Maritime and Shipping
Malta’s has for decades been an important maritime service centre in the heart of the Mediterranean. SMM Advocates is one of the leading law firms in Malta dealing in international shipping and maritime practice. The firm handles Shipping registration, finance, as well as handling of disputes arising from a variety of scenarios from charter and shipbuilding contracts to collisions and arrests for security and enforcement proceedings.
- Latest figures available indicate that the Malta ship register had over 5,956 vessels of 45million GT, including some 2,933 yachts. Through the on-going efforts of the Merchant Shipping Directorate, Malta has maintained its position as the largest register in Europe and one of the 10 largest registers in the world in terms of gross tonnage.
- The registration of a body corporate in Malta to own or operate a ship is a relatively straightforward operation and Maltese ship-owning companies operate in a relatively restriction-free environment. For example:
- There are no trading restrictions and there is preferential treatment to Maltese Ships in certain ports.
- There is a complete tax exemption to owners, charterers, and financiers of Maltese or Community (including EEA) ships of over 1,000 net tons (exempted ships).
- Furthermore, no tax is payable on dividends paid to the shareholders.
There are no restrictions on;
- the sale of ships registered in Malta to foreign nationals,
- the mortgaging of ships registered in Malta in favour of foreign nationals.
- the sale or transfer of shares, or stock of a company owning a Maltese ship.
- the nationality of the master, officers and crew.
Ships under Construction Maltese law provides for the registration of vessels that are being built or equipped. Vessels to be classed as trading ships are to be built under the supervision of a recognised organisation.
Yachts in commercial use which do not carry cargo and do not carry more than 12 passengers can be registered as commercial yachts. Maltese law is very advantageous for the operation of commercial yachts.
- A vessel is first registered provisionally under the Malta flag for a period of six months (extendible to one year) during which all documentation must be finalised.
- The requirements for provisional registration are simply:
- An application for registration by the owner or an authorised representative accompanied by an application for a change of name (where applicable).
- Proof of qualification to own a Maltese ship, in the case of a body corporate, its Memorandum and Articles of Association and in the case of non-Maltese owners, the appointment of resident agent.
- A Declaration of Ownership made before the Registrar by the owner or an authorised representative.
- Payment of initial and annual registration fees, for the assignment of the Official Identification number of the vessel.
- In the case of vessels of over 24 metres in length there is also the requirement of a copy of the International Tonnage Certificate or if unavailable, a simplified tonnage calculation issued by an approved classification society (hereinafter referred to as ACS).
Income Tax Exemptions
- A shipping organisation is exempt from tax on any income derived from shipping activities and any income or gains 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. “Shipping activities” comprises the international carriage of goods or passengers by sea or the provision of other services to or by a ship as may be ancillary thereto or associated therewith including the ownership, chartering or any other operation of a ship and includes also ship management activities of a ship manager.
- Any gains arising upon the liquidation, redemption, cancellation, or any other 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 are exempt from tax in Malta.
- No Malta tax is charged upon any payments of interest or other income in relation to the financing of the operations of shipping organisations or the financing of any tonnage tax ship.
- No tax is chargeable upon dividends distributed by a shipping organisation to its shareholders, out of profits derived from shipping activities.
No duty is payable in respect of any instrument connected with or involving the registration of a tonnage tax ship, the sale or other transfer of a tonnage tax ship or any share thereof, the assignment of any rights and interests or the assumption of obligations in respect of any ship or share thereof. No duty is payable in respect of any instrument connected with or involving 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 duty is payable in respect of any instrument connected with or involving the registration of any mortgage or other charge over or in relation to any ship or licensed shipping organisation, any transfer or discharge thereof, any receipt relative thereto, and any assignments granted in connection therewith.
VAT-Efficient Finance Leasing Structure
- The yacht must be present in Malta at the beginning of the lease period and at the end of the lease period, when the purchase option is exercised;
- The leasing agreement is to be concluded between a Maltese company as lessor and any foreign person or company as lessee;
- Prior approval of the lease arrangement must be sought in writing from the Commissioner of VAT;
- The lease period shall not be less than 12 months and shall not exceed 36 months;
- VAT is paid depending on the length and propulsion of the yacht;
- VAT may be as minimal as 5.4% on yachts over 24 metres;
- Any purchase value at the end of the lease agreement shall not be less than 1% of the original value of the yacht and this will be subject to the standard rate of 18%;
- Once the purchase option is exercised, a VAT Paid Certificate will be issued in the name of the lessee, as the new owner of the yacht.