Commercial Yacht Registration
Yacht leasing structure
Temporary Importation Procedure for non-EU Yacht Owners
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.
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:
The main advantages of registering a ship under the Maltese flag include:
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:
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:
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.
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.
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:
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:
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.
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:
The main features of the yacht leasing structure can be summarised as follows:
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.
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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.
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