Malta, as an island nation, has always had strong seafaring traditions. Due to its strategic, geographic location right in the middle of the Mediterranean Sea, Malta has historically played a pivotal role in the propagation of commercial and cultural activity between Europe, Africa and the Middle East which far belies its size. This rich maritime legacy is alive and evident to this day and Malta continues to play an important role not only in the commercial use of our oceans but also in conserving it for future generations. Malta hosts various international institutions including the Regional Marine Pollution Emergency Response Centre for the Mediterranean Sea, the International Maritime Law Institute and the International Ocean Institute. The island also hosts one of the most challenging and highly rated offshore classics, the Rolex Middle Sea Race which year after year attracts some of the offshore circuits most high profile yachts and top rated skippers.

Apart from the natural facilities available in view of the number of deep and protected harbours dotted around the island, over the years the island has continuously updated its level and quality of supporting services to continue developing the maritime industry in Malta. In fact we have seen significant investment in the upgrading and development of marine facilities and infrastructure. These include the construction of the Malta Freeport, Malta Oil Tanking, the Malta Super Yacht Services facilities, various yacht marinas, the upgrading of the Malta Dry Docks, the development of a luxury cruise liner terminal together with the overall regeneration of the port areas. This investment has also been in line with the growth in tonnage and reputation of the Malta flag. The Malta register has indeed been a tremendous success and since its launch in the early seventies, has grown to be the second largest marine register in Europe and in the top ten worldwide. This growth has been fuelled not only by the excellent infra-structure and facilities available but also to the number of shipping agents and professionals in the sector operating within a versatile and well regulated maritime legal framework.

The Malta Flag

The priority of the register is not tonnage but reliable and safe vessels which do not pollute the sea or harm marine life within. A robust legal framework and firm registration criteria, in line with EU Directives and IMO conventions have fuelled the growth in the reputation and integrity of the Malta register.

The advantages of having a Maltese Flag include:

  • Exemption from Maltese income tax on the income that is derived from shipping activities of Maltese vessels of 1,000 net tons and over
  • Exemption from duty on documents on the sale or transfer of a Maltese vessel of 1,000 tons and over
  • Exemption from duty on documents on the allotment or transfer of shares in Maltese companies
  • Exemption from income tax, donation and succession duty, in respect of Maltese vessels under 1,000 net tons subject to certain conditions

Other advantages include:

  • Reasonable incorporation and registration costs
  • No trading restrictions imposed on Maltese registered vessels
  • No restrictions on the nationality of the master, officers and crew serving on Maltese vessels

Ship registration

The registration of a ship under the Maltese flag is regulated by Transport Malta and is open to vessels owned by Maltese and non-Maltese owners. Vessels under construction may also be registered. Vessels are initially registered on a provisional basis valid for six months pending the completion of the necessary formalities to attain permanent registration. A permanent registration certificate is released following the submission of documents that include, a builder’s certificate, international tonnage certificate (where applicable), proof of title and a survey report. All registered vessels are required to obtain a Radio Ship Station license.

It is also possible to register vessels in Malta under bareboat charter subject to certain documentary evidence. This includes a declaration of bareboat charter supported by the charter agreement, an extract of the underlying registration and a copy of the ship’s certificate of international tonnage.

The fiscal tax advantages are available to qualifying shipping activities that include the ownership, operation, administration and management of ships.

Yacht registration

The yacht registration under the Maltese Flag is available to Maltese and EU nationals, companies incorporated in Malta or in the EU and non-EU body of persons. A Maltese registered company is the ideal structure for yacht registration in Malta. When the yacht owner is not a resident of Malta, it is necessary to appoint a resident agent. There are no restrictions on the nationality of the master, crew and officers.

VAT scheme for Yacht Finance Leasing

The Maltese VAT legislation contains rules which provide an opportunity for a reduction on the VAT impact when vessels are under finance lease arrangements. These opportunities are only available when the yacht is owned by a Maltese registered company and provided that the lease agreement is for a period not exceeding three years.  The benefit arises from a reduced rate of VAT payable in Malta on the acquisition of the yacht by the Maltese company and depends on the type of vessel and the deemed use in EU. The effective rate of Maltese VAT varies from 5.4% to 16.2% resulting in VAT savings from 1.8% to 12.6% The lease agreement must provide for an option to purchase the yacht at the end of the lease and the agreement requires the approval of the VAT office in Malta.

Commercial Yacht registration

The registration of a commercial yacht in Malta enjoys a number of benefits including tax benefits and VAT exemptions. Registration requires a number of documents to be submitted including a more detailed survey for this kind of registration. In this instance, a provisional licence is first issued which becomes formal on the presentation of the required documents.

The exemptions contemplated under Maltese fiscal laws include an exemption from VAT on the importation or supply of vessels used for the navigation on the high seas and the carrying of passengers under commercial activities and the supply of services consisting of the hiring, leasing, chartering, modification or maintenance of vessels. The Maltese tax refundable system is of particular relevance to the operation of commercial yachts owned by a Maltese registered company owned by non-residents.