State Taxes on Boat Use

December 14, 2019

[This post has transitioned to a work in progress . . . I have picked up a few new readers based on my taxation post, so if others have insight on boat taxation issues, I will try to include it in a helpful and meaningful way.]

My last post discussed the taxation of my (UK flagged) boat in Canada for a Canadian.  The overview is that, on the surface, as a Canadian resident, I would be required to pay a 9.5% duty and 15% HST if my boat enters Canada.

After posting this I received kind responses from a number of people with sympathetic, disgusted and advisory insights.   I thank all of you for the insights and comments.   I do agree that the taxation is ridiculously high, but we do have a number of benefits that come from that taxation, so I recognize that this is a ‘first world’ problem.

As you might expect, this effectively means that I will be shopping for a reasonable jurisdiction to explore for the foreseeable future.  As a reasonable human being I am happy to take my ‘first world’ problem (aka, boat) elsewhere.

Of course taxation serves the people who live in a country, and supplies general revenue for the government, and we also have faith that the government will apply that revenue to the services related to how we spent the money.   This is of course one of the large disconnects with taxes such as a Goods and Services Tax, or in Canada, we call it the Harmonized Sales Tax, but same deal.   On the other hand duties are a way to punish people for not supporting the local economy.  I bought a boat made in China, sold by an American company, and therefore my duties are a way to discourage this behavior.  Canada really wants me to buy a boat from some Canadian manufacturer.  While it is a bit simplistic to suggest that boat manufacturers have disappeared because of these high taxes, it is very fair to suggest that duties won’t make any Canadian manufacturer competitive with Beneteau Group or Ferretti Yachts.

I mention all of this because this duty and tax applies to me, because I live here, in Canada.

By contrast, the USA allows my foreign boat (and I am neither a US resident, nor a citizen) to visit US waters under a cruising permit for one year for a couple of hundred bucks.  I think that amount was for the broker, and not even for the government.

Here are some comparisons from my experience so far:

  • US – Free or modest fee for one year
  • EU – Free for 18 months
  • Croatia– 1,300 kuna (or ~C$256) for one year (based on 12-15 meters)
  • Montenegro – I don’t remember what I paid, perhaps ~200 Euro for one year (<24 meters)
  • Canada – Free for 12 months for foreigners

 

Meanwhile I started looking at state taxes.   In the US, it appears that all taxation on watercraft is done at the state level, and there are two classifications, purchase taxes and use taxes.

When a broker or manufacturer sells you a boat, they are required to charge state taxes.   Some states have exemptions for boats expected to leave (with varying lengths of time).   If a boat is NOT purchased in a state, but just ends up in the state for varying lengths of time, the state will charge a usage tax.   These same characteristics exist in some states for trailers.   It appears that purchase and use taxes paid in one state removes the obligation in most other states.

I am currently reading the rules for a number of states, and so this information is a bit scattered right now, and due to Christmas and other pulls on my time, it may take a long time to compile the information, but here is what I am learning thus far.

  • Florida Boat Tax – 6% ($30,000 max I think)
  • Georgia Boat Tax – 8.25%
  • S. Carolina use tax – 5%  ($500 max)
  • N. Carolina use tax – 3% ($1,500 max)
  • Virginia tax – 2% ($2,000 max)
  • Delaware– Cursory review suggests Delaware does not allow you to title a boat, but registration is required if it is your primary use state.   So no tax, but no title either.
  • Maryland– 5% tax ($15,000 Max) – If you stay in MD for more than 90 days, then you may be hit with the Maryland Tax as officials may construe it to be a Maryland boat.

Over the next little while I will gather the data for the states on the East coast and update this post.

2 thoughts on “State Taxes on Boat Use

  1. check Deleware – known for not having any taxes

    1. Thanks Thomas. Interesting that Delaware does not title boats apparently! I did check it out.

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