Shipping & Yachting
The Maltese Flag relishes a high reputation with the international shipping community. In this regard, Malta has the eighth largest ship registry worldwide and the second largest in Europe. Since Malta’s accession to the European Union, the pace of development has picked up rapidly with an approximate 2% increase per annum in the fleet, according to the Malta Maritime Authority.
The main reason for such growth is attributed to the fact that Maltese registered ships benefit from several advantages including low costs with regards to registration, tonnage dues and professional fees both for the registration and administration of the company and vessel. Also, the shipping industry has no trading restrictions or restrictions on the nationality of ship owners, master, officers and crew. It also boasts of an effective mortgage system.
All types of vessels, as well as ships under construction, may be registered in Malta.
Registration procedures are also quite simple and efficient with the possibility of registering a vessel within 48 hours from the receipt of the required documents.
The attractive fiscal incentives to owners also contribute to the high ranked position that Malta enjoys in this industry. The Maltese tax regime includes income tax and VAT exemptions, as well as exemptions related to stamp duties on the purchase/sale of ships, and exemptions on social security contributions in Malta by non-resident crew.
The Maltese VAT Department has set up Guidelines for the treatment of Yacht Finance Leasing transactions providing a means to acquire yachts through a Maltese structure and pay VAT on the same at advantageous rates, subject to clear terms and conditions established in the Guidelines.
The advantages of the Maltese Yacht Leasing include:
- The provision of clear Guidelines prescribing adequate leasing conditions
- An objective method of taxation allowing for a transparent procedure
- The issue a VAT Paid Certificate at the end of the lease
- A Structure allowing various finance options
The standard rate of VAT of 18% is applied on the established percentage of the lease, deemed to be related to the use of the boat in EU territorial waters. The minimum rate is paid on a yacht of 24 meters or bigger, where the vatable portion is established at 30% with an effective rate of VAT between 5.4 and 6.2 per cent.
At Charles Scerri & Associates, we provide assistance to clients during the process of registration under the Malta flag as well as assisting in the maintenance of the vessel’s registration and ongoing requirements of a Maltese company with MFSA and the tax authorities. We also provide assistance with the sale and disposal of the vessel.
It is emphasised that the above is intended only as general information and cannot substitute any professional advice on the matter in respect to particular situations.