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Why Malta Registration?
About the flag
- Malta is a member of the EU. Thus a Maltese flagged vessel is a vessel flying the flag of an EU Member State.
- Malta is an onshore jurisdiction.
- Malta is a stable jurisdiction having EU compliant legislation, as well as having ratified most important international conventions including SOLAS, 1969 Tonnage Convention, MARPOL, STCW 95 and a number of International Labour conventions (and shortly ILO MLC 2006).
- The Maltese Authorities adopted in 2006 (and revised in 2010) a Commercial Yacht Code intended for yachts carrying up to 12 passengers and up to 3000GT. The Code was intended to provide guidance to owners and service providers, whilst retaining an element of flexibility allowing the flag administration room for interpretation in view of the particular circumstances for each yacht.
- In the event of yachts carrying over 12 passengers or over 3000GT the Maltese authorities (after contemplating the issue of a code) decided to apply directly the standards imposed by SOLAS which allowed them more flexibility whilst reviewing the various circumstances of the yacht intended for registration – the technical department of the flag is approachable and will listen to owners and service providers with the underlying condition that safety and security of the vessel, crew and passengers are always the foremost consideration.
- Guidance from the technical department of the flag (on a case by case basis) may be requested even at the pre-registration stage.
- Both the Administration’s technical department and registration department are approachable and efficient. The registration process is fast and enables a provisional non-operative registration of any yacht within 48 hours, whilst the registration fees are very competitive.
- Any type of vessel (yacht) may be registered, even if the vessel is still under construction.
- A Maltese-registered yacht may be owned by a Maltese or European citizen, and any entity established in the EU. Further, any non-EU entity may register as owner subject to verification by the Registrar and appointment of a resident agent in Malta.
The Advantages to the Owners include:
- Low company formation and yacht registration costs.
- No restrictions on the nationality of the shareholders and directors of Maltese companies.
- No restrictions on the nationality of the Master, Officers and Crew carried on board Maltese yachts.
- No restrictions on the sale or transfer of shares of a company owning a Maltese yacht.
- A vessel can be imported directly to Malta and therefore the European Union territory by virtue of several available importation processes.
- Straightforward and quick company and yacht registration procedures.
In terms of Maltese law, commercial yachts registered in Malta and owned or chartered or managed by Maltese shipping organisations pay an annual tonnage tax instead of tax on income. The Maltese Merchant Shipping (Taxation and Other Matters Relating to Shipping Organisations) Regulations in fact provide that no tax under the Income Tax Act shall be charged or payable on the income of a licensed shipping organisation in respect of:
- Income derived from shipping activities; and
- Any income, profits or gains derived from the sale or other transfer of a tonnage tax ship or from the disposal of any rights to acquire a ship which when delivered or completed would qualify as a tonnage tax ship; and
- Any gain arising on the liquidation, redemption, cancellation, or any other disposal of shares, securities or any other interest, including goodwill, held in any licensed shipping organisation owning, operating, administering or managing a tonnage tax ship while she was a tonnage tax ship.
- The Merchant Shipping (Taxation and Other Matters Relating to Shipping Organisations) Regulations defines a “tonnage tax ship” as a ship declared to be a tonnage tax ship by the Minister or a Community ship of not less than 1000 net tonnage which is owned entirely, chartered, managed, administered or operated by a shipping organisation. The tax benefit is therefore extended to commercial vessels registered in terms of the Commercial Yacht Code which commercial yachts therefore fall within the category of “tonnage tax ships”.
- Specifically, LN224 of 2004 as amended by LN83 of 2010 refers to two hypotheses: either (i) a Community ship of at least 1,000 net tonnage owned entirely, chartered, managed, administered or operated by a (licensed) shipping organization; or (ii) a ship declared to be a tonnage tax ship by the Minister responsible for shipping (with the concurrence of the Minister responsible for finance) in terms of article 85A of the MFSA.
- The owner, charterer, manager etc of a vessel that falls within the meaning of a “tonnage tax ship” may take advantage of the tax benefits, in particular (and most importantly) exemption from income tax, provided that: (1) it (ie, the owner, etc) is itself a licensed shipping organization (which in certain cases may be presumed); (2) the vessel is in fact ipso facto (as per (i) above) a tonnage tax ship or is declared to be a tonnage tax ship in terms of article 85A of the MSA (as per (ii) above); and (3) the income derives from shipping activities (defined as ‘the international carriage of goods or passengers by sea or the provision of other services to or by a ship as may be ancillary thereto or associated therewith.
- The Malta Code incorporates the requirements for yachts under 24 metres, or over 24 metres and over 500GT in one volume. The requirements are clearly delineated and sections applicable to each category are easily comparable. Thus one Code covers all classes of yachts.
- The Code Standards for yachts over 24 metres are on the same lines of the other major Codes, particularly MCA LY2, thus designers and builders should find little difficulty in applying the Malta Code. The Code is based on SOLAS, Load Line and MARPOL requirements, on practical best practice experience and good industry standards.
- Follow-up time to survey requests, queries, clarifications and authorisations is typically very short. The flag technical department is available 24/7 all year.
- The reaction time of the surveyors is normally very short.
- Manning: the Malta Administration accepts on a case-by-case basis alternative qualifications, such as MCA, Australian and South African certificates as an equivalent to STCW. Specific certified training by the engine makers may also be considered in particular circumstances.
- The Administration accepts certification of Short Range Yachts for any yacht, irrespective of size. Subject to on-board assessment and evaluation, extended Short Range Certification may also be issued.
- Special category and historic yachts are also covered by the Malta Code.
- The Code has been notified to IMO as an alternative to the SOLAS and International Load Lines Convention.
- The Administration accepts alternative arrangements in relation to sprinkler/mist systems. The placing on board of certified non-combustible materials and linings or the treatment by approved methods of existing linings/materials may be phased in over the first 12 months of operational registration.
- Functional equivalence is adopted in relation to structural fire protection of composite yachts.
- Minimum requirements for radio communication installation are clearly defined and reflect the permissible sea areas as per SOLAS Chapter IV.
- As SOLAS is strictly followed, Class is not normally required for vessels below 500GT. Under the circumstances the Code itself has a dedicated section relating to the type and frequency of surveys that would be required by vessels below 500GT and are not in Class.
Issued by Ing. Paul L. Cardona, Government Surveyor of Ships, Malta.