Yacht Registration
Yachts may be registered under the Malta Flag regardless as to whether they are ultimately intended for private or commercial use.
Any citizen of Malta or of the European Union (EU) and any company registered in Malta or in an EU Member State may register a yacht under the Malta flag. A non-EU citizen cannot, accordingly, procure the registration of a yacht in Malta directly. However, any such non-EU citizen would be entitled to set up a company in Malta to hold and register the relevant yacht under the Malta flag.
A yacht would first be registered under the Malta flag provisionally merely pursuant to the submission of certain prescribed and straightforward documentation to the domestic authorities. Prior to the lapse of six months from the provisional registration of a yacht and pursuant to the submission of additional documentation to the said authorities, the yacht would be permanently registered as a Maltese flagged vessel.
Yachts intended for international commercial use would additionally be required to comply with standards set by the domestic Commercial Yacht Code.
Registration fees levied by the domestic authorities in connection with yacht registrations are chargeable by reference to size and tonnage. Such fees are generally reasonable.
Tax Considerations
Income derived by a Malta company from the operation of one or more commercial yachts should ultimately be chargeable to tax in Malta at a combined overall effective Malta tax rate of 5% - by application of Malta's refundable tax credit system. In fact, such income would be chargeable to tax in Malta at the rate of 35% at the level of the operating company. However, upon a distribution of net dividends by that company in favour of its shareholders, the said shareholders should generally be entitled to a refund of six-sevenths of the Malta tax suffered at the level of the operating company on the profits out of which the dividends were distributed.
VAT
In addition, the charter of a commercial yacht which navigates on the high seas and carries paying passengers would represent an exempt with credit (zero-rated) supply for Malta VAT purposes. Likewise, the supply of the vessel itself and subsequent supplies made in respect thereof (including maintenance and provisioning) would represent exempt with credit supplies.
Aircraft Registration
Malta's regulatory framework applicable in the context of aviation is intended to establish Malta as a hive of international aviation activity. Malta aims to be a cost-effective but sophisticated and reliable European jurisdiction for aircraft registrations. As such, the Malta registration marks emblazoned on an aircraft lend substantial credibility to that aircraft and its owner/operator.
The domestic regulatory framework is broadly applicable and unrestricted as regards the type and intended use of aircraft registered in Malta. A Malta registered aircraft may accordingly be used commercially or otherwise for private purposes. The said regulatory framework also provides for the registration of aircraft under construction.
However, prescribed eligibility restrictions apply by reference to the nationality/residence of prospective registrants of aircraft. At any rate, a private aircraft may be registered by a citizen of or an undertaking established in an approved jurisdiction but provided that, inter alia, the registrant appoints a local resident agent to represent the owner in Malta for matters concerning the aircraft.
The registration process should be straightforward and streamlined - as should the processes employed with a view to the issuance of additionally required licenses and authorisations including certificates of airworthiness and air operating licenses.
Tax Considerations
Income derived by any person who owns, leases or operates any aircraft or aircraft engine/s and which is/are used or employed in the international transport of passengers or goods, is deemed to arise outside Malta for Malta tax purposes - irrespective of the country of registration of the said aircraft or aircraft engine/s and regardless as to whether the aircraft may have called at, or operated from, any airport in Malta.
In turn, a company resident but not domiciled in Malta for domestic tax purposes (that is, incorporated outside Malta but controlled and managed from Malta) is subject to tax in Malta only on:
chargeable income and capital gains arising in Malta;
chargeable income (not capital gains) arising outside Malta to the extent that such income is received in Malta.
As such, income derived by a company incorporated outside Malta but which is resident in Malta from the ownership, leasing or operation of aircraft or aircraft engines would not be chargeable to tax in Malta unless such income is received in Malta. Any such income received in Malta (or otherwise accruing to a company incorporated in Malta) would then typically be subject to tax in Malta at a combined overall effective rate of 5% by application of Malta's refundable tax credit system described above.
In addition, in terms of Malta double tax treaties (60 treaties currently in force), taxing rights over profits of an enterprise derived from the operation of aircraft in international traffic are generally allocated exclusively to the country in which the place of effective management of the relevant enterprise is situated. As a result, profits derived by a Malta resident company from the operation of aircraft in international traffic may be taxable exclusively in Malta.
VAT
The supply, chartering, maintenance, servicing and provisioning of aircraft destined to be used by an airline operator would represent exempt with credit supplies for Malta VAT purposes.
Yacht/Aircraft Leasing Arrangements
The Malta VAT Department has issued guidelines clarifying the Malta VAT treatment of yacht and aircraft leasing arrangements. In terms of the guidelines, the overall VAT incidence incurred on the acquisition of a yacht or aircraft may be reduced to 5.4% depending on the size and means of propulsion of the yacht or the relevant features of the aircraft - including the aircraft type, maximum fuel capacity and fuel burn.
