Month: March 2021
The Benefits of Ship or Yacht Registration in Portugal, with the International Shipping Register of Madeira (MAR)
Ship or Yacht Registration in Portugal
The International Shipping Register of Madeira (MAR) was established in 1989 as part of the Madeira International Business Centre (“MIBC”) “package” of taxation benefits. Portugal is an attractive jurisdiction for ship or yacht registration, with over half a million vessels are now registered with MAR. It is also ranked the fourth international shipping register in the EU. If you are in the process of deciding where to register your vessel, Portugal should be considered.
Vessels registered with MAR carry the Portuguese flag and are subject to the International Treaties and Conventions entered into by Portugal. The register is of a high standard, has EU credibility, is not regarded as a flag of convenience, and is whitelisted in both Paris MoU and Med MoU. Moreover, it has never been regarded by the ITF as a flag of convenience.
It is important to note that the Portuguese Government is determined to boost the maritime economy, taking concrete steps to put MAR among the leading European flags. In this context we must point out that MAR is one of the first flags to fully introduce an efficient digital system, allowing for the dematerialisation of all procedures and the issuing of electronic certificates following the IMO Guidelines for the use of electronic certificates.
In the words of MAR’s Technical Commission, “Portugal considers digitalization in the maritime transport as a very relevant development, namely in respect to expediting sharing of information, improving security and traceability of documentation and reducing administrative burdens.”
It is therefore clear that MAR is offering the best quality package to owners worldwide, as any individual or entity can register a vessel with MAR. There are no nationality requirements for ship-owners of vessels registered in MAR and they are not required to have their head office in Madeira. In addition, if the entity is registered with the International Business Centre of Madeira (MIBC), and undertakes maritime transportation, it can enjoy specific tax incentives provided by the MIBC.
Advantages of Ship or Yacht Registration in Portugal
Yacht Registration with MAR:
- EU register – yacht registration in MAR provides unrestricted access to EU waters.
- Yacht owners are not required to have their head office in Madeira (it is sufficient to have local legal representation with adequate powers).
- Low levels of taxation.
- The yacht does not have to sail or be moored in Madeira.
- No citizenship requirements for the crew of commercial yachts and a flexible social security regime.
- The existence of a flexible mortgage system which allows the mortgagor and the mortgagee, by written agreement, to choose the legal system of a particular country that will govern the terms of the mortgage.
- Reduced costs of registration.
Advantages of Ship Registration in MAR:
- EU Flag – the register is of a high standard and has complete EU credibility, with access to continental and island cabotage.
- The register is included in the Paris MoU Whitelist.
- Competitive registration fees, there are no annual tonnage taxes.
- Only 30% of the safe manning must be “European”. This includes nationalities such as Polish, Russian, and Ukrainian, as well as citizens of Portuguese-speaking countries. This requirement may also be derogated if duly justified. This allows for flexible manning.
- Crew wages are exempt from income tax and from social security charges in Portugal.
- If an MIBC company is formed, with the object being maritime transportation, there is no share capital requirements.
- Shipping companies licensed to operate within MAR benefit from a corporate income tax rate of 5% until 2027. They also enjoy:
- automatic VAT registration,
- access to the Portuguese double taxation treaty network,
- exemption from withholding taxes on the distribution of dividends,
- exemption from withholding taxes on interest, royalties and service fees paid to non-residents,
- and exemption from capital duty, notary, and registration fees.
- If certain requirements are met, shipping companies may also be exempt from capital gains tax when subsidiaries are sold.
- The existence of a flexible mortgage system which allows the mortgagor and the mortgagee, by written agreement, to choose the legal system of a particular country that will govern the terms of the mortgage.
- Eight International Classification Societies are recognised in Portugal. MAR can delegate some of its functions to these societies. This can be simpler and more convenient for ship owners.
- Temporary registration is allowed by law (bareboat charter: “In” and “Out”).
- Vessels under the Portuguese flag are included in the Qualship 21 Index of the United States of America. This certificate recognises the exceptional standards of the Register.
Summary
If you are interested in finding out more about Ship or Yacht Registration in Portugal and would like to take advantages of the benefits listed within this article, please contact: advice.portugal@dixcart.com, or your usual Dixcart contact.
Dixcart Air Marine – Team Introduction
The Team and Activity
Dixcart Air Marine assists clients with the registration of yachts, ships, and aircraft in a number of different jurisdictions.
Our team of experienced professionals across the various Dixcart offices, provide a complete service for clients. Professionalism, coupled with practical experience, help guarantee a smooth process for our clients and enables them to access a range of attractive measures that are available in the different jurisdictions.
Dixcart Air Marine can coordinate the entire yacht, ship, or aircraft purchase and/or ownership. To maximise the benefits, one of our professionals should ideally be involved as early as possible – as soon as the thought of owning the asset has occurred to the client. To see the full range of services available, please click here.
Introduction to Jonathan Vassallo and Paul Harvey
Jonathan Vassallo from the Malta office and Paul Harvey from the Isle of Man office are two key members of the Dixcart Air Marine team that we are introducing you to today.
Jonathan joined Dixcart in September 2009. He is a member of the Association of Chartered Certified Accountants, the Malta Institute of Taxation, the Malta Institute of Accountants, and the Malta Institute of Management. Jonathan is also a member of the Yachting Business Section of the Malta Chamber of Commerce, Enterprise and Industry. He is the Managing Director of the Dixcart office in Malta.
Paul Harvey, an accomplished figure in offshore financial services, brings over two decades of expertise to his role at Dixcart Management (IOM) Limited. With expertise regarding superyacht holding structures, Paul collaborates closely with a network of tax advisers, lawyers, and industry experts to ensure the efficient establishment, management, and administration of these prestigious assets. His expertise extends to both private and commercial vessels.
Jonathan Vassallo – jonathan.vassallo@dixcart.com
Jonathan was appointed Director of Dixcart Management Malta Limited at the start of 2013 and Managing Director during 2018. His role is to develop and implement strategy for the Malta office ensuring that the Group’s high standards of compliance and operational control are maintained. He manages a number of relationships with international clients and particularly specialises in the areas of yachting, residence, and VAT. He has extensive experience with the registration of yachts and superyachts, the formation and administration of the relevant holding structures, and the ongoing management of yachting structures.
Before joining Dixcart, Jonathan Vassallo was involved in the manufacturing industry in Malta for thirteen years. During this term, he served as an Accountant and Financial Controller for two major furniture firms in Malta.
Paul Harvey– paul.harvey@dixcart.com
Paul is a member of the Society of Trust & Estate Practitioners (STEP) and is skilled in handling complex tax and legal matters related to superyachts. He regularly attends events such as the Monaco Yacht Show.
Paul became a member of the Society of Trust & Estate Practitioners (STEP) and joined the Dixcart office in the Isle of Man in 2009, later becoming a director of Dixcart Management (IOM) Limited in June 2017. He maintains daily engagement with clients, advisers, and yacht professionals, leveraging over 20 years of offshore financial services experience to navigate the tax and legal complexities of superyacht holding structures effectively.
The Malta Aircraft Registration Regime – A Favourable Aviation Base in the EU
Background – Malta Aircraft Registration
Malta has implemented an aircraft registration regime, structured in a manner to accommodate efficient registration of smaller aircrafts, in particular business jets. The regime is governed by The Aircraft Registration Act Chapter 503 of the Laws of Malta which will serve as the framework for registration of aircrafts in Malta.
In recent years Malta has actively positioned itself as a favourable aviation base in the EU. It has attracted several international carriers to operate from Malta and more importantly, the successful establishment of aircraft maintenance facilities such as those of SR Technics and Lufthansa Technik.
The Aircraft Registration Act addresses several important issues such as different types of registrants, the concept of fractional ownership and the protection of creditors and special privileges which may exist on the aircraft. Aircraft registration is administered by the Authority for Transport in Malta.
Malta Aircraft Registration Process – Key Information
An aircraft may be registered by the owner, operator, or its buyer, under a conditional sale. Only qualified persons and entities are entitled to register an aircraft in Malta.
Qualified persons are citizens of the European Union, EEA or Switzerland and qualified entities are entities that should be beneficially owned at least to the extent of 50% by individuals who are citizens of the European Union, EEA, or Switzerland. Qualification for registration is more flexible when it comes to the registration of private jets.
An aircraft which is not used for ‘air services’ may be registered by any undertaking established in an OECD Member State. Registration caters for issues of confidentiality in the sense that it is possible for the aircraft to be registered by a trustee. Foreign undertakings registering an aircraft in Malta are obliged to appoint a Maltese resident agent.
Malta Aircraft registration allows the possibility for separate registration of the aircraft and its engines. An aircraft which is still under construction may also be registered in Malta. The notion of fractional ownership is fully recognised by Maltese law allowing the ownership of an aircraft to be split into one or more shares. Details recorded on the public register include the physical details of the aircraft, physical details of its engines, name and address of the registrant(s), details of any registered mortgage(s) and details on any irrevocable de-registration and export request authorisation.
Registering a Mortgage on an Aircraft
Maltese law allows the aircraft to act as a security for a debt or other obligation.
A mortgage on an aircraft may be registered and as such all registered mortgages including any special privileges are not affected by the bankruptcy or insolvency of its owner. Furthermore, the law protects the judicial sale of the aircraft (instituted by the registered mortgage) from being interrupted by the administrator overseeing the bankruptcy proceedings of the owner. A mortgage may be transferred or amended according to the relevant preferences and circumstances of the creditor. Special privileges are granted in respect of certain judicial costs, fees owed to the Malta Transport Authority, wages payable to the aircraft’s crew, debts owed in relation to the repair and preservation of the aircraft and, if applicable, to wages and expenses in relation to salvage. Interpretation of the provision of the governing legislation has been consolidated and facilitated by Malta’s ratification of the Cape Town Convention.
Taxation of Aviation Activities in Malta
The regime is supported by attractive fiscal incentives:
- Income derived by a person from ownership, operation of leasing of aircraft is not taxable in Malta unless this is remitted to Malta.
- 0% withholding tax on outbound lease and interest payments made to non-resident persons.
- Beneficial depreciation period for wear and tear.
- The Fringe Benefits (Amendment) Rules 2010 – in some cases, entities may be exempt from fringe benefit taxation (for example, the private use of an aircraft by an individual who is not resident in Malta and who is an employee of an entity whose business activities include ownership, leasing or operation of aircraft or aircraft engines, used for international transport of passengers/goods, shall not be considered as a fringe benefit, and is therefore, not taxable as a fringe benefit).
The Malta Highly Qualified Persons Programme and the Aviation Sector
The Highly Qualified Persons Programme is directed towards professional individuals earning over €86,938 per annum, employed in Malta on a contractual basis within the aviation sector.
This scheme is open to EU nationals for five years, and to non-EU nationals for four years.
Tax Advantages Available to Individuals – Highly Qualified Persons Programme
- Income tax is set at a flat rate of 15% for qualifying individuals (instead of paying income tax on an ascending scale with a current maximum top rate of 35%).
- No tax is payable on income earned over €5,000,000 relating to an employment contract for any one individual.
How can Dixcart help?
Through our team of experienced professionals, Dixcart Management Malta Limited will assist you in all aspects of registering your aircraft in Malta. Services range from incorporation of the entity owning the aircraft in Malta and full corporate and tax compliance, to the registration of the aircraft under the Maltese Registry, whilst ensuring full compliance with Maltese Aviation legislation.
Additional Information
If you would like further information regarding Malta Aircraft Registration, please speak to Jonathan Vassallo (advice.malta@dixcart.com) at the Dixcart office in Malta or your usual Dixcart contact.