Why Use An Llc To Buy Our Catamaran?

[tvananda]

My husband and I are US citizens about to purchase a catamaran in France to live on and sail worldwide. We've been told that we should set up an LLC in order to buy the boat. I get the liability issue but I don't understand what tax implications there are. We plan to only have retirement income, use it as our primary home (although we have a small home in Oregon) and bring it back to the US a bit later. Can anyone assist?

[redbopeep]

Originally Posted by tvananda

My husband and I are US citizens about to purchase a catamaran in France to live on and sail worldwide. We've been told that we should set up an LLC in order to buy the boat. I get the liability issue but I don't understand what tax implications there are. We plan to only have retirement income, use it as our primary home (although we have a small home in Oregon) and bring it back to the US a bit later. Can anyone assist?

There may be some reason in France or something regarding export from the EU? Hopefully one of our European members will happen along with advice regarding that part.

In the USA:

Unfortunately, there are many people who think they're going to pull one over on Uncle Sam and not pay taxes on (often unrelated) income via using LLC, etc, to own an asset with no business reason to own that asset. If you are planning on starting a business and that business will own your boat and use your boat (you will NOT be using the boat primarily for personal reasons or your home) then having the business own the boat would make sense. However, when a business owns a boat and an owner/employee of that business has personal gain/use from the boat, the IRS can consider that a "benefit" or "perk" and tax it as such. All in all, a very confusing matter and in general not a good idea for most people in the USA. The IRS already closely scrutinizes "yachts" in VALID business use.

Those folks who advise you to use a LLC...you should ask THEM "why?"

Good luck on your purchase!

[Nausikaa]

Originally Posted by redbopeep

There may be some reason in France or something regarding export from the EU? Hopefully one of our European members will happen along with advice regarding that part.

I can imagine that if you are to keep the boat in Europe then setting up a business here would have some advantages but they would probably be outweighed by the necessity and costs of registering a company, auditing books, paying tax on the benefits derrived from the using the boat etc. The boat may be required to pass survey and be crewed as a commercial vessel.

If, as a U.S. citizen you come to Europe, pay your hard earned dollars and sail away (i.e. leave the EU) within 3 months then ou pay no VAT on the boat and there is no export duty. The one catch, as far as I can see, is if you are resident in a European Union Member State, in which case you will have to pay VAT.

Aye // Stephen