KNOWLEDGE BASE

YACHT & SHIP OWNERSHIP

Malta Ship Registration

Introduction Shipping Yachting Solutions Registration Procedure Commercial Yacht Registration Yacht leasing structure Temporary Importation Procedure for non-EU Yacht Owners

INTRODUCTION

The Republic of Malta is situated in the centre of the Mediterranean, south of Sicily, east of Tunisia and north of Libya. Malta gained its independence from the United Kingdom in 1964 and became a republic in 1974. Since 1964 it has been a member of the United Nations and in 2004 it joined as a member of the European Union. Malta is also party to the Schengen Agreement and in 2008 it became part of the eurozone.

Throughout history, Malta's location has given it great strategic importance and has become a maritime hub in the Mediterranean and an entree-port to the EU. Moreover Malta offers an array of aviation services relating to the registration of aircraft and aircraft mortgages, financing and management of aircraft, insurance, brokerage, aircraft maintenance, classification and surveying of aircraft. Increasingly recognised as a flag of confidence by the maritime and aviation industries, Malta offers owners and operators of merchant vessels, superyachts and commercial and private jets tax efficiency, a robust regulatory framework and industry expertise, capabilities and facilities in a central European location.

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SHIPPING

The choice of an owner when considering the appropriate jurisdiction to register a vessel is invariably linked with the reputation of the chosen flag and fiscal considerations. Malta has the second largest shipping register in Europe and the seventh largest in the world, with over 5,000 vessels now flying the Maltese flag.

Aside from the operation of an efficient international ship register, Malta offers a whole range of international maritime services and facilities including:

  • exercised in Malta, may carry out maritime cabotage in terms of Council Regulation (EEC) No 3577/92 on the freedom to provide services to maritime transport within Member States;
  • ship building and ship repair yards;
  • extensive bunkering, ship supplies and towage services;
  • modern facilities for trans-shipment and distribution, including a successful Freeport and oil terminal;
  • a hub for cruise liners; and
  • yacht marinas backed by efficient repair and shore support services.

The main advantages of registering a ship under the Maltese flag include:

  • Malta is on the White list of the Paris MoU;
  • The Merchant Shipping Directorate offers a flat organisation structure with direct access to the decision makers offering a 24/7 service in respect of urgent matters;
  • Malta has ratified most of the international conventions on maritime safety, prevention of pollution and training and certification of seafarers;
  • a Maltese-flagged vessel owned by a company established in Malta and whose principal place of business is situated and effective control shipping activities carried out by a licensed shipping company through the operation of Maltese vessels and Community vessels of 1000 net tons & over are exempt from Malta tax and duty;
  • no duty is payable in respect of the issue or allotment of any security or interest of a licenced shipping organisation shares or stock; or the purchase, transfer or assignment of any security or interest of any licenced shipping organisation; or the sale or other transfer of a ship or any share thereof; or; the registration of any mortgage or other charge over or in relation to any ship or licenced shipping organisation; or any transfer or discharge thereof;
  • income derived by Ship Management Companies is exempt from tax provided that certain conditions, such as the payment of an annual tonnage tax, are complied with;
  • dividends paid to the shareholders are exempt from tax;
  • registration of vessels which are still under construction and vessels not strictly considered as ship, such as oilrigs, platforms and barges, is permitted;
  • and crew serving on Maltese vessels;
  • easy and efficient registration of mortgages over a Maltese-flagged vessel and the relative simplicity with which mortgage security rights can be enforced;
  • flexibility of ownership in the sense that vessels registered under the Malta flag may be owned either by Maltese or foreign companies that are acceptable to the Registrar of Shipping or by any citizen of the European Union; and
  • marriages can be officiated onboard Maltese ships without the presence of a notary or other public official, facilitating marriages on board cruise ships.

The registration of vessels under the Maltese flag takes place firstly by provisional and subsequently by permanent registration. Provisional registration is valid for 6 months and may be extended up to one year, by which time permanent registration must be completed.

A vessel at the time and for the duration of its registration in Malta must be classed with a Classification Society authorised to issue statutory certificates on behalf of the Government of Malta. The following is a list of the classification societies recognized by the Merchant Shipping Directorate:

American Bureau of Shipping Bureau Veritas
China Classification Society Class NK
Det Norske Veritas Germanischer Lloyd
Korean Register Of Shipping Lloyd's Register of Shipping
RINA Russian Maritime Register of Shipping

A Maltese registered vessel may be registered under bareboat charter under a foreign flag and a non-Maltese registered vessel is eligible to be registered under bareboat charter under the Maltese flag, if the vessel in question is registered in a compatible registry.

The following is a list of current compatible registries approved by the Registrar of Shipping for bareboat registration in and out of Malta:

Compatible Registries Bareboat Out Only Bareboat In Only
Antigua & Barbuda Brazilian Special Registry (R.E.B.) Luxembourg
Bahamas Islamic Republic of Iran
Belgium Italian International Ship Register
Belize Luxembourg
Bermuda (for ships over 24 metres in length) The Philippines
Bulgaria Portugal
Cambodia United Kingdom
Canada Venezuela
Canary Islands
Cayman Islands
Commonwealth of Dominica
Cyprus
Denmark –
1. Danish International Register of Shipping
2. Traditional Danish Register of Shipping
Estonia
Faroe Islands
France
Georgia
Germany
Gibraltar
Isle of Man
Italy
Republic of Kazakhstan
Latvia
Liberia
Madeira Int Ship Register
Marshall Islands
Netherlands
Netherlands Antilles
Panama
Poland
Romania
Russian Federation
Singapore
Spain
St Kitts & Nevis
St Vincent & The Grenadines
Turkey
Ukraine
Vanuatu

Our shipping-related services at OCRA Malta include the registration, transfer and deletion of vessels under the Malta flag, vessel maintenance and administration, co-ordination of vessel financing transactions, registration of statutory mortgages, coordination of the issue of STCW endorsements and handling of on-going crewing and compliance formalities with the relevant Maltese authorities and incorporation of ship owning and management companies.

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YACHTING SOLUTIONS

Malta offers a number of solutions to yachts owners including certification of commercial yachts, VAT-efficient leasing structures and temporary importation procedures. At OCRA Malta we provide our clients with a complete one-stop and tailor-made service for yacht owners not only in respect of the registration of yachts and ownership structures but we also offer expertise advice on VAT and tax planning particularly in connection with the importation of yachts into the EU.

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REGISTRATION PROCEDURE

Under the Malta flag a yacht is first registered provisionally for six months and may be extended for a further period not exceeding six months during which all the appropriate documentation for its permanent registration needs to be finalised.

The requirements for provisional registration are:

  • Application for registration by the owner or an authorised representative/resident agent;
  • Proof of qualification to own a Maltese yacht;
  • Declaration of ownership which must be signed in front of the Registrar of Shipping by the owner or an authorised representative/resident agent;
  • Copy of the current yacht’s International Tonnage Certificate in the case of yachts over 24 metres;
  • Application for a radio station licence (where applicable);and
  • Payment of initial registration fees and annual tonnage tax.
During the provisional registration period, the following documents must be submitted to the Registrar of Shipping:
  • Bill of Sale if the yacht was previously owned or a builder’s certificate in the case of a new build;
  • Deletion Certificate issued by the registry where the yacht was previously registered (where applicable);
  • Certificate of Survey and a copy of the International Tonnage Certificate in the case of yachts over 24 metres issued by an approved Malta government appointed surveyor or classification society; and
  • Carving and marking note.
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COMMERCIAL YACHT REGISTRATION

Yachts in commercial use which are over 15 metres in length and do not carry more than 12 passengers, can be registered as commercial yachts subject to compliance with the requirements of the Commercial Yacht Code drawn up by the Merchant Shipping Directorate within the Authority for Transport in Malta. The Code has gained acceptance and recognition within the yachting industry and to date more than 150 yachts with an average length of 30 metres are registered as commercial yachts under the Malta flag.

An initial pre-registration survey is carried out in order to draw up compliance with the Code. Grey areas and specific issues are discussed between the approved Government surveyor and the Malta administration and recommended design alternatives are agreed upon in order to ensure that the desirable standards are achieved following which a Certificate of Compliance will be issued which will enable the yacht to operate commercially.

Malta offers a number of advantages to owners operating commercial yachts, which advantages include the following:

  • Maltese requirements are well known to main shipyards and main classification societies;
  • No Malta tax is chargeable on income derived from the chartering of a commercial yacht. An annual tax calculated on the yacht’s tonnage is payable to the Merchant Shipping Directorate instead;
  • No Malta VAT is chargeable by the yacht owner during the operation of the yacht if the lessee of the yacht concerned uses it for an economic activity;
  • Input VAT incurred on goods and services acquired and attributable to the yacht owner’s chartering operations would be recoverable;
  • No Malta tax or duty is chargeable upon the disposal of a yacht by a licensed shipping organisation;
  • No Malta tax is chargeable upon a distribution of dividends by a licensed shipping organisation;
  • No Malta tax or duty is chargeable upon a disposal of shares in a licensed shipping organisation;
  • No restrictions on the nationality of the Master, Officers and crew carried on board Maltese yachts;
  • Flexibility of ownership- Yachts registered under the Malta flag may be owned by any citizen of the European Union or by any Maltese or foreign companies that are acceptable to the Shipping Registrar.

It is noteworthy that yachts that are operated at extra cleanliness and safety standards are assigned a Green Yacht Notation which give the owner various benefits including charter preference.

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YACHT LEASING STRUCTURE

The Malta VAT Department has issued guidelines for yacht-leasing structures. In terms these guidelines, a Maltese company acquiring a pleasure yacht and leasing it to third parties is required to apply Malta VAT only to that portion of the lease during which the yacht is presumed to lie in EU territorial waters. The portion of lease subject to Malta VAT is determined on the basis of the vessel’s length overall and means of propulsion.

The following table sets out the relative parameters applied by the Malta VAT department in relation to yacht leasing structures, which effectively reduces the standard 18% Malta VAT rate:

Type of yacht % of lease subject to VAT Effective rate of VAT
Yachts over 24 metres in length 30% 5.4%
Sailing yachts between 20.01 and 24 metres in length 40% 7.2%
Motor yachts between 16.01 and 24 metres in length 40% 7.2%
Sailing yachts between 10.01 and 20 metres in length 50% 9%
Motor yachts between 12.01 and 16 metres in length 50% 9%
Sailing yachts up to 10 metres in length 60% 10.8%
Motor yachts between 7.51 to 12 metres in length (if registered in the commercial register) 60% 10.8%
Motor yachts up to 7.51 metres in length (if registered in the commercial register) 90% 16.2%

The main features of the yacht leasing structure can be summarised as follows:

  • The yacht may be registered under any flag;
  • The yacht must come to Malta during the lease period or alternatively at the time when the purchase-option is exercised. Changes in the “place of supply” rules in 2013 will require that the yacht must be in Malta on the date when any lease longer than 3 months commences;
  • The leasing agreement is to be concluded between a Maltese company as lessor and any Maltese or foreign person or company as lessee;
  • Prior approval of the lease arrangement must be sought in writing from the Commissioner of VAT who is to confirm the rate applicable according to the use in EU territorial waters (depending on the size and propulsion of the craft), as well as the acceptability of the value of the yacht as declared. For this purpose, with the application for approval, a valuation certificate of the yacht shall be submitted in the case of a second hand yacht or a copy of the relevant invoice in the case of a new building;
  • An initial contribution is to be paid by the lessee to the lessor amounting to 50% of the value of the yacht;
  • The lease instalments shall be payable every month and the lease agreement shall not be less than 12 months and shall not exceed 36 months. The recommended period is of 12 months;
  • The lessor shall be expected to make a profit from the leasing agreement over and above the value of the yacht;
  • 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 VAT at 18%;
  • If the lessee opts to purchase the yacht at the end of the lease, a VAT paid certificate will be issued to the lessee provided that all VAT due has been paid;
  • Following payment of the VAT for the first quarter, a provisional VAT-paid certificate will be issued enabling the yacht to cruise EU waters. If you would like to receive tailor-made workings of the savings that could be availed of through the implementation of the yacht leasing structure please send us the following information:
  • The overall length of the yacht;
  • Proposed duration of the lease (not less than 12 months and not more than 36 months);
  • Method of propulsion (sailing or motor); and
  • Estimated value of the yacht (to be evidenced by the builder’s invoice in case of a new build or a valuation issued by a recognised yacht surveyor).

TEMPORARY IMPORTATION PROCEDURE FOR NON-EU YACHT OWNERS

Any yacht spending more than 6 months in any calendar year cruising in EU VAT zone waters may be liable to EU VAT in the place of effective importation, irrespective of its ownership. Where, however, a yacht is imported into EU waters with the intention of re-exporting it may be temporarily brought into the EU and used for private purposes without customs duties or VAT being paid on the value of that yacht.

The temporary importation procedure enables the yacht to stay within the EU for 18 months and can move freely within its territorial waters with no further customs formalities during this period. If the boat is laid up for any period of time it is also possible to disregard such laid up period for the purpose of reckoning the 18-month period. Where the temporary importation is effected in Malta, the customs authorities will require the provision of a security or guarantee, which may be capped by agreement with the customs authorities, to cover the payment of the customs duties and VAT that become due if the yacht does not leave the EU customs territory after the operative period.

This procedure cannot be availed of by persons or companies residing in the EU. Back to top

CONTACT A CONSULTANT

If you are interested in more information regarding the registration of your aircraft in Malta, please contact Michael J. Zammit, Director of OCRA (Malta) Limited.

Michael is a qualified advocate in Malta, practicing primarily in the areas of corporate and insolvency law, financial services regulation, contract law and immovable property law. Michael’s main responsibilities involve the provision of technical consultancy relating to corporate and regulatory matters, general finance issues, permanent residence permits, ship and yacht registration, real estate transactions and estate planning.

Alternatively, to select one of our multilingual offices, click here for a list of our office contact details.

OCRA (Malta) Limited
The Penthouse
Tower Business Centre
Tower Street
Swatar BKR3013
Malta – EU

Tel: 
Fax: 
Email: 
+356 2557 2333
+356 2557 2444
malta@ocra.com

Languages spoken in this office: English, Italian, French

REQUEST A CALLBACK

Michael J. Zammit (Managing Director)
MALTA OFFICE
Tel: 
Fax: 
+356 2557 2333
+356 2557 2444
Email: malta@ocra.com
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