Malta Yacht Registration
Malta Yacht Registration
The Malta Ship Registry is the largest merchant flag in the European Union and the sixth worldwide. As at end of December 2015, the registered gross tonnage under the Merchant Shipping Act was 66.2 million, an increase of almost 8.3 million gross tonnage representing a growth rate of 14.3 per cent over the previous year.
These statistics represent record figures for the Malta Flag and a significant achievement for the Malta Flag Administration, since over 900 ships for a total gross tonnage of over 12 million tons were registered in 2015.
The Malta yacht registration is a very expeditious matter and comes with a host of Benefits and Advantages. A pleasure or commercial yacht shall be registered for a provisional period of 6 months, during which all necessary documentation is collected and submitted to the authorities.
Malta Flag Registration For Yacht And Superyacht
A yacht may be registered under the Malta Flag in the name of a non-resident EU national or a foreign company, subject to the appointment of a resident agent in Malta acting on the owner’s behalf. Alternatively, an individual resident in Malta or a Maltese company or shipping organization can be the owner of the vessel. Kindly refer to Maltese Shipping Organizations and International Owner for more information.
In order for a yacht to be registered under the Malta Flag as a commercial vessel, the yacht must be in compliance with the Malta Commercial Yacht Code. On the other hand, a pleasure yacht has to be more than 6 metres in length, and shall only be registered as such if it does not carry passengers for reward and is not engaged in trade.
Any vessel registered with Malta Ship Registry shall also be required to undertake a survey by a Malta Government Appointed Ship Surveyor.
1. The Advantages of Registration of a Yacht and a Superyacht under the Malta Maritime Flag
The Maltese Maritime Flag is registered at the Malta Maritime Authority and comes with a list of advantages and benefits, making Malta an ideal destination for the registration of yachts as well as the largest Flag in Europe. Besides reliability, minimum bureaucracy and value for money, benefits and incentives are offered for owners of both commercial and pleasure yachts flying the Maltese flag.
One must mention the security and protection offered to financiers by Maltese law in the event that the owner is in default, which enhances the confidence of financiers who would only extend financial facilities to borrowing owners if they feel that their interests are properly safeguarded.
Vat On Malta Yacht Leasing
Where a yacht is registered with the Malta Register as a pleasure yacht, amongst the benefits offered by the Maltese Maritime Flag is the settlement of Value Added Tax (VAT) payments on pleasure yachts which are subject to VAT in the member state of importation or acquisition. This is possible through the use of Maltese structures fully approved by the Maltese tax authorities, whereby a lease agreement is entered into between the owner of the yacht and the lessee, in return for a monthly consideration.
Such lease which is considered as a supply of services, is taxable depending on the type and length of the boat and its means of propulsion, subject to standards set by the Maltese VAT Department. By way of example, a sailing or motor boat of 24 metres or over is considered to be used in the EU only 30% of the time. Accordingly, subject to approval by the Commissioner of VAT, VAT applicable on the lease shall be 30% of the consideration multiplied by the applicable VAT rate of 18%, amounting to 5.4%. On the other hand, a motor boat measuring between 12.01 and 16 metres is considered to be used in the EU only 50% of the time. Thus, subject to approval by the Commissioner of VAT, VAT applicable on the lease shall be 50% of the consideration, multiplied by the VAT rate in place, amounting to 9%. This means that VAT on the lease payments is only payable with respect to the estimate portion of time (as established by the VAT Department) the boat is deemed to be within EU territorial waters.
Where a yacht is registered under the Malta Flag as a commercial vessel, the owner pays an annual tonnage tax depending on the tonnage of the vessel. No income tax is charged on profits generated from the vessel’s activities, including in the case of commercial and chartering activities.
Furthermore, the Malta registration flag offers attractive tax incentives to yacht and super yacht owners, encouraging commercial operation. In this regard, Guidelines for the Value Added Tax (VAT) Treatment of Short-Term Yacht Chartering taking place in Malta have recently been issued. These guidelines are intended to address situations in which a short-term charter of a yacht with a crew (or on a bareboat charter basis) is entered into between the owner or operator and the charterer, for a consideration.
Short-term chartering activities (lasting up to 90 days) are considered as a supply of services that is subject to VAT at the standard rate applicable in the place where the yacht is put at the disposal of the Customer. In Malta’s case, the charter would be subject to VAT at the standard rate of 18%. With the introduction of the Guidelines, a reduced VAT rate shall apply according to the portion of the use and enjoyment of the yacht within the territorial waters of the European Union. Since in practice it is difficult to determine the actual amount of time spent by the yacht within or outside EU territorial waters, the VAT rate applicable shall be based on the length of the yacht and the method of propulsion. By way of example, in the case of a sailing or motor boat of 24m or over considered to be used in the EU only 30% of the time, the VAT applicable on the lease shall be 30% of the consideration multiplied by the applicable VAT rate of 18%, amounting to 5.4%. The Guidelines also mention the terms and conditions according to which the charter may take place.
2. Maltese Shipping Organisations
A vessel may be registered with the Malta Ship Registry in the name of a shipping organization if the principal objects and activities of said organisation relate to any of the following activities and if it obtains and maintains a licence from the Registrar-General to enable it to carry on such activities:
- The ownership, operation (e.g. under charter), administration and management of a registered Maltese ship, or a ship registered under the flag of another state, and all ancillary financial, security and commercial activities; and/or
- The holding of shares or other equity interests in entities, whether Maltese or otherwise, established for any of the purposes stated herein, and the carrying on of all ancillary financial, security and commercial activities; and/or
- 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 stated herein for the shipping organisation itself or for other shipping organizations within the same group; and/or
- for the carrying on of such other activities within the maritime sector which the Minister may, on the advice of the Authority for Transport in Malta, from time to time prescribe by regulations as qualifying for the above purpose.
The principal place of business need not be located in Malta; however the shipping company is required to have a place of business in Malta. In addition, there are no restrictions on the sale and transfer of shares or stock of a Maltese shipping company.
- A shipping organisation which is registered and licensed under Maltese law and owns a tonnage tax ship enjoys fiscal advantages and benefits in relation to its shipping activities namely:
- No tax shall be charged or payable on income where said income is derived from shipping activities of the organization;
- No tax shall be charged or payable on any income, profits or gains of a licensed shipping organisation derived from the sale or other transfer of a tonnage tax ship or from the disposal of any rights to acquire a ship which when delivered or completed would qualify as a tonnage tax ship;
- No tax charged or payable on any gain arising on the liquidation, redemption, cancellation or any disposal of shares, securities or any other interest, including goodwill, held in any licensed shipping organisation owning, operating, administering or managing a tonnage tax ship while she was a tonnage tax ship;
- No stamp duty shall be charged on the registration of a tonnage tax ship under the Merchant Shipping Act and other registrations relating to a tonnage tax ship;
- No stamp duty shall be charged on the issue or allotment of any security or interest of a licensed shipping organisation or the purchase, transfer, assignment or negotiation of any security or interest of any licensed shipping organisation;
- No stamp duty shall be charged on the sale or other transfer of a tonnage tax ship or any share thereof;
- No stamp duty shall be charged on the registration of any mortgage or other charge over or in relation to any tonnage tax ship or licensed shipping organisation, any transfer or discharge thereof, any receipt relative thereto, and any assignments granted in connection therewith; and
- No stamp duty shall be charged on the assignment of any rights and interests, or the assumption of obligations in respect of any tonnage tax ship or share thereof.
Fundamentally, this means that the income derived from shipping activities conducted by the tonnage tax ship shall be exempt from income tax and the ship would instead be subject to a fixed tonnage tax.
Such benefits may be enjoyed by a tonnage tax ship which is either declared as such by the Minister, or which is a Community ship of not less than 1000 net tonnage and is owned entirely, chartered, managed, administered or operated by a shipping organisation.
3. International Owner
The International Owner of a Maltese ship shall satisfy the following requirements:
1) Be a foreign company; or
2) Be a citizen of a Member State of the European Union not residing in Malta:
A resident agent in Malta shall be appointed for the purpose of acting as the channel of communication between the international owner and the Maltese government departments and authorities.
The resident agent shall also, amongst other duties, sign and file on behalf of the said international owner all declarations and forms required in terms of Maltese Law with the Maltese authorities and act as the judicial representative of the international owner for judicial proceedings in Malta. However, the resident agent shall not be personally liable for non-compliance by the international owner with any law, unless the resident agent has personally undertaken liability in writing or has wilfully or recklessly made a false declaration.
The resident agent shall moreover have the power to sign and file, on behalf of the international owner, applications, declarations, notices, returns and any other document required in terms of Maltese law; apply for the registration of a vessel; pay all relative fees and taxes payable in terms of Maltese law; do, on behalf of the international owner, all other things as may be considered conducive or ancillary for the registration of a ship under the Merchant Shipping Act (Cap.234 of the Laws of Malta) or for the maintenance of such registration and perform any other ancillary activities and authenticate any documents issued by the international owner.
Except with regards to matters in relation to the registration of the ship under the Malta Merchant Shipping Act and to the maintenance of such registration, the international owner may restrict any of the powers of the resident agent following the submission of a declaration to the Registrar-General to this effect.
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