Category: Aircraft

Are Malta and Cyprus Shaping the Future of Aviation?

Posted on | by Megan Raguro | Leave a Comment on Are Malta and Cyprus Shaping the Future of Aviation?

The aviation sectors in Malta and Cyprus are experiencing significant growth, leveraging their strategic geographic locations and favourable regulatory environments. These islands are becoming pivotal aviation hubs in Europe, offering a range of services from aircraft registration to appealing leasing schemes.

Expansion and Regulation in Malta’s Aviation Sector

Over the past decade, Malta has solidified its position as a key player in the aviation industry. The government’s proactive approach has helped establish a supportive ecosystem, including a Maintenance, Repair, and Overhaul (MRO) centre that caters to the needs of a growing fleet. The establishment of flight training providers and flight software operators has further enhanced Malta’s aviation infrastructure.

Recent years have seen Malta develop robust drone regulations, creating lucrative opportunities for companies in the Unmanned Aerial Vehicles (UAVs) space, particularly those involved in photo and videography. This regulatory framework makes Malta an appealing destination for aviation-related businesses.

Malta’s Strategic Aviation Benefits

As a regional aviation hub of international repute, Malta’s Aircraft Registry has grown to include over 800 aircraft and 40 Air Operator Certificate owners (AOCs). The presence of international airlines such as Lufthansa, Malta Air, WizzAir, and Lauda Air underlines Malta’s status as a base for operational excellence.

Moreover, Malta offers attractive leasing structures, facilitated by favourable taxation policies. Notably, income from aircraft ownership, operation, or leasing is not taxable in Malta unless remitted to the country. Additionally, there is no withholding tax on lease payments where the lessor is not a tax resident, alongside opportunities related to tax depreciation and shareholder tax refunds.

Malta is a member of the Cape Town Convention on International Interests in Mobile Equipment (or Cape Town Treaty), which standardises transactions involving movable property. These international standards supersede national legislation, therefore the presence of a clear set of rules for aircraft transactions, lowers the risks of lessors (who enjoy preferential ranking remedies in case of default) and, therefore, reduces borrowing costs.

These aspects are complemented by an extensive network of over 80 Double Taxation Agreements (DTAs) and by the possibility, for aviation companies resident in Malta, to claim the notional interest deduction.

Cyprus’s Private Aircraft Leasing Scheme

Cyprus has established itself as prominent jurisdiction for individuals purchasing Aircraft for private use. This is all down to its underutilised Private Aircraft Leasing Scheme which can result in an attractive VAT rate being charged on the purchase of the aircraft. The reduced VAT rate is calculated based on the aircraft’s operational time within EU airspace, the type of aircraft and its maximum take-off weight. However, it should be noted that the eligibility criteria for the scheme are rigorous, but it can result in substantial savings for qualifying purchases.

Cyprus’ host of Advantages for Individuals Purchasing an Aircraft

The private aircraft must be owned by a company registered for VAT in Cyprus (the Lessor) and leased to any physical or legal person that is established in, or resident in, the Republic of Cyprus and not engaged in any business activity (the Lessee).

When you couple this with the fact that Cyprus has one of the lowest corporate tax rates in the EU at 12.5%, you can start to see why the opportunities with leasing private use aircraft have put Cyprus’ aviation industry on the map.

Additionally, the aircraft in question can be registered under any global aircraft registry and is not limited to the Cyprus Aircraft Register.

Qualification Requirements

As can be expected, due to the savings that can be made by applying this scheme there are a number of specific requirements that need to be met.

The key qualification requirement is the receipt of prior approval from the VAT Commissioner. This is done on a case-by-case basis and the VAT Commissioner reserves the right to refuse any application they wish.

Other additional qualification requirements are needed as well in order for the Private Aircraft Leasing Scheme to apply.

How Dixcart Facilitates Aviation Operations

In Cyprus, Dixcart’s services encompass establishing and managing VAT-compliant leasing structures, drafting lease agreements, and securing approvals from the VAT Commissioner. We also handle the importation of aircraft into Cyprus, assisting with all related customs clearance processes.

Dixcart Management Malta Limited offers extensive services to assist with every aspect of aviation operations in Malta. These include the incorporation of entities owning aircraft, full corporate and tax compliance, and registration under the Maltese Registry while ensuring adherence to local aviation legislation.

How can Dixcart Help?

Both Malta and Cyprus offer unique advantages for aviation-related activities, making them ideal jurisdictions for entities and individuals looking to optimise their operational and financial efficiencies. Dixcart is well-equipped to provide detailed guidance and comprehensive services in both regions.

For further information regarding aircraft registration in Malta, please contact Jonathan Vassallo at advice.malta@dixcart.com. For details on the Cyprus Private Aircraft Leasing Scheme and other services, please contact us at advice.cyprus@dixcart.com.

To learn more about Dixcart’s aviation services read our comprehensive article.

Aircraft Registration

A Guide to the Advantages of Aircraft Registration in: Cyprus, Guernsey, Isle of Man, Madeira (Portugal), and Malta

Posted on | by Megan Raguro | Leave a Comment on A Guide to the Advantages of Aircraft Registration in: Cyprus, Guernsey, Isle of Man, Madeira (Portugal), and Malta

Introduction

Dixcart Air Marine specialises in assisting clients with the registration, and ongoing management of various assets, including aircraft, ships, and yachts.

With a global network of experienced professionals, Dixcart provides tailored services to meet the unique needs of professionals and their clients.

Aircraft registration is a complex topic, and this guide aims to explore the advantages of aircraft registration in the following jurisdictions: Cyprus, Guernsey, Isle of Man, Madeira (Portugal), and Malta. For additional information, please contact us to be put in touch with an expert: advice@dixcart.com

Aircraft Registration Services Provided by Dixcart Air Marine

From assistance with importation to registration and corporate structuring, we provide expert assistance every step of the way.

With extensive experience in providing support for the importation of aircraft into the EU, Dixcart handle all preparation work and customs clearance procedures, ensuring a streamlined process.

When it comes to registration, we understand the importance of choosing the right jurisdiction based on the aircraft’s usage and location.

Dixcart can establish the appropriate ownership structure, guiding clients through the intricacies of registration with precision and efficiency. Additionally, our corporate structuring services cover accounting, secretarial tasks, VAT, and tax advice, providing professional advisers and clients with a commercial approach to managing aircraft assets.

Choosing the Right Jurisdiction

Dixcart offers expert advice in selecting the most tax-efficient ownership structure and jurisdiction for aircraft registration. With extensive experience and offices in key jurisdictions; including Cyprus, Guernsey, Isle of Man, Malta, and Portugal.

Dixcart ensures efficient coordination of the registration process. Our knowledgeable team provides insights into the regulatory frameworks, tax incentives, and operational considerations, enabling clients to make informed decisions, aligned with their objectives.

Advantages of Aircraft Registration in Cyprus

Cyprus offers a favourable regulatory environment and tax incentives for aircraft registration. With competitive fees and an efficient registration process, Cyprus is an attractive choice for aircraft owners seeking reliability and cost-effectiveness.

Additionally, Cyprus’ strategic location provides easy access to European and international markets, enhancing the aircraft’s operational flexibility.

The Private Aircraft Leasing Guidelines provide that Cyprus VAT will only be applied on a percentage of the lease consideration. The applicable percentages have been determined by the Tax Department and depend on the, length, type of aircraft, and an indication of the presumed time of use of the aircraft in EU air space. There is therefore, no need to maintain a detailed record or log books of the movements of the aircraft, for VAT purposes.

To benefit from the Cyprus Private Aircraft Leasing Guidelines, the private aircraft can be registered under any Aircraft register in the world and not necessarily under the Cyprus Aircraft Register. Certain conditions must be met, and the prior approval of the Cypriot Tax Commissioner needs to be obtained in each case.

If you would like further information regarding Aircraft Registration in Cyprus, please contact advice.cyprus@dixcart.com

Advantages of Aircraft Registration in Guernsey

Guernsey’s reputable regulatory framework and tax-efficient environment make it an ideal jurisdiction for aircraft registration. As a member of the Red Ensign Group, Guernsey adheres to high standards of safety and professionalism in aviation. With streamlined administrative procedures and access to a wide range of aviation-related services, Guernsey offers stability and efficiency for aircraft owners.

Guernsey’s Channel Islands Aircraft Registry, ‘2-REG,’ offers simplified registration with a neutral ‘2-‘ nationality mark.  Registration is available out of sequence; the 2- followed by a four-letter combination, allows for significant personalisation and branding opportunities.

2-REG accepts transfers from various registers, improving flexibility and with a secure mortgage registration system and global inspector network, it offers convenience and security.  

If you would like further information regarding Aircraft Registration in Guernsey, please contact advice.guernsey@dixcart.com

Advantages of Aircraft Registration in Isle of Man

The Isle of Man offers advantageous VAT arrangements and tax benefits for aircraft owners. With a robust regulatory framework and simplified customs procedures, the Isle of Man provides flexibility and efficiency for aircraft registration. In addition, the Isle of Man’s status as a crown dependency of the United Kingdom, ensures adherence to international standards and conventions, instilling confidence in aircraft owners and operators.

With over 1,000 registered aircraft, the Isle of Man Registry ranks as Europe’s second-largest private business jet register and sixth largest globally. It offers a neutral “M” registration prefix and upholds high regulatory standards.

Operating on a commercial yet cost-effective basis, the Isle of Man boasts; zero corporation tax, no insurance premium tax and VAT alignment with the UK. In addition, no capital gains taxes, no capital transfer tax, and no general withholding taxes are payable in the Isle of Man. A final benefit is that no insurance premium tax is payable.

If you would like further information regarding Aircraft Registration in the Isle of Man, please contact advice.iom@dixcart.com

Advantages of Aircraft Registration in Madeira (Portugal)

Madeira, as part of Portugal, provides a credible option for aircraft registration with EU compliance and tax advantages. Madeira presents a compelling option for aircraft registration, leveraging the advantages of INAC’s (the regulatory authority for civil aviation in Portugal), streamlined processes and low registration charges.

Portugal’s registry requires no nationality stipulations for owners, with a rapid 10-day registration turnaround. In addition, Portugal has pioneered fractional aircraft ownership registration and INAC officers are experienced in this field.

INAC is a secure mortgage register – due to its international reputation and safety standards it is on the banks and financial institutions whitelist of aircraft registries.

Air operators that meet certain conditions and with a valid AOC granted by INAC, are entitled to deduct the VAT on the, fuel supply, maintenance, lease, transfer, and repairs to the aircraft. They are also entitled to deduct VAT on the; acquisition, maintenance, repair, and transfer of equipment incorporated into the aircraft or used in its exploitation. This is provided that 50% of the aircraft’s flights are international.

If you would like further information regarding Aircraft Registration in Portugal, please contact advice.portugal@dixcart.com

Advantages of Aircraft Registration in Malta

Malta boasts a reputable aviation registry and extensive tax incentives for aircraft owners. With adherence to international conventions– most notably the Cape Town Convention and Protocol, Malta offers reliability and regulatory compliance for aircraft registration. Additionally, Malta’s comprehensive legal framework and experienced professionals facilitate smooth transactions for aircraft owners, minimising administrative burdens and maximising operational efficiency.

Malta’s location makes it logistically easy to provide access to European and African markets. Malta’s weather conditions also make it the prefect jurisdiction to test aircrafts and train pilots. It offers a wide spectrum of services in this sector such as; aircraft repair and overhaul, management, leasing, maintenance, and training, amongst others.

Aviation professionals can benefit from specifically designed expat tax status, and the taxation of aircraft structures in Malta offers advantageous frameworks, both for commercial and for private registrations.

The Double Tier Tax Structure allows tax free holding of funds and reinvestment of retained earnings through a Malta Holding Company and no withholding tax applies on the distribution of dividends.

In addition, Malta allows for registration of an aircraft under construction, if it is uniquely identifiable.

If you would like further information regarding Aircraft Registration in Malta, please contact advice.malta@dixcart.com

Conclusion and Dixcart Contact Details

Dixcart Air Marine offers comprehensive services to assist aircraft owners in selecting the optimal jurisdiction for registration dependant on their circumstances. Whether in Cyprus, Guernsey, Isle of Man, Malta, or Madeira (Portugal), Dixcart ensures efficient coordination of the registration process, and optimises the benefits available in the circumstances.

With expert guidance and practical solutions, Dixcart helps aircraft owners achieve their objectives efficiently and effectively in an ever-evolving global aviation landscape.

If you would like further information regarding Aircraft Registration, and aren’t sure on a specific jurisdiction, please contact advice@dixart.com for further assistance.

Malta Aircraft Registration Cleared for Take-off

Posted on | by Akiko Design | Leave a Comment on Malta Aircraft Registration Cleared for Take-off

Background

Malta’s strategic geographical position has assisted its aviation industry to present numerous economic opportunities, for many years. The importance of the Malta aviation sector has led the Maltese Authorities to strengthen its aviation framework to further enhance aircraft registration and aircraft operator licensing.

Malta and the Aircraft Registration Act

Malta has aimed to position itself as one of the primary aviation hubs in the EU by continually reviewing and bolstering its aviation registry. The available aviation legislation provides the aviation industry with a solid foundation. This is further complemented by; competitive aviation registration costs, the authority’s practical understanding of the aviation sector, and favourable corporate structures. As a result, the aviation framework provides several benefits to individuals seeking to register an aircraft on the island.

The importance of Malta’s flag has already been proved within the aviation industry and the inception of the Malta Aircraft Registration Act in 2010, positioned Malta as having one of the most reputable aircraft registers, within the aviation sector.

The Aircraft Registration Act has helped to enhance the aviation framework on the island. Malta has also implemented the ‘Cape Town Convention in Interests in Mobile Equipment’ and its ‘Aircraft Protocol’. Malta took additional measures to boost the aviation industry in 2012, by establishing the Safi Aviation Park, providing a number of aviation services, including training and repairs.

Benefits of Aircraft Registration in Malta

There are many benefits and innovative concepts relating to aircraft registration in Malta.

Amongst these, as mentioned above, was the enactment of the Aircraft Registration Act (Chapter 503, Laws of Malta), which came into force on 1st October 2010. This new regime was implemented to regulate the registration of aircraft, mortgages, and other securities relating to aircraft.

  • In terms of Maltese legislation, an aircraft may be registered by; an owner who operates an aircraft, or an owner of an aircraft under construction (or an aircraft temporarily not being used or managed), or an operator of an aircraft under  temporary title (subject to certain conditions), or a buyer of an aircraft under a condition of sale or title reservation agreement.

Additional benefits include:

A. More visibility of rights and interests in relation to aircraft, through the updating of the National Register;

B. Incentives to encourage the development of finance and operating leases relating to aircraft. Legislation provides clear rules on the tax treatment of the finance charge, available tax deductions to finance lessors, and capital allowances for lessees;

C. Broader registration options, extending to aircraft under construction or temporarily not in service and aircraft under a temporary title;

D. Recognition of fractional ownership of aircraft;

E. No withholding tax on lease payments where the lessor is not a tax resident of Malta;

F. Competitive minimum depreciation periods for aircraft;

G. The private use of an aircraft by an individual who is not resident in Malta and is an employee/officer of an employer/company/partnership, whose business activities include the ownership/leasing/operation of aircraft used for international transport, does not constitute a taxable fringe benefit.

H. Legislation implementation including the provision of the Cape Town Convention on ‘International Interests in Mobile Equipment’ and its ‘Aircraft Protocol’, thereby granting secured lenders more protection and more effective remedies whilst also enabling lower borrowing costs.

Tax, Standards and Flexibility Advantages of Private and Commercial Aircraft Registration in Malta 

Tax

Since 2007, Malta has offered an attractive corporate tax system whereby non-residents can claim tax refunds. In practical terms, the standard 35% corporate tax rate is often effectively reduced to between 0% and 5%.

If you are considering aircraft registration in Malta, another tax benefit is that income, from the international transport of goods and passengers outside the country, is exempt from Maltese tax.

As an EU member state since 2004, the Maltese aircraft register permits free circulation of aircraft in the eurozone, which allows tax-free commercial operation.

VAT Treatment

The VAT treatment for aircraft leasing makes Malta an attractive jurisdiction for private and commercial aircraft registration, whilst ensuring full adherence to EU laws and regulations. The rules take into account the amount of time spent by an aircraft within EU airspace.

The imposition of VAT in Malta varies according to how an aircraft is used. The key differentiation is between, an aircraft being used by an airline operator mainly for ‘reward’ in relation to the international transport of goods or passengers, or an aircraft that is being used purely for private use.

VAT implications, such as those applicable in other EU member states, are also relevant in relation to; importations, intra-community acquisitions, and/or supply of aircraft. The intra-community purchase, importation or supply of aircraft destined for use by an airline operator chiefly for international transport of passengers or goods is classified as an exempt credit supply.

The following are additional exempt credit supplies:

(a) Supplies of equipment to constructors, owners, or operators of an aircraft;

(b) Supplies of services consisting of the modification, maintenance, chartering and hiring of an aircraft.

The VAT treatment applies to all aircraft, other than those used by airline operators for international traffic, as a VAT exemption applies in this latter case.

According to Malta’s VAT legislation, the lease of an aircraft, which airline operators do not use for international traffic, is the supply of a service subject to VAT, with the right of deduction of input VAT by the lessor.

In terms of the VAT simplification procedure, the portion of the lease that will be subject to VAT, depends on the amount of time that the aircraft is used in EU airspace. As it is difficult to identify the movement of a plane in advance and the period in which the aircraft will be operated in EU airspace, Malta applies an ‘expert technical test,’ to estimate the portion of the lease that will be subject to VAT. The standard Malta VAT rate of 18% is applicable on the established percentage of the lease that is deemed to be related to the use of the aircraft in EU airspace.

In addition, Malta offers a very solid legislative environment, with an extensive double-tax treaty network and transparency of rights and interests.

Standards

Falling under the jurisdiction of the European Union Aviation Safety Agency (EASA),  the Maltese aircraft register implements some of the highest levels of regulation in the world. Aircraft registration in Malta offers business jet owners peace of mind, with its International Civil Aviation Organisation (ICAO) rating, testament to stringent safety and security standards.

In addition, Malta adheres to the Cape Town Convention on ‘International Interests in Mobile Equipment’, which specifies international standards for leases, security interests and the registration of contracts.

Flexibility

Aircraft registration in Malta offers unparalleled flexibility for international operators. Aircraft on the Maltese aircraft register can be based and freely operated from anywhere globally.

It is also possible to add an aircraft that is currently under construction or ‘out of action’ to the Malta aircraft register.

Aircraft registration in Malta allows operators to take advantage of fractional ownership of a single aircraft. The potential benefits are enormous, with several co-owners being able to detail a percentage stake, each financed by a separate creditor.

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 Aircraft Registration in Malta, please speak to Jonathan Vassallo: advice.malta@dixcart.com, at the Dixcart office in Malta or to your usual Dixcart contact.

Aircraft Registry

Aviation Funding And Leasing Services In Malta

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Background

In the last decade, aviation has become an even more relevant sector to Malta, not only due to the fact that it is the primary way that the island connects with other countries.

The jurisdiction is well known for aircraft registration with almost 500 aircraft registered in Malta. Similarly, the number of Air Operator Certificate Holders has increased to 40.  It is no surprise that Malta has become the fastest growing Registry in Europe.

This growth has been spearheaded by the introduction of various incentives and changes in legislation during recent years.

Aircraft Leasing 

One of the niche sectors which Malta is keen to expand is the aircraft leasing sector. Charles Pace, head of Transport Malta’s Civil Aviation Directorate, stated that the tendency nowadays is for airlines to lease aircraft rather than buy.

Malta is working to attract major aircraft leasing players which will help boost the aircraft sector in Malta further, both in terms of registrations as well as; maintenance, repair and overhaul activities.

Taking the Cape Town Index into account, Malta ranks well and is featured in the top 10, with a score of 85%. Taking advantage of this opportunity, the Malta Civil Aviation Director Charles Pace, is clear that he wishes to expand the Malta aviation sector to compete with strong leasing jurisdictions, such as Singapore, Hong Kong, or Ireland.

Leasing Types

When it comes to rental business, regardless of the aircraft, there are two types of leases: short-term (also known as wet leases), or long-term (also known as dry leases). 

Short leases are generally used by airlines for clients who need a plane for specific events or when faced with some technical problems within their own fleet. The lessor will pay the airport fees, taxes, fuel, insurance, maintenance, and crew. The fee paid by the lessee will depend on how many hours the aircraft is used.

However, for long leases, the only thing included in the price is the aircraft. The customer (the lessee) will be responsible for all charges in relation to; insurance, fuel, taxes, maintenance and crew. 

Benefits of Malta Aviation Companies

  • Investment Aid initiatives are available through the Malta Enterprise Corporation. The  aim of this assistance is to ease financial pressure at start up, as well as incentives to lessen the burden during ongoing operations.
  • Loan guarantees/subsidies and soft loans provided to facilitate entry into market.
  • Key personnel employed in the Aviation industry may benefit from the ‘Highly Qualified Persons Rules’.
  • Access to the aviation park situated in Safi.
  • Attractive taxation incentives including tax depreciation and taxation refunds.

Additional Information 

If you require any further information regarding aircraft leasing or the funding available to set up an aviation company in Malta, please speak to Jonathan Vassallo at the Dixcart office in Malta: advice.malta@dixcart.com.

Dixcart Air Marine – Team Introduction

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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 Vassallo

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

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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.

Using a Maltese Cell Company for the Registration of a Yacht or Aircraft

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Extension of the Ability to Use a Cell Company in Malta

Shipping and Aviation Cell Company Regulations were issued in Malta, earlier this year. The purpose of these regulations is to provide the opportunity to use a new cell structure for companies operating in the fields of shipping and aviation.

Cell companies, for use in the insurance and securitisation sectors, have already been successfully established in Malta, under the Companies Act for Cell Companies. It was felt beneficial to extend this type of corporate structure to the shipping and aviation industry.

Benefits Cell Companies Offer

The definition of a cell, within the relevant Malta Companies Act, summarises the benefits available; a cell company creates ‘within itself one or more cells for the purpose of segregating and protecting the cellular assets of the company in such a manner as may be prescribed’.

Each cell is treated as a separate legal entity which allows for the segregation of assets and liabilities relevant to the individual cell, from the assets and liabilities of the non-cellular element, and from the other cells.

A cell company may have more than one cell and each cell is treated independently from any other cell forming part of the same cell company. A cell company therefore provides protection for cells, from the other cells within the same company.


Obligations Cell Companies Must Meet

Cell Companies are distinguished from other companies by their name, which must include the words; ‘Mobile Assets Protected Cell Company’ or ‘MAPCC’.

Companies with such a structure may be formed or constituted as a cell company to conduct shipping or aviation business. Alternatively, a company conducting such business can be converted into a cell company, if permitted to do so by its memorandum and articles of association.

The assets of a cell company can be cellular or non-cellular assets. Such assets consist of the cell’s capital and reserves, as well as all other assets attributable to the different cells.

A cell company may, in respect of any of its cells, create and issue shares, these are known as ‘cell shares’. The proceeds of the issue of this ‘cell share capital,’ will form the assets of the cell.

Cell companies must inform all third parties that they are dealing with a cell company, and that there are two regulations which specifically deal with creditors and the recourse available for creditors in relation to cellular assets.

Examples – How Aviation and Shipping Companies Can Use a Cell Company

There are numerous examples of how a cell company can be effectively used to segregate assets in the fields of aviation, shipping and yachting:

  • In relation to aviation, for example; one cell could own the plane, the second cell the engine, the third cell ‘aircraft management’ and a fourth cell might relate to the employees’ pension fund.
  • A similar, relatively simple example in relation to yachting, might be where one cell owns yacht A, the second cell owns yacht B, the third cell owns yacht C, and cell D owns the business matters in relation to ‘yacht management’.

Additional Information

If you would like further information regarding Malta Cell Companies and the opportunities that they provide and/or the registration of a ship, yacht or aircraft in Malta, please contact Jonathan Vassallo at the Dixcart office in Malta at advice.malta@dixcart.com.

Channel Islands Commerical Aircraft Registry: Case History Highlighting the Advantages of Temporary Registration

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Background

Established in December 2013, “2-REG”, the Channel Islands Aircraft Registry, is the aircraft registry of the States of Guernsey. The nationality mark is ‘2’ followed by four letters, allowing for attractive registration marks.

There have been 94 registrations to date of lessor owned aircraft, corporate aircraft, including a Boeing 787-8 Dreamliner, and locally owned aircraft. The registry is also able to award Air Operator Certificates, and benefits from being party to the Cape Town Convention, the international aviation standard relating to aviation assets.

The Registration Process

The process for aircraft registration involves a review of corporate and aircraft due diligence. This applies to the 40 countries where financial services business regulations are considered equivalent to local Guernsey standards.

For countries not on this list, the 2-REG requires a Resident Agent in Guernsey, who must be a licensed fiduciary, to be appointed to undertake this work. 

What is the Role of a Resident Agent?

The Resident Agent is required to undertake a review of due diligence (corporate and aircraft) to the standard expected by the Guernsey Financial Services Commission, and to report their findings to the registry. In addition, the Resident Agent must act as liaison between the aircraft owner and the registry and submit the registration applications.

Dixcart Trust Corporation Limited in Guernsey is a registered Resident Agent for the 2-REG Registry.

Case Study and How Temporary Registration on 2-REG Solved a Problem

The Dixcart office in Guernsey was recently approached by a Turkish commercial air cargo carrier to act as Resident Agent for a temporary registration of an Airbus A300.

The aircraft was moving from the American FAA registry to the Civil Aviation Register of Turkey. The Turkish register required a Certificate of Airworthiness (CofA) as part of its registration requirements.

The FAA, however, has shifted policy recently and is less willing to issue documents for aircraft that are not in the United States or destined to go to the United States.

The solution was to apply for a temporary registration on 2-REG allowing the appropriate airworthiness inspections to be undertaken and a CofA issued to allow onward registration in Turkey.

On receipt of properly certified due diligence relating to: the company, directors, ultimate beneficial owners and the aircraft, a full compliance review was carried out by Dixcart and this formed the basis of the report to 2-REG, in addition to the relevant registration forms being submitted.

Dixcart Guernsey and International Business Support

This type of fiduciary work it is a good example of the wider support that Dixcart in Guernsey, and other offices across the Dixcart Group, offer to corporate, private and family office clients.

It also reflects the wider business friendly and ‘can do’ environment that the Guernsey Government has fostered and which helps to support and deliver global solutions. These include the 2-REG aircraft registry, the Channel Island Securities Exchange, HNWI relocation and domicile, and highly respected fiduciary, captive insurance and fund sectors.

Additional Information

If you require any additional information on this topic, please speak to your usual Dixcart contact or to Bruce Watterson at the Dixcart office in Guernsey: advice.guernsey@dixcart.com.