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What are the Benefits of Registering AirCraft in Malta

Malta is an alluring proposition for Aircraft Registry and Operation. A member of the EU with a thorough double tax treaty network, Malta is regarded as an ‘onshore’ jurisdiction with ‘offshore’ benefits. Here, aircraft registration is offered through its Aircraft Registration Act 2010 and caters to both the commercial and private aircraft markets.

The register also endorses registration of aircraft whilst under construction, engine registration, and fractional ownership, providing aircraft owners/ co-owners the flexibility in how they operate their aircraft, be it for private or commercial use, or a combination of both.

Additionally, in principle, every type of aircraft qualifies for registration in Malta. Foreign undertakings not operating in air service also have the opportunity to appoint a registered agent in Malta for the purposes of eligibility for registration.

As a member of the EU, it can also be utilised as a strategic VAT import jurisdiction for aircraft in the Southern Mediterranean region and has recently enabled a beneficial VAT simplification process for private aircraft.

Some in the industry believe that the Malta registry, through its distinctive flexibility in relation to aircraft use, is very much a registry to keep on your radar.  In the last few years, Malta’s aviation industry has experienced increasing growth and professionals in the industry have praised the ‘can do’ attitude and hands-on approach of its aircraft registry whilst applauding its customer service standards.

The following are some of the key benefits relating to Maltese aircraft registration:

The Cape Town Convention

One of the primary benefits of the Aircraft Registration Act was the authorization of the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocols into national legislation.

The main objective of this convention is to establish enforceable remedies and rights in aircraft objects, despite the fact that they do not have a stable location. The convention also regulates aviation leasing transactions and cross border financing, and permits individuals to register an international interest, producing priority of certain security interests.

Conclusively, it can be noted that this convention provides secures international interests on such issues, and will ensure that the needs of the aviation industry are met.

Fiscal Benefits of Aircraft Registration in Malta

There are financial incentives to registering your aircraft in Malta. Maltese tax advantages are present both on a company level and also on a personal level, where certain management positions in the aviation sector attract a personal tax rate of only 15%. The following is a concise outline of the fiscal advantages under Maltese law relevant to the aviation industry:

  • There is no import duty on the importation of civil aircraft into Malta and it does not attract any stamp duty.
  • Income gathered from the lease, operation or ownership of an aircraft or aircraft engine involved in the international transportation of passengers or goods is regarded as arising outside of Malta, so is exempt from Maltese tax. This foreign source rule is administered regardless of the country in which the aircraft was registered, or whether the aircraft has called at, or is operated from an airport in Malta.
  • Attractive accelerated depreciation periods –as from the year of assessment 2010, the minimum timeframe to claim wear and tear deductions for depreciation of aircrafts, interiors, and engines has been reduced as indicated below:
    • Aircraft airframe, engine, and overhaul: 6 years
    • Aircraft interiors and additional parts: 4 years
  • VAT – the Vat implications vary depending on the manner in which the aircraft is utilised, that is, whether the aircraft is solely for private use or is employed by an airline operator for mainly the international transport of passengers or goods. VAT implications alike those applicable in other EU member states would be applicable in respect of intra-community acquisitions, importations, or supply of aircraft.
  • The private use of an aircraft by a non-resident individual who is an officer or employee of a company whose business includes the ownership, operation or leasing of an aircraft involved in the international transport of passengers or goods is regarded as NOT constituting a taxable fringe benefit.
  • Any individual that carries on a business or trade involving the overhaul, repair or maintenance of aircraft, engines or equipment incorporated in such aircraft, may benefit from investment tax credits against the tax due on its chargeable income within Malta.
  • Malta has approximately 60 double Taxation treaties in force. Where there is no double tax treaty established, Maltese legislation has rules set up to allow unilateral relief on income emerging outside of Malta.
  • Low minimum capital requirements in place.
  • Companies can pay tax in any currency and receive tax rebates in and currency, therefore exchange risk is eliminated.

Mortgage Registration

Maltese aircraft mortgages provide superb security by creating a privileged charge over an aircraft, which is not impacted by the bankruptcy of the mortgagor occurring after the date on which it was created. Mortgages boast a relatively high priority in an eventual ranking of claims against a Maltese registered aircraft. Amongst the benefits of registering a mortgage over a Maltese aircraft, one should take note of the following:

  • A mortgagee may (in the mortgage instrument) disallow the creation of subsequent mortgages.
  • A Maltese aircraft may not be voluntarily transferred outside the registry and its registry may not be terminated without the mortgagee’s prior written consent.
  • The mortgagee may take over and complete any outstanding registration formalities.
  • Mortgages are executive titles and may be enforced instantly without the need for prolonged court proceedings.
  • The mortgagee may also take ownership of the mortgaged aircraft or/and sell (even privately) the mortgaged aircraft. The process of aircraft repossession is quite straight forward.
  • The mortgagee may also demand an order by a competent court banning, any voluntary sale of, or voluntary creation of a registered encumbrance over the mortgaged aircraft. The mortgage instrument may also expressly prohibit the voluntary transfer of the mortgaged aircraft in the absence of the mortgagee’s prior written consent.
  • The mortgage attaches to any insurance proceeds.
  • If an aircraft to which a mortgage attaches is sold pursuant to an order or with the authorisation of a competent court the mortgagee’s interest in the aircraft passes to the proceeds of the sale.
  • The mortgagee is entitled to benefit from fiscal incentives: no tax is payable on the interest or other income due to him by a Maltese aircraft operating or aircraft owning company in respect of a debt undertaken or contracted by the Maltese company with regard to a Maltese-registered aircraft.
  • Moreover, the Aircraft Registration Act entities holding interests in aircraft to register their interest with the competent authority under the Cape Town Convention on International Interests in Mobile Equipment.

Concluding Points

Concluding Points

The Maltese aircraft registration act of 2010 is intended to fix Malta at the forefront of Europe’s aviation jurisdictions. Malta’s core advantages are the provision of:

  • Transparency of all interests and rights in aircraft;
  • Extensive registration possibilities for all aircraft, whether for private or commercial use;
  • Facilitation of enforcement of mortgages and additional security interests;
  • Competitive minimum depreciation periods for aircraft;
  • No withholding tax on lease payments if the lessor is not a tax resident of Malta;
  • The Cape Town Convention’s applicability administers financiers with a higher degree of protection and more sufficient enforcement remedies whilst permitting lower borrowing costs;
  • Tax refunds to shareholders on profit distribution;
  • Availability of a broad range of airline services (aircraft and engine maintenance, aircraft management, repair and overhaul, aircraft maintenance training and other additional support services);
  • A comprehensive network of double taxation treaties; and
  • No taxable fringe benefits emerge from the private use of the aircraft by non-resident individuals who are employees, officers or shareholders of companies’ concerned with the international transportation of passengers or goods.

In summary, the Malta registry stands out from the competition. In an ever-expanding aircraft registration market, it retains the highly regulated and legislative environments aircraft owners require for registration of their asset, whether a commercial or private aircraft, combined with the novel benefits of being able to supply VAT registration and import from their registration jurisdiction into the EU.

Would you like to know more about the benefits concerning aircraft registration in Malta? Do you need assistance with aircraft repair, maintenance, crew training, or with chartering a private jet? As experts at every level of the aviation industry, we are here to assist you. Click here to get in touch and find out more.