Thinking of selling or chartering a foreign-built vessel in U.S. waters? Head to the U.S. Virgin Islands for smarter business.

Selling or chartering a yacht is by no means plain sailing, especially in mainland U.S. waters, where regulations restrict how foreign-built vessels can be offered for sale or charter.

U.S. laws hamper the sale and charter of foreign-built yachts to U.S. residents in U.S. waters unless these vessels are first imported into the U.S. and duties paid, or significant restrictions are put in place.

To avoid this expense, owners of foreign-built vessels are hopping over to the U.S. Virgin Islands (USVI), where no such restrictions apply and where the market is buoyant.

As an unincorporated U.S. territory, the USVI is not subject to the same laws and U.S. customs which restrict the sale and charter of vessels. Thus, the islands provide a simpler and more cost-effective way to sell or charter vessels to U.S. residents.

With IGY’s 4-time award-winning superyacht marina Yacht Haven Grande located in St Thomas, just a 15-minute drive from the international airport and luxury FBOs, the USVI is the perfect location for foreign-built vessel sales or to embark on a charter yacht for vacation. Furthermore, the marina is home to charter company professionals, yacht shows, and local marine vendors, making it easy to meet with industry professionals in person.

Challenges of selling a foreign-built vessel in mainland U.S. waters

The difficulty facing owners of foreign-built yachts in U.S. waters is that, with few exceptions, these vessels must be imported into the U.S. before they can be offered for sale or charter to U.S. residents. To import the vessel, the owner must pay customs duty of 1.5% of the vessel’s value.

Many foreign-built yachts are not even eligible to be imported because their engines were never certified to meet U.S. regulations.

Moreover, convoluted U.S. customs laws, including the Jones Act, prohibit foreign-built and foreign-flagged yachts, even those that have been imported, from carrying charter guests as passengers, which means these yachts may be offered for charter only without a crew provided on a bareboat basis.

There are further restrictions on how many passengers can be carried. United States-documented yachts of less than 100 gross tons (or about 80 feet, depending on the yacht’s layout) that are offered for charter are generally not allowed to carry more than six passengers.

Benefits of selling and chartering in the U.S. Virgin Islands

The great advantage of the USVI is the islands are not subject to the United States customs regime and the restrictive coastwise laws.  This means owners can sell or charter yachts to U.S. residents in the USVI without having to import their vessels into the U.S. first or pay customs duty, saving both time and money.

Since the Jones Act’s restrictions on trade do not apply in the USVI, foreign-built and foreign-flagged yachts may carry charter guests in the USVI on crewed charters. Furthermore, yachts of less than 100 gross tons (about 80 feet) that comply with MCA small commercial vessel code (also known as Blue or Yellow code) are allowed to carry up to 12 passengers for hire, making charter in the USVI much more attractive.

Besides being outside the U.S. customs zone, the USVI offers a business-friendly environment for buying and selling yachts. This is not only due to its use of the U.S. dollar and U.S. banking institutions, but also to unique tax incentives such as the Economic Development Commission Tax Incentive Program for charter yachts. In addition, the Government of the Virgin Islands is supporting infrastruture on shore to maintain charter business interests.

A further benefit is the USVI provide easy access. As a U.S. territory, U.S. citizens can enter the islands without a passport, and there are direct flights from major U.S. gateway cities.

No other state or territory in the United States offers all these advantages.

How you can save money

An owner wants to offer a 130-foot, foreign-built yacht for sale for $10,000,000. In Florida, to offer the yacht for sale to U.S. residents, the owner could do one of the following:

• Import the yacht and pay customs duty of $150,000
• Put the yacht in a foreign-trade zone for $40,000 per month
• Put the yacht under a boat-show bond, with significant restrictions, for $5,250

In the USVI, the owner could offer the yacht for sale without restriction, at no cost.

The USVI: a compelling alternative

With its outstanding IGY marinas, business-friendly environment, tax incentives and less burdensome regulations, the USVI is an ideal location for yacht owners seeking to achieve greater flexibility and profitability in the sale and charter of their vessels.