One outdated number has quietly shaped the entire superyacht landscape in the United States: 300 gross tons. For nearly 100 years, once yachts started exceeding that limit, the law effectively pushed them toward a commercial-vessel regulatory world. Yet, that world doesn’t match how private owners actually operate, nor how their yachts operate. So why is there still no clear, modern U.S. large yacht code? And, why do so many American-owned yachts end up under Cayman Islands, Marshall Islands, or other offshore registries?
In this episode of The Yacht Law Podcast, we comb through the real-world consequences of treating a mobile industry like it sits in place. When governments add importation duties or tariffs, yachts do what yachts have always done: They move. That movement doesn’t just mean the owners and their guests go elsewhere. In fact, it hits marinas, boatyards, fuel docks, restaurants, shops, and the seasonal small businesses dependent on visiting vessels. We also connect the dots between U.S. flag rules, the Jones Act, and the national-interest logic that drives maritime policy, even when the outcome is messy for modern superyachts.
A surprise turning point came in 2018, in more ways than one. Firstly, Congress lifted the 300-gross-ton limit that had defined a yacht since 1920. Secondly, Congress attached this large-yacht language to the National Defense Authorization Act (often referenced as the John McCain NDAA). It tasked the Coast Guard with creating a pathway for these yachts to fly the U.S. flag while staying non-commercial. That deadline, though, came and went, and to date no U.S. large yacht code is on record.
As with all things in government, the reasons are complicated. We talk about why implementation has lagged, for instance, and why so few American megayacht owners choose the option. It probably comes as no surprise that multiple unintended consequences have resulted from not just the legislation, but also seemingly unrelated legislation. Costs like 1.5-percent duty and double-digit tariffs can wipe out the perceived benefits instantly. Along the way, we explore legal workarounds such as bareboat charter structures and why the only message every legislator consistently hears is economic impact backed by real numbers.
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Share your opinion, too: What policy change would actually convince more owners to choose the U.S. flag?
Mark Fry
Hi Diane,
In answer to your question as to why the U.S. does not have a “Large Yacht Code” such as the MCA and other flag states, I personally believe that the simple answer is that there is not enough demand for two main reasons.
Firstly, a yacht that is registered in a foreign jurisdiction with favourable tax laws (such as the Cayman Islands, Bermuda etc.), can have the yacht registered to a trust company that does not allow the owners name or contact information to be made public. This allows the real owner to maintain complete privacy and enjoy tax incentives not available with U.S registration. Also, a U.S flagged vessel is considered sovereign U.S. territory so they are subject to strict maritime and immigration laws that prohibit foreign nationals from working on them without proper U.S. work qualifications which restricts the hiring of foreign crew.
The second reason goes back to an article I wrote for Megayacht News many years ago which addressed the reason why American owners did not necessarily want American crew. For instance, European crew generally grow up speaking multiple languages and have an understanding of multiple cultures and their laws and traditions which is a great help when visiting foreign countries, not so with many American crew. Sadly, a small number of American crew also have a tendency to sue the Yacht or Yacht management company if they get injured on the job or on the yacht, which has a negative impact on the selection of American crew.
At International Yacht Training, (IYT) we issue in excess of 30,000 Master of Yachts and crew certificates annually in 66 countries and less than 1% of them are American citizens ! Personally, I believe that these two reasons impact the lack of demand for a U.S. “Code of Practice for Yachts”.