Malta: A maritime and aviation hub

The marine and aviation sectors have garnered plenty of interest – whether as an opportunity to own an asset that is associated with leisure, or a mode of transport, or as a business opportunity. This is of particular interest to those wishing for flexibility and the support of a reputable flag.

For shipping, there is much added value in terms of Malta’s being party to a significant number of conventions which provides comfort in terms of compliance with major international standards on safety and the marine environment.

Maritime Malta – Ship and yacht registration

The Maltese maritime register boasts a long tradition and experience in the registration of ships and yachts and has become one of the largest shipping registries in the world. The Malta maritime registry has achieved the status of being in first position among superyacht registries worldwide.

The Malta flag is set up within a robust regulatory framework and is well-respected in major ports around the world. Malta’s excellent geographic location as a maritime hub and the wide range of services being offered on or from Malta serve to make it a one-stop-shop for vessel owners.

The respect that the Malta flag has earned over time is partly due to its high level of involvement in international fora (including the International Maritime Organisation) in matters concerning the marine environment and safety in shipping and Malta’s commitment to adherence to international standards and conventions.

Malta also forms part of the Paris MoU – an international collaboration within which flag states collaborate on the inspection of ships flagged within those countries to ensure a higher standard of compliance with the applicable laws in the shipping industry. As such, Maltese ships receive favourable treatment in major ports around the world.

Malta’s ship registry is a public registry: registration has public effect in a similar manner to immovable property. This makes transfers traceable and also means that the vessel’s owners are recognised as being such; thereby providing legal certainty to vessel owners and other stakeholders.

The owner wishing to register a ship or yacht in Malta is not required to have Maltese nationality or residence: an international registrant may opt instead to have an authorised resident agent act as liaison between the registry and the owner. Any person or company in any jurisdiction may therefore register a Maltese ship or yacht.

In the case of yachts, the Commercial Yacht Code and the Passenger Yacht Code provide legal certainty to owners wanting to register their yachts in Malta and operate them commercially. These codes lay down technical rules and standards which apply to yachts that are being chartered and in particular yachts that are being chartered with more than 12 guests onboard.

Main benefits of a Malta-flagged vessel

• Registration as private or commercial yacht, or merchant ship.
• Registration under construction
• No trading restrictions
• No restriction on nationality of owners and crew
• Registration under a bareboat charter, where the bareboat flag is not necessary the flag of original registration.
• Registration of mortgages – Mortgages are a registered priority claim in respect of the vessel, ranked in the order of their registration
• Availability of a warrant of arrest of sea vessels – essential tool in securing financing.
• Tonnage tax – owners of Malta-flagged vessels can opt to pay annual tonnage tax instead of corporate tax, subject to conditions
• Wide recognition around the world

Malta – An aviation hub

The Maltese aviation industry features a well-respected national and international registry, backed up by a sound legal framework and a broad network of service providers across the industry. Malta’s accession to the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol has bolstered the value that registration in Malta brings to an aircraft owner and financiers alike by providing a system to register interests in the craft, including mortgages.

The Maltese legal and fiscal framework for aircraft registration and ownership presents highly attractive fiscal opportunities, highly competitive registration fees and operational costs. The Malta aircraft register is a public register and registration has effect against third parties, providing visibility to interest-holders and right-holders upon request.

The possibility of registering interests in aircraft and their engines adds to this further value in securing the interests of financiers and creditors. There is an abundance of local aviation services and providers to meet operators’ needs, as well as several airside facilities for the aviation and related industries in compliance with international aviation standards.

Investment tax credits also exist for those carrying on a trade or business in relation to maintenance of aircraft or their equipment.

Further aviation-specific tax considerations are available, including:
• Accelerated depreciation rates for aircraft and their engines
• Income deriving from ownership, leasing or operation of aircraft or their engines used for the international transport of passengers or cargo, is deemed to arise outside Malta, regardless of whether the aircraft may have operated from, or called at, a Maltese airport and is exempt from Maltese tax
• No withholding tax on lease payments made by Maltese lessors to non-residents in respect of aircraft operated in the international transport of passengers or goods
• No withholding tax on lease payments made by Maltese lessors to non-resident financial lessors
• Favourable VAT treatment of finance leases and operating leases
• Operating leases: the depreciation periods may be claimed by both lessor or lessee – depending on who bears the majority of the risks and reward of the aircraft, as well as on the parties’ agreement. In the case of a finance lease, the lessee can avail himself or shorter depreciation periods and may deduct expenses for wear and tear.
• VAT exemption on the supply of aircraft destined to be used by airline operators chiefly for international transport for hire or reward
• VAT exemption on the supply to constructors, owners or operators of equipment used or Incorporated In aircraft as well as supplies of services consisting in modification, maintenance, chartering or hiring of aircraft engaged in international transport of goods and passengers
• Investment tax credits, for persons carrying on a trade or business in relation to repair, Improvement or maintenance of aircraft or their equipment; these can be used against tax due in subsequent years
• Fringe benefits – private use of aircraft by non-resident individual being an employee or officer of an employer, company or partnership whose business activities Include ownership, leasing or operation of aircraft or their engines engaged in international transport of goods and passengers not deemed as fringe benefits
• No import duty payable on civil aircraft
• Aircraft not chargeable assets in terms of duty on documents in Malta

Key benefits of aircraft registration in Malta

• Flexible registration requirements
• Recognition of fractional ownership
• Registration of irrevocable deregistration and export power of attorney, and other special powers of attorney granted as security over the aircraft and parts
• Research and development schemes for aviation companies
• Private use of aircraft not treated as a fringe benefit (conditions apply)

Malta Company

The Malta Company is a useful vehicle to own and operate ships, yachts and aircraft and offers attractive incentives to foreigners wanting to enter the European market. In many cases, this is important when dealing with EU suppliers and an EU customer base, access to EU finance and banking services and the ability to provide services across the EU.

Malta has signed double tax treaties with over 70 jurisdictions and offers business incentives for a number of key industries, with specific opportunities for the maritime and aviation industries.

Acumum Legal and Advisory

Acumum is an award-winning boutique set of legal, tax and fiduciary firms – with an associated UK barristers chambers, located in the EU tax and fiscal efficient jurisdiction of Malta. Acumum’s senior management of lawyers, accountants and tax advisers provide expert, trusted and cost-efficient, bespoke services to an international clientele: individuals, family offices, corporations, governments and other service providers.

Believing in long-term relationships, we provide holistic, sustainable and practical solutions to clients, whilst being committed to a superb and personalised level of client service.

Head of maritime and aviation Dr. Geraldine Spiteri (Advocate) +356 2778 1700 (403) | [email protected] | WhatsApp: +356 99695770
Acumum Legal and Advisory: Malta, UK and Ireland – Independent | Trusted | Expert