your town because it is not registered in your town.

Since your boat will not spend 60 consecutive days in MA waters, you will not be required to register it here or pay sales tax. I'm sure NH will be glad to have your bi-annual registration money.

Just ask our friendly senator who registered his yacht in RI so he could avoid paying 500k+ in sales tax.