Export Yacht Sales

Understanding Duty Paid Status

Duty Paid status is part of the “Delivered Duty Paid” process, which is an Incoterm (International Commercial Term). It means that in an international commercial transaction, the seller assumes the following responsibilities:

  • All costs and risks associated with sending the product or products to their destination
  • Taking care of clearance formalities at the point of origin, such as export permits and cargo-specific documentation
  • Arranging carriage contracts with the various carriers up to the named place of delivery
  • Obtaining proper clearance of the goods for import
  • Paying any and all customs duty for both import and export
  • Handling all customs-related requirements at the destination port
  • Liability for costs if the product is lost or damaged in transit

Sellers who trade under Delivered Duty Paid Incoterms may have to take note of Contracts for the International Sale of Goods and other related provisions in applicable national Sale of Goods Acts. These provisions can provide the seller with relief from reasonably unforeseeable circumstances that prevent the product from being delivered on the specified shipping terms.

The seller must advise the buyer once the product has been delivered to the agreed-upon address. In all duty paid documentation, the freight terms are followed by an address, such as DDP (name of a port, if the product is a yacht) because, under the Incoterms rules, this address is where:

  • Delivery takes place
  • All risk passes from the seller to the buyer

In a duty paid delivery transaction, the buyer is responsible for any transportation of the boat from the agreed place of delivery to another location and covering themselves for any insurance or risk.

Who Uses Duty Paid Delivery?

Duty paid delivery is typically requested by buyers who don’t want to enter into a transport contract with any logistics company and would rather let the seller assume responsibility for all the steps involved in getting the boat to them. Although the seller is doing most of the work, the charges are usually passed on to the buyer in the product price.

The international sale and transportation of recreational vessels can be complicated, given the number of steps involved and the precise rules that accompany each one. Whether you are a buyer or seller, Export Yacht Sales partners with the Customs Brokerage Division at Howard S. Reeder can guide you through the necessary steps and documentation involved in delivering the vessel to its intended destination. 

European Commission announces action on VAT evasion in the yachting sector

The European Commission has announced its cracking down on VAT evasion in the yachting sector. The move follows revelations contained in the Paradise Papers of widespread tax dodging in the purchase of private boats. The EU believes this evasion is facilitated by national rules which do not comply with EU VAT law. The Commission has started formal action against on three EU state members – Cyprus, Greece and Malta – for not charging the correct amount of VAT on the provision of yachts. The infringement procedures announced are specifically related to:

  • The reduced VAT base for the lease of yachts – a general VAT scheme provided by Cyprus, Greece and Malta. While current EU VAT rules allow Member States not to tax the supply of a service where the effective use and enjoyment of the product is outside the EU, they do not allow for a general flat-rate reduction without proof of the place of actual use. Malta, Cyprus and Greece have established guidelines according to which the larger the boat is, the less the lease is estimated to take place in EU waters, a rule which greatly reduces the applicable VAT rate.
  • The incorrect taxation in Cyprus and Malta of purchases of yachts by means of what is known as ‘lease-purchase’. The Cypriot and Maltese laws currently classify the leasing of a yacht as a supply of a service rather than a good. This results in VAT only being levied at the standard rate on a minor amount of the real cost price of the craft once the yacht has finally been bought, the rest being taxed as the supply of a service and at a greatly reduced rate.

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs Union, said: “In order to achieve fair taxation we need to take action wherever necessary to combat VAT evasion. We cannot allow this type of favourable tax treatment granted to private boats, which also distorts competition in the maritime sector. Such practices violate EU law and must come to an end.” Cyprus, Greece and Malta received letters by the European Commissions on Thursday 8 March and have been given two months to respond to the tax evasion claims.

October Boat Sales

Sales of brokerage boats in the United States rose in October to 2,318, a 4 percent gain from the same month a year earlier.

Powerboat sales were key to the increase with 1,861 boats changing hands, an increase of 7 percent, according to YachtWorld member brokers reporting in their proprietary database SoldBoats.com. Sailboat sales fell 6 percent as 457 boats were sold.

The aggregate price of boats sold during the month increased to $289.5 million, a 19 percent gain that substantially outpaced the rise in unit sales, indicating a higher average sale price than in the previous October.

The total price paid for powerboats rose 23 percent to $252.9 million, lifting the average price from $119,000 to $136,000. The total price paid for sailboats declined 1 percent to $36.7 million, but the average price paid climbed from $76,000 to $80,000.

The bulk of the market’s volume gains were in the 26- to 35-foot segment, which rose from 888 boats sold to 975. Among boats 36 to 45 feet, sales were up 3 percent with 539 boats sold; sales of boats under 26 feet increased 1 percent to 589.

Among larger boats, the 56- to 79-foot segment showed the only growth year over year, but it was substantial at 20 percent with 54 boats sold. The 46- to 55-foot range was down 11 percent with 150 boats sold and sales of superyachts over 80 feet were even with the previous October as 11 boats were sold.

Valuations tell a different story for the larger and smaller halves of the market. Average prices were down slightly among boats 35 feet and smaller, but they increased in all size ranges above 35 feet. The largest gains in aggregate price were among superyachts, up 46 percent, with sales of $70.8 million, and boats 56 to 79 feet, up 61 percent, with sales of $38.6 million.

— John Burnham

Outboard Boat Performance

There are two things that affect an outboard’s performance more than anything else.  First is the height of the engine.  Many boat manufacturers mount the engines lower in the water than they should.  In my experience as both a new and used boat dealer, I don’t think a majority of boat manufacturers test the effect of engine height the way they should.  If your boat porpoises when you trim up the engine, in other words the bow starts bouncing, and doesn’t start cavitating, your engine is most likely mounted too low.  Also have someone hold the wheel for you while you are out in your boat.  If you don’t see the cavitation plate clearly while on a plane, your engine is probably mounted too low.  I have seen speed gains of almost 5 mph by raising an engine on a factory rigged boat.

The second factor that will drastically affect the performance of an outboard is the prop. If you want to go fast then go stainless.  It’s stronger than aluminum, which means manufacturers can make thinner blades, increase efficiency, and reduce drag.  Your boat needs to top out at its recommended RPM for the engine or close to it.  For a little more speed and efficiency, you should be on the lower side of your engine manufacturer’s top RPM range, and for a quicker hole shot you should be toward the max RPM limit.  On most two stroke engines this range is from 5200 to 5600.  On most four stroke outboards, this range is 5600 to 6200.  If your outboard is not turning over 5000 RPM’s on 99% of outboard motors, then you have too big of a prop.  When switching props, there are a few rules of thumb:

Three-blade aluminum: Nonperformance prop, usually comes with the boat; thicker construction, few pitch options.

Three-blade stainless: Up to 2-mph gain over aluminum three-blade; accelerates better because blades are thinner, holds better in turns, blows out less.

Four-blade aluminum: Nonperformance prop, smoother than three-blade aluminum; thick construction, few pitch options.

Four-blade stainless: Most popular performance propeller, up to 2-mph gain over aluminum four-blade, smoother than a three-blade, better acceleration, holds better in turns, blows out less, lots of pitch options.

Five-blade stainless: Smoother operation than four- and three-blades; gets on plane better, enhances midrange performance, but probably no gain in top speed.

When buying a boat, pay attention to the maximum RPM’s, see if the boat starts porpoising easily, and look at what type of prop the boat has.  The way the boat rides, planes off, and top speed can be severely affected by making a few changes in the engine height and prop. 

At Export Yacht Sales, we make sure a boat performs correctly before we deliver it to an absentee buyer.  In addition, we always recommend a surveyor that has experience with the type of boat you are buying.  No matter how big or small of a boat you are looking at, Export Yacht Sales will always be in the buyer’s corner.

Interesting Stats Posted by YachtWorld

According to YachtWorld, U.S. brokerage sales increased to 3,517 boats in July, a 10 percent gain over the 3,210 boats sold in the previous July. According to YachtWorld member brokerages reporting in SoldBoats.com, this was the third month in a row of sales over 3,500, a figure reached only once before since 2007 (in May, 2012).

The total price paid for the boats sold in July, $299 million, was also higher by $61 million, or 25 percent, over July 2012.

Sales of powerboats increased by 8 percent, to 2,928 boats, and the value of the boats sold climbed 24 percent, to $256 million. Sales of sailboats increased even more on a percentage basis, with 589 boats changing hands, a 17 percent gain over the previous July. The total price paid for the sailboats increased 32 percent, from $32 million to $43 million.

Market growth occurred among all size ranges of boats. Below 35 feet, an additional 202 boats were sold in July, up 8 percent, and values increased at a faster rate, indicating a higher average price paid per boat than in July 2012.

In a category that had been weak all year, 56 to 79 feet, sales increased by 46 percent with 73 boats sold, and total price paid kept pace, at $40 million, which was a 47 percent gain.

In the superyacht segment, over 80 feet, sales rose from an unusually low 4 boats a year earlier, to 14 sold in July 2013. The aggregate price paid increased from $21 million to $36 million.

For 2013 through seven months, U.S. brokerage sales were 2 percent higher, with 19,924 boats sold.

Shipping Costs

Many of our clients call us looking for boats without any idea of what international shipping cost are.  Boat buyers need to understand that there is a drastic difference in shipping cost depending on the dimensions of a boat.  There are three ways to ship a boat by ship, depending on the size of the boat. 

First is the least expensive and this method is by placing a boat in a container.  Although the container is less than 8 feet wide, it is possible to turn the boat sideways in the container to fit it.  There are a few companies Export Yacht Sales uses , which have the facilities to do this usually without damage.  The downside is that a majority of boats will need major components removed such as any sort of hard top, windshield, and engine.   Also, there is more risk of damaging the boat during the load and unload process.   The largest boat I have seen fit in a container is under 24’ long for a walk-around, and lightweight center consoles which can get up to 27’.  The upside is price and that you can fit up to three smaller boats in one container, as well as load anything else you want in there with the boat. Prices to send a container with the loading fee and a boat to Europe is about $5,000usd, and about $6,500usd to send one through the canal to Australia and New Zealand.

The second method is using a ship called a Ro-Ro (Roll On- Roll Off) ship.  With this method you can fit almost any boat on a trailer with the limiting factor being that the boat, on a trailer, must be under 14’.  This is the height of the cargo door.  To ship a boat on a Ro-Ro, prices usually cost about $500 per foot to Australia and the South Pacific.  Prices drop to about $400 per foot to ship to the Middle East.  Europe is the least expensive with prices running around $300 per foot.

The last alternative is if a boat is too large to fit on a trailer, or is over 14’ on a trailer.  If this is the situation, the boat will need to be hauled out of the water with a large onboard crane.  Divers will place straps under the boat.  The boat will be hoisted out, then metal caulks will be welded to the deck to support the hull.  This process is approximately double the Ro- Ro ship, it runs about $1,000usd per foot to Europe and about 10% more to Australia. 

Please pay attention to this guideline, it can save you a large headache if you purchase a boat before you know the shipping cost.  A boat that has a hard to remove tuna tower could cost you three times the amount to ship if it has to be hauled on deck. For more accurate quotes, please email us.

Sea Trials

Boat buyers seldom understand what to look for on sea trials.  The biggest misconception we hear is on the various rides of boats.  You should understand that there are advantages to the hull design when you are originally looking at a boat.  A deep vee is 100% going to ride better into a head sea.  The disadvantage of pushing that boat through the water is that it is going to take more fuel to push it, and it is going to roll more when you stop to fish.  A flat bottom boat is going to not ride well into a head sea, but is going to burn a lot less fuel, and will be more stable when you stop to fish.  The characteristics that vary from boat to boat is the variations on how much “V” there is in the hull, construction methods, the reverse chine to control how wet it is, and the layout of the boat. 

Customers constantly ask me how a boat will ride in 4 to 6 foot seas and I have a fairly standard answer, “like shit”.  An experienced boater that has been out in 4 to 6 foot seas realizes that unless you have a top of the line boat with a deep V that is over 40’, nothing will ride good when it is rough.  In addition, unless you are a tournament fisherman, there is no reason to go out in 4 to 6 foot seas. 

A sea trial should take place where you can run the boat in smooth water to make sure the engines turn up to the proper RPM, and where you can hit some waves and maybe a little bit of chop so you can feel  the integrity of the boat, whether it rattles, and if it absorbs the wave or pounds.  There is no reason for more than a ½ hour sea trial, and there is absolutely no reason to go out on a day with 4 to 6 foot seas unless you will be regularly operating in these conditions and are very experienced.  Every day is different on the water, and when comparing two similar quality boats, on two different days, it is rare they will ride the same. 

I always suggest going with your instinct.  You made an offer on a boat based on its reputation, and the design characteristics you were interested in.  I have seen more deals go bad on sea trials then at any other part of the transaction.  A majority of the time, the deals went bad for incorrect conclusions and many times they later regret the decision to decline the boat.  Research the boat you are buying on forums such as The Hull Truth.  Go on the sea trial with an open mind, trust your instincts, and I always recommend hiring a surveyor.

Why do you need a Oil Sample during pre-purchase inspection?

Many of our customers are not sure if they want to do a full engine survey given the cost.  Our recommendation is to at the very minimum perform an oil sample.  Oil analysis has been used successfully to determine the internal condition of machinery since the 1940s.

Oil analysis is not witchcraft; Test procedures are established and reviewed by such agencies as the International Organization for Standardization (ISO), the American Society for Testing and Materials (ASTM), and the Society of Automotive Engineers (SAE): Oil analysis is a proven diagnostic tool.

Engines and machinery are built from several different metals; including iron, aluminum, copper, chromium, silver, magnesium, molybdenum, tin, vanadium, zinc, boron, nickel, and lead. These metals are used in different components of engines and machinery.

By analyzing what metals are present in a properly obtained sample of oil, a competent lab can determine if anything is wearing excessively and why.

Analysis can also determine the presence of contaminants in the oil. Fresh water, salt water, antifreeze, fuel, and other contaminants can alert the surveyor to specific areas of concern.

The specific characteristics of oil can also be determined by laboratory analysis. Oxidation, sulfur content, soot content, PH, and other factors can be quantified.

Physical and spectrochemical analysis of properly obtained oil samples can provide information that could otherwise only be determined by completely disassembling the machinery.

We have boats with newer engines still under warranty with bad oil sample readings.  The owner did not know of any problems with his boat.  After the results we shown to the engine manufacture, they replaced the engine and the new buyer received a brand new engine!

Finding the right representation for your needs

Yacht buyers need to remember when they call a broker that is selling a yacht, that broker is only interested in selling the yacht they have listed. Therefore, they will suggest a surveyor that is the easiest surveyor they know of in order to get the yacht sold. Since Export Yacht Sales represents buyers, there is not a conflict of interest. Buyers are represented by Export Yacht Sales, and therefore, they will ensure you get the right surveyor for the yacht you are buying.

Using a “Buyers Broker” will not raise the price of the yacht. The central listing agreement that 99% of yacht sellers signed, ensures that they will pay the same percentage to one or two brokers. Instead of giving the entire commission to the sellers broker, why not have him split that commission with a broker that represents you? It only makes sense. When you buy a house, you usually use your own broker, give Export Yacht Sales a try

Importing a Boat from the USA

We are constantly getting inquires about the process of importing a boat from the USA. Buyers have to remember that when you call a seller, that seller is only interested in selling the boat they have listed. They are well aware that if you don’t buy their particular boat, then you are a lost sale. In addition, every broker that has dealt with foreign buyers realizes that the buyer will not see the boat until it is too late to return it. The smart thing to do it get a buyer’s broker. All Export Yacht Sales does is work as buyers brokers. They have in house surveyors, documentation specialist, shippers, and can get the boat CE certified before it leave the country. They don’t care which boat you buy because they represent the buyer. It is the only way to buy!