I've never seen a fishing boat fly a flag, and I've been sailing in many countries for >20 years. Generally, fishermen don't care for such things.
So, since I am British and have a UK registered boat and know a bit about this. The law that applies (The Merchant Shipping Act 1995 section 5) requires that we should fly the flag when entering or leaving a foreign port or upon a signal by one of Her Majestys ships [1]. Flying a flag routinely in international waters is very much not required, and very few vessels fly a flag out there, because there is not much there to look at it and it just flaps itself to bits.