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.

Listed Company Services

Malta Implements a New Passenger Yacht Code: More Than Twelve Passengers

Background

Malta is a well-known and popular jurisdiction within the yachting sector. It has the largest shipping register of vessels in the EU and the 6th largest in the world. It is also a jurisdiction that is ‘leading the way’, with a number of initiatives in this sector.

Current Obligations

Yachts need to meet obligations for ‘commercial passenger ships’ and it is widely recognised when considering the operational pattern and risk profile of yachts, that these requirements, are in some instances disproportionately onerous and impractical in terms of design and implementation.

As the trend for larger commercial yachts increases, the 12 passenger limitation rule has become more problematic and has resulted in an increase in administration for a number of organisations, including the Malta Merchant Shipping Directorate. This, combined with encouragement from the yachting industry, has provided impetus for Malta to develop the ‘Passenger Yacht Code’, to meet industry demands.

The Malta Passenger Yacht Code

The Malta Passenger Yacht Code is applicable to passenger yachts, which carry between 12 and 36 passengers, do not carry cargo, and which sail internationally. The Code is intended to cater exclusively to the yachting sector of the market, it is not intended to apply to the excursion and/or ferry passenger sectors of the industry.

The new yacht code has been drafted by the Authority for Transport in Malta, in consultation with various industry stakeholders including; yacht designers, yacht builders, repair yards, specialised service providers and manufacturers, appointed surveyors and recognised organisations. This has been to ensure a wide representation of the industry.

Details of the Malta Passenger Yacht Code

A passenger yacht must be; surveyed, certified, audited and issued with Class and Statutory Certificates, applicable to passenger vessels, by a recognised organisation. Class Rules relating to passenger vessels will apply. Approval staff, auditors and surveyors must be experienced and qualified in passenger ship planning, audits, and surveys.

The Malta Passenger Yacht Code provides addition regulation, in particular in relation to safety, for example; life- saving appliances and arrangements, life at sea safety, navigation safety, and protection of personnel.

Passenger Yachts Chartered on a Static Basis

Where a passenger yacht remains static; berthed or anchored at sea, the yacht may be allowed to carry more than 36 passengers, as provided for in The Malta Passenger Yacht Code. For a passenger yacht to be able to be chartered on a static basis, the yacht would need to be issued with a statement by the Flag Authority, permitting static charters.

The Certification Process

Once owners submit the necessary documentation and complete the designated survey and inspections, the Maltese Flag Authorities will issue the vessel with a Statutory Certificate.

All passenger yachts must, in addition, be classified by a Recognised Organisation (RO), and must maintain a valid classification throughout the validity period of the yacht’s statutory certificate. The applicable RO Rules for classification purposes are those used for the classification of passenger ships. Upon satisfactory completion of  the required surveys or audits, the yacht’s RO needs to issue a certificate, confirming compliance with the Malta Code.

Passenger yachts certified under the remit of the Code may carry out International (Unrestricted) Voyages or Short International Voyages, as defined by The International Convention for the Safety of Life at Sea (SOLAS).

Advantages of the Malta Passenger Yacht Code

The introduction of the Malta Passenger Yacht Code is a welcome development for those who plan to register larger commercial yachts under the Malta flag. It enables larger yachts to carry between 12 and 36 passengers.

It offers a solution to the many technical issues and concerns which were previously faced by prospective registrants.

Additional Information

If you would like further information regarding the registration of a yacht and opportunities available through Malta, please speak to Jonathan Vassalloadvice.malta@dixcart.com, at the Dixcart office in Malta or your usual Dixcart contact.

Isle of Man Shipping Registry

Malta Initiative Moves Forward – A Shared Database of Ships Linked to Criminal Activity

Background

Crime-linked vessels are an unfortunate reality worldwide.

The lack of information about vessels can result in countries flagging or re-flagging ships involved in criminal activities, or letting such vessels sail out of their ports unimpeded.

Main Concerns for Malta

Malta has had long-term concerns regarding contraband  linked to Italian organised crime as well as to Libyan militia groups.

The head of Malta’s sanction board Neville Aquilina, detailed in an International Maritime Organisation (IMO) Assembly “mechanisms for the full implementation of UN sanctions requirements are either too weak or inexistent”.

In addition, vessels which have been sanctioned in one country are able to sail to another jurisdiction, to obtain their license. This is possible because countries which de-flag vessels do not have the obligation of informing other countries about this and/or other actions taken.

International Database Proposal

In March 2020, in a meeting arranged by the IMO and the International Maritime Law Institute (IMLI), Malta proposed an idea to the EU to deal with this issue:

  • Malta suggested the idea of building a global database of vessels or companies, connected to illicit activities or subject to international sanctions, and for this database to be shared between countries, to help them make informed decisions.

The goal is to strengthen international maritime law, specifically, making it more difficult for criminals to obtain vessel licenses when they sail from one country to another, after their ship has been de-flagged for sanction violations in a previous country.

In addition, this new information about vessels worldwide will make it easier to carry out investigations. Currently these can take years to complete because of the lack of information available.

International Database Creation

Malta raised this idea again in 2021, during a follow-up event. In April 2021 the European Commission agreed to start working on a database across the EU, and to introduce it as soon as possible, in the forthcoming months.

Malta’s Standing

Located centrally in the middle of Europe and to the north of Africa, Malta is ranked  sixth in terms of world ship registration and regards this new initiative as being extremely important.

Implementation Intentions

Even though the objective for the database is to be used by all of the IMO state members, the IMO has not, as yet, committed to a date to implement the database.

Dixcart will keep you updated.

Additional Information

For further information about the Malta flag please contact Jonathan Vassallo, at the Dixcart office in Malta: advice.malta@dixcart.com. Alternatively, please speak to your usual Dixcart contact.

Pleasure Boats in Malta

Dixcart Malta Managing Director – Co-opted to Malta Chamber’s Yachting Services Executive Committee

Jonathan Vassallo has been co-opted to join the Yachting Services Executive Committee of the Yachting Services Business Section, within the Malta Chamber.

Jonathan Vassallo

This section represents one of the biggest categories within the Chamber in terms of members.

During the past couple of years the Chamber has been dealing with the challenges faced by the industry. It has continued to work closely with the authorities to propose new, and re-visit existing practical applications and procedures, designed to have a positive impact on the yachting industry in Malta.

This is an ongoing exercise to ensure that this yachting sector remains dynamic and at the forefront of the industry internationally. A number of procedures and guidelines have been adopted and fine-tuned, and this has helped to ensure that Malta remains an attractive jurisdiction for yacht owners and operators.

Jonathan is keen to be part of this team and use his experience to contribute to the Yachting Services Executive Committee for the benefit of this sector within the Malta economy.

For the next two years, the key objective of the Committee is to continue to offer a robust platform for the yachting industry and to collaborate with the authorities and stakeholders to improve Malta’s already strong position within the yachting world.

You can contact Jonathan, in the Dixcart Malta office at: advice.malta@dixcart.com

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.

redomicile a ship

Time to Redomicile a Ship? Why Malta Could be the Answer

Redomiciliation of a Shipping Company to Malta

Malta has established itself as a robust and safe maritime jurisdiction and has the largest European maritime flag registry.

It is possible to redomicile a shipping company from another jurisdiction to Malta, without liquidating the company in the country that it is being redomiciled from (Legal Notice 31, 2020).

A Summary of the Attractive Tax Regime Available to Ships Registered in Malta

In December 2017, the European Commission approved the Maltese tonnage tax regime for a period of 10 years, following a review of its compatibility with EU State Aid Rules.

The Maltese Shipping Tonnage Tax System

Under the Malta Tonnage Tax System, tax is dependent on the tonnage of the vessel or fleet belonging to a particular ship-owner or ship-manager. Only companies that are active in maritime transport are eligible under the Maritime Guidelines.

Standard corporate tax rules do not apply to shipping activities in Malta. Instead shipping operations are subject to an annual tax consisting of a registration fee and annual tonnage tax. The rate of tonnage tax reduces according to the age of the vessel.

  • As an example, a trading ship measuring 80 metres, with 10,000 gross tonnage, built in the year 2000, will pay a fee of €6,524 on registration and €5,514 annual tax thereafter.

The smallest category of ship is up to a net tonnage of 2,500 and the largest, and most expensive, are ships over 50,000 net tonnage. Charges are reduced for ships in the 0-5 and 5-10 year age categories respectively and are greatest for those 25-30 years old.

Please see IN546 – Maltese Shipping – The Tonnage Tax System and Advantages for Shipping Companies, for further information regarding this regime and additional advantages regarding the registration of a ship in Malta.

Conditions to Redomicile a Shipping Company to Malta

The following conditions need to be met:

  • the company is established under the law of an approved country or jurisdiction where those laws are similar in nature to company law in Malta;
  • the ‘objects’ of the company must be such that the company qualifies as a shipping organisation;
  • provisions in the law of overseas country enabling such countries to redomicile
  • redomiciliation is permitted by the company’s charter, statutes or memorandum, and articles or other instruments that constitute or define the company;
  • a request is submitted to the Malta Registrar for the company to register to be continued in Malta.

A request by a foreign company for registration to be continued in Malta, must be  accompanied by:

  • the resolution authorising it to be registered as being continued in Malta;
  • a copy of the revised constitutional documents;
  • a certificate of good standing or equivalent documentation relating to the foreign company;
  • a declaration by the foreign company to be registered as continued in Malta;
  • a list of directors and company secretary;
  • confirmation that such a request is permitted by the laws of the country or jurisdiction in which the foreign company has been formed and incorporated or registered.

The Registrar will then issue a Provisional Certificate of Continuation.  Within six months of this certificate being issued, the company must submit documentation  to  the  Registrar  that  it  has ceased to be a company registered in the country or jurisdiction where it had been previously established. The Registrar will then issue a Certificate of Continuation.

Additional Information

If you would like further information regarding the Malta Tonnage Tax System or the registration of a ship and/or yacht in Malta, please contact Jonathan Vassallo at the Dixcart office in Malta: advice.malta@dixcart.com or your usual Dixcart contact.

Maltese Cell Company

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

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.

Shipping Advantages

Shipping Advantages in Cyprus, the Isle of Man, Madeira (Portugal) and Malta

Dixcart can provide clients with a number of alternative ship registration solutions. This note provides a brief overview of the regimes in Cyprus, the Isle of Man, Madeira (Portugal) and Malta and the shipping advantages they offer. More detailed information is available on request regarding shipping in each of the jurisdictions considered in this Information Note.

Shipping Advantages by Jurisdiction:

Cyprus

Cyprus is a major ship management centre attracting foreign ship owners through the highly favourable tax provisions available for shipping companies on the island. It is recognised as one of the most accessible registries in the EU.

The Cyprus shipping registry has not only grown in size in the last two decades but has also made a considerable effort to increase the quality of its fleet and related services. As a result the Cyprus flag is now classified on the white list of the Paris and Tokyo MOUs*.

Key shipping advantages relating to the shipping sector in Cyprus include:

  • Cyprus exempts international transport services from value added tax when these services are supplied outside of the EU.
  • The income of officers and crew on Cypriot registered vessels is not subject to income tax.
  • Cyprus offers a competitive rate of corporate income tax at 12.5%.
  • There is no estate duty on the inheritance of shares in a Cyprus shipping company and no stamp duty is payable on ship mortgage deeds.
  • A new tonnage tax system was enacted in May 2010. The tax system is in full compliance with EU requirements. The tonnage tax (TT) is calculated on the net tonnage of the ship according to a broad range of band rates proscribed in legislation. The Cypriot approved tonnage tax system provides for TT on the net tonnage of the vessel rather than corporation tax on the actual profit. This allows for mixed activities within a group, shipping activities are subject to TT and other activities are subject to 12.5% corporation tax.
  • Cyprus also offers a series of tax advantages which are applicable to ship and ship management companies: exemption from tax of dividend income (subject to limited conditions), exemption from tax on profits from foreign permanent establishments, and exemption from withholding tax on the repatriation of income (dividends, interest and nearly all royalties).

Isle of Man

The Isle of Man Registry is a Category One British Registry, and can therefore maintain international safety convention status for vessels of all sizes and classes. As a British ship, an Isle of Man flagged vessel is entitled to protection and assistance from the British Royal Navy and access to British consular services worldwide.

The Isle of Man shipping registry has a reputation for quality and for a customer focused approach:  

  • The Isle of Man registry is on the Paris and Tokyo MOU white lists. It is recognised by the United States Coast Guard as a Qualship 21 flag and it is at the top of the industry’s flags by country performance table.          
  • The ship registry in the Isle of Man offers in-house expertise and availability 24 hours of every day and provides a fast response to any queries.
  • The Isle of Man registry offers reasonable costs. There are no annual tonnage dues and in terms of tax obligations, corporate income tax in the Isle of Man is zero.       
     
  • There is flexibility in the requirements for registered owners, with a comprehensive list of accepted countries for ownership.  
  • The Isle of Man shipping registry allows ships to demise-in, enabling a transfer of registry and also allows ships to register on a demise charter registry other than in the Isle of Man (demise-out).        
  • It is a flag of choice for merchant vessels and commercial yachts and it is not designated as a flag of convenience.

Madeira (Portugal) Shipping Advantages

The International Shipping Register of Madeira (MAR) was established in 1989 as part of the Madeira International Business Centre (“MIBC”) “package” of taxation benefits. Vessels registered with MAR carry the Portuguese flag and are subject to the International Treaties and Conventions entered into by Portugal.

The key shipping advantages of ship registration in MAR are detailed below:

  • The register is of a high standard, has EU credibility, is not regarded as a flag of convenience and is included in the Paris MOU white list.          
  • There are no nationality requirements for ship-owners of vessels registered in MAR. They are not required to have their head office in Madeira. It is sufficient to have local legal representation with adequate powers.      
  • 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.        
  • The existence of a flexible mortgage system 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.   
  • Competitive registration fees, there are no annual tonnage taxes.   
  • 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”).        
  • Shipping companies licensed to operate within MAR benefit from a corporate income tax rate of 5% until 2027. They also enjoy automatic VAT registration and have access to the Portuguese double taxation treaty network.

Malta Shipping Advantages

Malta provides a reputable flag and ensures compliance with international and European standards. Registration of vessels under the Maltese flag take place in two stages. A vessel is provisionally registered for a six month period. During this provisional registration period, the owner is required to submit additional documentation and the vessel is then permanently registered under the Maltese flag.

There are a number of attractive tax reasons and shipping advantages to consider ship registration in Malta:

•       The standard corporate tax rules do not apply to shipping activities in Malta, due to a specific exemption. No tax on profits from shipping activities is therefore due. Following recent amendments this exemption has also been extended to ship management companies.          

•       Shipping operations are subject to an annual tax comprising an annual registration fee and a tonnage tax based on the net tonnage of the vessel. The rates of tonnage tax are reduced according to the age of the vessel.

•       There is an exemption from stamp duty in Malta on the registration or sale of a ship, shares relating to a licensed shipping organisation and the registration of a mortgage relating to a ship.

•       Individuals not resident in Malta who are officers or employees of a licensed shipping organisation, and the organisation that they work for, are exempt from social security contributions.     

Dixcart Shipping Services and Additional Information

Dixcart can assist in all aspects of registering a ship in Cyprus, the Isle of Man, Madeira and Malta.  

Services include the incorporation of the owner entity, coordinating the appropriate corporate and tax compliance, and registration of the vessel.

If you would like additional information on this topic, please speak to your usual Dixcart contact or to:

*White List Paris and Tokyo MOUs: Flags securing the highest rating in relation to the Memorandum of Understandings on Port State Control.

Dixcart Management (IOM) Limited is licensed by the Isle of Man Financial Services Authority

Flagging or Reflagging

Why Malta is a Great Location for Flagging or Reflagging a Vessel?

Background

A lot of uncertainty has been generated within Europe following on from the Brexit vote, and certain other countries who are beginning to reassess their position within the EU. This is having an impact on the marine industry, with a number of vessel owners seeking to reflag ships and yachts.

The choice of flag registration is an important decision and a jurisdiction must be selected that satisfies relevant criteria relating to how and where the vessel will be used.

The Jurisdiction of Malta and Ship and Yacht Registration

Malta, with its central and strategic position at the heart of the Mediterranean, offers a wide range of international maritime facilities and services. This jurisdiction offers an active International Ship Register, with an excellent reputation, and it currently ranks as the largest merchant shipping flag in Europe.

The Malta Flag is a European Flag, a flag of confidence and a flag of choice. Many leading ship owning and ship management companies register their vessels under the Malta Flag, and international banks and financiers often recommend the Maltese Register and Malta Ship Registration. 

Benefits Offered to Ships and Yachts Registered in Malta: Fiscal, Corporate and Legal

A number of advantages are available to vessels registered under the Malta Flag, which include:

  • Vessels registered under the Malta Flag have no trading restrictions and are given preferential treatment in many ports.
  • The Malta Flag is on the white list of the Paris MoU, Tokyo MoU and on the Low Risk Ship List of the Paris MoU. In addition, Malta has adopted all International Maritime Conventions.
  • All types of vessel, from pleasure yachts to oil rigs, may be registered in the name of legally constituted corporate bodies or entities (irrespective of nationality), or by European Union citizens.
  • A Maltese vessel may also be bareboat charter registered under another flag.
  • There are no trading restrictions for the vessels.
  • Vessels less than 25 years old may be registered. Where relevant, the following criteria apply:
  • Ships aged 15 years and over, but under 20 years, must pass an inspection by an authorised flag state inspector before or within a month of, provisional registration.
  • Ships aged 20 years and over but under 25 years, must pass an inspection by an authorised flag state inspector prior to being provisionally registered.

Registration of a Vessel in Malta – the Procedure

The procedure for the registration of a vessel in Malta is relatively straightforward.  Provisional registration, which in terms of the law has the same effect as permanent registration, can be effected very quickly. 

Authority to provisionally register a ship will only be given once the Malta Maritime Administration is satisfied that the vessel conforms to all of the standards required by the relative international conventions.

Provisional registration is valid for six months, although this can be extended by a further six months; by this time all of the documentation must have been completed for the permanent registration. Specifically this must include evidence of ownership from a former registry, unless the vessel is new. Authority to operate remains dependent on meeting the relevant manning, safety and pollution prevention measures as detailed in international standards.

Bareboat Charter Registration

Maltese law provides for bareboat charter registration of foreign ships under the Malta flag and for the bareboat charter registration of Maltese ships under a foreign flag.

Vessels so registered enjoy the same rights and privileges and have the same obligations as a ship registered in Malta.

The main factor relating to bareboat charter registration is the compatibility of the two registries.  Matters regarding title over the ship, mortgages and encumbrances are governed by the underlying registry, while the operation of the vessel falls under the jurisdiction of the bareboat registry.

A bareboat charter registration lasts for the duration of the bareboat charter or until the expiry date of the underlying registration, whichever is the shorter,  but, in any event, for a period not exceeding two years.  It is possible for the bareboat charter registration to be extended.

Yacht Registration Services Offered by Dixcart Malta

Dixcart Management Malta Limited has extensive experience in registering yachts under the Malta Register and providing the ancillary services needed to maintain such a registration.

Dixcart can establish the ownership structure for the vessel and provide advice on the most efficient structure, depending on the type of use of the vessel as well as the place of use.

For further information, please speak to your usual contact at Dixcart or email the Dixcart office in Malta: advice.malta@dixcart.com