Shipping & Aviation
Malta has a long term tradition for shipping and its flag is the largest in Europe and the 6th largest globally.
Registration is normally effected in 2 steps, by:
Having the vessel provisinonally registered under the Maltese flag (valid for 6 months); and
During the provisional registration, the information provided by the applicant will be verified and any remaining documentation required is to be submitted to the authorities.
Advantages using Malta Flag
Tax exemption on ship activities, financing or sale (including when held through shares, securities or any other interest, including goodwill) when ships are over 1,000 net tons, provided the tonnage tax and registration is paid;
On ships smaller than 1,000 tons tax may be reduced in line with its age;
Other tax and cost-efficient financing structures (Eg: securitisation, trust, shareholders’ tax refund, lease-back);
No exchange control authorisations are required for the purpose of incorporating or operating a shipping company insofar as 80% or more of the shares are owned by non-residents. This also applies to the taking of security for loans or other facilities over Maltese-registered vessels owned by companies registered locally;
Ships may be registered in the name of legally constituted corporate bodies or entities irrespective of nationality;
Malta is on the White List of the Paris MoU and Tokyo MoU and on the Low Risk Ship List of the Paris MoU;
No nationality restrictions for master, officers and crew;
No trading restrictions and preferential treatment to Maltese ships in certain ports;
No hidden costs and no inspection fees;
Maltese requirements are well known to main shipyards and main classification societies;
Reputable and internationally recognised ship Register.
Malta has become a jurisdiction of choice in the fields of aircraft maintenance, aircraft registration and aircraft leasing.
Companies engaged in aircraft leasing may benefit from a number of corporate tax and VAT advantages as follows:
In an operating lease, the lessor would be entitled to tax depreciation on the value of the aircraft frame and aircraft engine at 16.7% each year as well as a tax depreciation on interiors and other parts at 25% each year. Through the application of the tax refund system, although the lessor will be subject to tax at 35%, the effective Malta tax charge will be reduced to between 0% and 6.25%. Furthermore, a disposal of the aircraft can be structured in a way that it would not attract any Maltese tax liability.
In a finance lease, the lessor will be taxable in Malta on the finance charge, with deductions allowable for any finance cost. Although the lessor will be subject to tax at 35% on its taxable income, the tax refund system will reduce the effective Malta tax charge to a maximum of 6.25%. Upon a disposal of the aircraft there are no tax consequences in Malta.
Alternative Planning Opportunity
Where the lessor or lessee is a company that is resident but non-domiciled in Malta (incorporated outside Malta but managed and controlled in Malta), it would only be subject to tax in Malta upon any:
income arising in Malta;
chargeable gains arising in Malta; and
income arising outside of Malta which is received in / remitted to Malta.
Any income derived from the ownership, leasing and operation of aircraft or aircraft engines, which is used for or employed in the international transport of passengers or goods, is deemed to be arising outside of Malta.
Therefore, a resident non-domiciled company will only be taxable in Malta if it receives its income in Malta. If the income is not received in Malta there would be no tax liability in Malta.
VAT on private aircraft to non-business customers is payable on aircraft range, this resulting in a reduction from the standard 18% to between 10.8% (for 7,000) this decreasing up to 5.4% for longer ranges. International transport of goods or passengers is exempt from VAT.