Flags of Convenience

Hi Steve, I’ve finally finished reading your Offshore Cruising Encyclopedia and look forward to Surviving the Storm. Great job on its contents and construction–first class! May I pick your brain on the pros and cons of foreign flag vs. US documentation…I am mainly concerned with trouble in foreign ports (both ways; foreign flag ownership issues with customs, and anti-US sentimental issues with the locals of US registered entities). Thanks, Bill

Hi Bill: Flags of convenience…that’s a complex question. On the positive side, if done correctly you can reduce your liability. This becomes more important as the value of the boat increases and/or you sail without insurance. In some situations there can be tax advantages as well. However, for US citizens, it is difficult–to say the least–to avoid the long arm of the IRS! There is a further potential bonus of not flying the US ensign. In some parts of the world this might be a help.

On the other side, there is a cost associated with the entity which owns the foriegn-flagged vessel. Costs can run from $3000 to $6000 per year for paperwork and local government fees. If you are spending a lot of time in the US, even though you are a US master and crew, the vessel must be cleared into and out of each customs district unless you have a cruising permit.

Cruising permits are issued for a year to vessels flying the flag of countries which reciprocate this privilege to US vessels. British flag entities, such as the Cayman Islands, Bermuda, and the Channel Islands all enjoy this status. With a cruising permit you simply notify each new custom’s district via phone when you arrive. Regards–Steve

Posted by Steve Dashew  (November 30, 1999)

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