Malta is rapidly becoming a flag of choice for yacht and superyacht owners. There are now over 500 superyachts greater than 24 metres in length flying the Malta flag, with the number of registered yachts increasing profoundly when yachts smaller than 24 metres in length are taken into consideration.
A yacht in Malta may be registered as a pleasure yacht or as a commercial yacht. There are now more than 230 commercial yachts, with an average length of 31 metres, registered under the Malta flag.
The registration and operation of Maltese commercial yachts is principally regulated by the Merchant Shipping Act (Chapter 234 of the Laws of Malta), subsidiary legislation enacted thereunder and a code of practice known as the Commercial Yacht Code (the “Code”). The Code originally published in 2006 has since been amended. The present version is now the Code as published in 2015.
A yacht owner wishing to register and operate a Maltese commercial yacht must comply with the requirements contained in this Code as administered by the Merchant Shipping Directorate within Transport Malta.
The Code imposes those standards of safety, pollution prevention and crew welfare which are appropriate for the type and size of yacht being registered. The requirements imposed by the Code were developed whilst considering the relevant IMO Conventions, EU Directives and industry standards.
Advantages to Register Yacth in Malta
1. Reduce your VAT liability down to potentially 5.4%
VAT requirements are nothing short of a headache for European Yacht owners as well as those sailing in EU waters. Pleasure Yachts which spend more than 6 months in any calendar year cruising in the EU or which are purchased or owned by EU residents or imported into the EU are subject to the EU’s VAT.
While all vessels sailing in the EU are subject to VAT, by registering your yacht in Malta you could potentially reduce your VAT liability down to 5.4% through a leasing set up for yachts over 24 metres. Malta has become the European Ship registry of choice for brokers and sellers as well as yacht owners seeking to register pleasure and super yachts because it provides the possibility of tax planning.
As regards VAT payable on the purchase of the yacht by the company, the leasing of the yacht is a determining factor. The lessor company uses the yacht for its economic activity, which in return grants the lessor company the right to deduct any input VAT incurred on the purchase of the yacht.
As regards the VAT charged by the company in relation to the leasing fees, the rate of VAT payable is commensurate to a percentage reflecting the use of the yacht in EU waters. Such percentage is set in accordance with the length and type of yacht (whether motor or sailing) resulting in an effective rate of VAT payable ranging from the full 18%, being the rate of VAT generally payable in Malta, to other different rates down to 5.4% for yachts over 24 meters.
2. Reputability of its Flag and Register
While there are other jurisdictions which come off as cheaper options, registering your yacht under a reputable flag is essential if you want to sail in EU waters with peace of mind. Reputability is a sine qua non factor in the maritime industry, thus, A Plus Solutions understands the importance of choosing a reputable flag that has been listed on the white list of the Paris MoU. The Maltese Flag is the most popular EU flag amongst superyachts registered in the EU because Malta has entered into a number of treaties aimed at regulating and supervising the industry which has earned it a position on the White list on both the Paris MOU as well as the Tokyo MOU, and it has also entered into various bilateral agreements with foreign governments where Maltese ships receive preferential treatment in respect of port charges and taxes. Malta also carries out a highly rigorous supervisory exercise on vessels registered under its flag. It has set up a Flag state inspectorate which ensures adherence to international standards which adds to the reputability of the Malta flag.
3. Quick Straightforward Procedure
Although Malta imposes rigorous standards that have earned it such a golden reputation in the maritime nature of process, these standards do not hinder those seeking to register their vessel. Malta provides for a straightforward procedure for registration and deletion of vessels, including the registration and discharging of mortgages which are essential when seeking to obtain financing.
In fact, there are a number of benefits associated with registering in Malta, including:
- its competitive registration and renewal fees;
- no restrictions on the nationality of the master, officers and crew serving on Maltese vessels;
- minimum technical requirements in relation to pleasure yachts allowing owners to freely design their own yachts;
- a 24-hour service to deal with urgent matters.
From a tax perspective, the procedure to benefit from the reduced effective VAT rates mentioned above is highly straightforward, particularly when you are assisted by a team of experienced maritime lawyers.
WHICH VESSELS MAY BE REGISTERED?
All types of vessels, from pleasure yachts to oil rigs, may be registered.
There are no age restrictions on pleasure yachts or yachts registered under the commercial yacht code.
- Shipsof 15 years and over, but under 20 years must pass an inspection by an authorised flag state inspector before or within a month of provisional registration; and
- Ships of 20 years and over but less than 25 years must pass an inspection by an authorised flag state inspector prior to being provisionally registered.
Ships of 25 years and over require express permission by the authorities to be registered.
|TYPE AND LENGTH||VAT REDUCTION||EFFECTIVE VAT IN %|
|Sailboats longer than 24 meters||70%||4,3%|
|Sailboats between 20.01 and 24 meters||60%||7,2%|
|Sailboats between 10.01 and 20 meters||50%||9%|
|Sailboats up to 10 meters||40%||10,8%|
|Motor boats longer than 24 meters||70%||5,4%|
|Motor boats between 16.01 and 24 meters||60%||7,2%|
|Motor boats between 12.01 and 16 meters||50%||9%|
|Motor boats between 7.51 and 12 meters (registered in the Commercial Register)||40%||10,8%|
|Motor Boats up to 7.5 meters (registered in the Commercial Register)||10%||16,2%|
|Boats only allowed in secure waters||0%||18%|
Technical Prerequisites for Yacht Registration in Malta
In a 130-page document, Transport Malta precisely detailed which technical requirements a boat must possess to qualify for pleasure-yacht registration. The following factors thereby play an important role:
- Safety Measures (Equipment, Accessibility, Achievement of Standards);
- Emissions & Environmental Compliance
- Electronic and Radio Equipment
- Stability and Structural Design of the Boat
Generally, one can assume that any finished yacht berthed in a European wharf will fulfill the required standards. A Plus Solutions experienced witj process and familiar with the testing and review process including, in particular, as it relates to major boating manufacturers where registration if oftentimes mostly unproblematic.
How does the A Plus Solution in Malta will assist to work?
In just a few straightforward steps, Malta has created a system whereby ownership of the yacht can pass onto the buyer at a reduced VAT rate. The procedure is relatively simple. While the buyer will still have full access to use and enjoy the yacht, he or she will initially start doing so under a leasing set up. The leasing set up involves the creation of a Malta company with the ultimate aim of passing on ownership of the yacht to the buyer.
- Prior to registering the yacht, the latter must be brought to Malta.
- A Maltese company will be set up which will acquire the yacht.
- After the yacht has been registered under the Malta flag, the company can lease the yacht to the buyer who will carry out the sale of the yacht at the end of the lease.
- At the beginning of the lease, an initial contribution, hence the first lease payment must be made, which must amount to 40% of the value of the vessel by the lessee (the prospective buyer) to the lessor company.
- The remaining portion must be paid in lease installments which are payable every month through an agreement which does not exceed 36 months.
- At the end of the lease, the sale of the yacht is carried out for at least 1% of the purchase value on the return of the yacht to Malta at the expiration of the lease
- Subject to all the relative VAT payments, the issuing of a VAT paid certificate in relation to the yacht by the authorities, following which the yacht may circulate freely in the EU.
Contact to A Plus Solutions who will be able to show you how you can benefit from the Malta VAT yacht solution.