Malta Ship Registration
Owners of all types of vessels, from pleasure yachts to passenger cruise ships, tankers and oil rigs, may register such vessels under the Malta flag as Malta ships and take advantage of the various benefits, particularly fiscal, available to each Malta ship under Maltese law
Any Maltese or European citizen, and any company registered in Malta or in a member state of the European Union or EEA, may register a vessel under the Malta flag. However, unless resident in Malta, an EU citizen must appoint a registered agent in Malta. Non-EU citizens, may register a vessel in the name of a Maltese company setup and owned by such non-EU citizens. Non-EU registered entities may register a vessel in Malta if such entity appoints a resident agent in Malta, and if the registrar-general is satisfied that such entity enjoys legal personality under the laws of the country in which it is established.
The Merchant Shipping Act, which regulates the registration and operation of vessels under the Malta flag, is based to some extent on UK law and in all cases the registration procedure is extremely simple and straightforward.
Shipping Organisation
A licensed shipping organisation is a tax efficient legal vehicle used to own and operate ships and vessels. A licensed shipping organisation may be set-up with one or more of the following objects:
- The ownership, operation (under charter or otherwise), administration and management of a ship or ships registered as a Maltese ship and the carrying on of all ancillary financial, security and commercial activities in connection therewith
- The ownership, operation (under charter or otherwise), administration and management of a ship or ships registered under the flag of another state and the carrying on of all ancillary financial, security any commercial activities in connection therewith
- The holding of shares or other equity interests in entities, established for any of the purposes stated in this article and the carrying on of all ancillary financial, security and commercial activities in connection therewith
- The raising of capital through loans, the issue of guarantees or the issue of securities by the company when the purpose of such activity is to achieve the objects for the shipping organisation itself or for other shipping organizations within the same group
- For the carrying on of such other activities within the maritime sector which the Minister may, on the advice of the Authority, from time to time prescribe by regulations as qualifying for the above purpose
A licensed shipping organization may be set up as a Limited Liability Company; a Limited partnership; a General Partnership.
A shipping organisation may also operate under a trust (a “shipping trust”) or be a foundation (a “shipping foundation “).
In addition to the above, a Shipping organisation may also be any foreign corporate body or other entity enjoying legal personality in terms of the law under which it has been established or constituted and which has established a place of business in Malta
A number of incentives and exemptions exist and are applicable. Such exemptions include:
- Exemptions from income tax in Malta
- Exemptions from Duty on Documents and Transfers (stamp duty)
- Exemptions from Social Security Contributions
- Reduced tax compliance requirements
Ship Management Companies
Malta companies which derive income other than the type of income exempted from income tax such as ship management companies may be set-up as a normal company constituted under the Companies Act. In fact Maltese legislation allows the incorporation of special types of Ship Management Companies intended to be used also for the management, administration or operation of ships whether the vessels are registered in Malta or elsewhere. There are no nationality requirements as to both the shareholders and the directors.
It is possible for such Ship Management Companies to set up a fully equipped management office in Malta with its own staff. Work permits can be obtained for any expatriate employees required to run the operation from Malta. Any equipment required by the company can be imported duty free into Malta.
The company can utilise local commercial banking services in order to operate its financial transactions or operations (both domestic and foreign) from Malta itself.
The income derived by a ship management company constituted under the Companies Act is subject to a corporation tax of 35%. Any expenses related to the activities derived by such companies may be deducted from the chargeable income.
Tax refunds
Despite the relatively high corporation tax rate, such companies are entitled to avail themselves from a Maltese tax refund system. Under the tax refund system, the distribution of profits entitles the shareholders of the company to claim a 6/7ths refund of the corporation tax paid in Malta. Malta does not levy any withholding tax on the distribution of a dividend.
The refund of the corporation tax together with the absence of withholding tax on outbound dividends creates potential opportunities for ship management companies who want to establish themselves in a reputable EU jurisdiction and yet enjoy a low effective rate of tax.
Aircraft registration
The Malta Aircraft Registration Act (Act VIII of 2010) provides for the innovative concepts which place the Maltese Aviation Register as one of the world’s leading and most competitive aviation registers. The Malta Aircraft Registration Act endeavors to limit nationality restrictions and form requirements in order to make the register accessible to as many owners and operators as possible, while ensuring that the register is not open to anyone and everyone.
PCM Legal provides services in the following areas:
- flag and ship registration under Maltese flag and overseas;
- bareboat charter registrations;
- ship owning and ship management company incorporation;
- Ownership and Management Structures both from a corporate and tax perspective;
- marine mortgages and other securities;
- discharging of mortgages;
- ship/yacht sales and purchases;
- ship finance;
- aircraft registration;
- aircraft purchase, certification and leasing
- aircraft fractional ownership matters;
- aircraft financing and securitization;
- aircraft maintenance, repair and servicing agreements;
- chartering and leasing;
- syndicated bank loans; and
- Advising financing institutions on security and mortgage enforcement matters
- Tax incentives.