Malta’s strategic location in the center of the Mediterranean Sea, natural harbors, and a wide range of marine services (such as shipbuilding and repair, a free port, bunkering, supply, and towing vessels) have made the island a leading sea hub. About 230 commercial yachts and 450 private ones whose length exceeds 24 m, and also over 780 superyachts are registered under the Maltese flag today. The European island is quickly becoming one of the best yachting places in the world. What makes yacht owners flock here to register their yachts?
Register a Yacht under a Maltese Flag
It was back in the 1970s that the Maltese vessel register became one of the largest ones in Europe, and the number of superyachts over 24 m long recorded in it has doubled in the past five years.
In addition to its advantageous geographical location, the efficient legal framework is a key factor that attracts yacht owners here. The Maltese yachts are protected by reliable maritime rules and the laws of the jurisdiction. There are whole professional corporate sectors on the island that provide services for yachts of any category. Thus, vessel owners receive a full range of required services, from registration to administration.
Yes, Malta is quite a small EU member state located in the middle of the Mediterranean Sea. But if we look at ownership and maintenance of yachts, the jurisdiction is beyond any doubt one of the brightest leaders in the region. Let’s consider the advantages you will get if you choose to register your yacht under the Maltese flag.
A Possibility to Reduce Your VAT Liabilities to 5.4%
VAT payment requirements often create certain difficulties for yacht owners as the amounts are quite high. The recreational vessels that spend more than 6 months in any calendar year cruising around the EU, as well as those bought and owned by EU residents or imported to the EU, are subject to the European VAT.
However, if you register your yacht in Malta, you will have a potential possibility to reduce your VAT liabilities to 5.4% thanks to the leasing of vessels that are over 24 meters long. This is the reason why the Maltese vessel register has become one of the most popular ones with brokers, sellers, as well as owners of yachts: this is a solution that gives a good tax optimization and planning opportunity.
The effective Value Added Tax rate will depend on the length and type (sailing or motor) of the vessel you register and is levied as follows:
- Sailing or motor vessels over 24 meters long – 5.4%
- Sailing vessels from 20.01 to 24 meters long – 7.2%
- Motor vessels from 16.01 to 24 meters long – 7.2%
- Sailing vessels from 10.01 to 20 meters long – 9%
- Motor vessels from 12.01 to 16 meters long – 9%
- Sailing vessels up to 10 meters long – 10.8%
- Motor vessels from 7.51 to 12 meters long (if they are entered into the trade register) – 10.8%
- Motor yachts up to 7.51 meters long (if they are entered into the trade register) – 16.2%
As for the VAT payable when a yacht is bought by a company, the defining factor is the yacht rent. The lessor company uses the yacht for its economic activity, which in its turn gives it the right to subtract any VAT paid when the vessel was bought.
If we talk about the VAT levied by the company as part of the rent, the rate is commensurate with the interest that reflects the use of the yacht in EU waters. This interest is set in accordance with the length and type (motor or sailing) of the yacht you register. As a result, the effective VAT rate ranges from a full one (18%) to the reduced one (5.4%) for yachts that are over 24 meters long.
Are you looking for a reliable solution that will help you save on VAT when you buy and use a yacht in the EU territorial waters? We offer the services of structure establishment in Malta to minimize the VAT for those who buy and use yachts (rent them). Contact our specialists today to find out the details!
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Authority of Maltese Flag and Register
The yacht owners who want to sail under a flag that has authority often prefer Malta for this purpose. The Maltese flag is the most popular in the EU among superyachts as the island concluded a number of agreements aimed at regulation and supervision of the industry.
The mentioned agreements helped the island get on the White List in the Paris and Tokyo Memorandum of Understanding. As a result, Malta managed to sign different bilateral agreements with the governments of foreign states under which Maltese vessels enjoy a preferential treatment with regard to port taxes and levies.
Malta also provides very strict supervision over the vessels registered under its flag. There is a special state flag inspection on the island which ensures compliance with international standards.
Register a Yacht in a Quick and Simple Procedure
Malta’s high reputation in the yachting world is explained by the strict standards it imposes. However, despite this fact, you will hardly encounter any difficulties if you decide to register your yacht here, and the same can be said about the process of vessel deregistration.
Here are the main advantages for those who decide to register their yacht under a Maltese flag:
- Relatively small registration and extension fees
- Absence of restrictions on the citizenship of the captain, officers, and crew members that work on Maltese vessels
- Minimum technical requirements for recreational yachts which make it possible for owners to freely design their vessels
- Round-the-clock customer support service
One of the possible profitable solutions is to execute a lease agreement. In this case, the buyer may receive the rights to the yacht at a reduced VAT rate.
This requires making a few simple steps:
- The yacht should be taken to Malta before you register it.
- You set up a Maltese company that will buy the yacht.
- As soon as the yacht has been registered under the Maltese flag, the company can rent the yacht out to the customer. The customer will be able to buy out the vessel at the end of the lease term.
At the start of the lease term, the lessee (the potential buyer) makes an initial deposit or the first rent payment to the lessor company which should amount to at least 40% of the vessel cost.
The remaining part should be paid in the form of monthly rent. The agreement term should not exceed 36 months. At the end of the lease term, the yacht is sold for at least 1% of its cost.
Registration of yachts in Malta is recognized by many countries and international organizations, which is convenient if the yacht sails in different waters quite often. Malta offers different categories under which you can register your yacht, including commercial and private ones, to comply with the needs of owners.
Register a Yacht in Malta to Benefit from its Advantages
In addition to the fact that Malta has an outstanding global status in the international yachting community confirmed by the island’s EU membership, you will also benefit from the following advantages if you decide to register the yacht here:
- Simple local ownership. You can register a yacht in the country through a special legal entity known as the Maltese shipping company, which is done quickly and at an affordable price.
- Foreign ownership permitted. Foreign corporations (including offshore companies) are allowed to register yachts under the Maltese flag on the condition that they have a resident agent in the country.
- Anonymous ownership. If you don’t want to make the fact of yacht ownership public, you can appoint an attorney to register it.
- Absence of restrictions with regard to the yacht crew. Malta does not set any restrictions regarding the citizenship of the crew members that work in local yachts. This allows the owner to hire any person to be a captain, officer, chef, sailor, or any other crew member, regardless of where he comes from.
- No restrictions on the yacht age. Vessels that are 15 to 20 years old should pass a check before (or within one month after) preliminary registration; vessels that are 20 to 25 years old should pass a check before temporary registration; and any vessel that is more than 25 years old will require a special permit from authorities to be registered on the island (but it is not impossible to do so).
- Low cost of technical maintenance. The berthing and maintenance fees in Malta are among the lowest ones in the EU.
- Tax advantages. Malta offers an attractive taxation system for yacht owners. The vessels you register here can benefit from different tax incentives.
- Favorable regulation. Malta has progressive laws and regulatory authorities that ensure high security and quality standards for registered yachts.
- Geographical location. The island is located in the strategic place of the Mediterranean Sea and is a convenient starting point for sailing between Europe, Africa, and Asia.
- Professional services. Malta offers a well-developed infrastructure for yacht maintenance, including shipyards, marinas, brokerage companies, and legal and financial services.
All of the above creates a favorable environment for yacht owners and ensures a high reliability and quality level. On the whole, considering its advantages and investments in the industry, Malta is sure to continue to be attractive for yacht owners and remain a popular place where you can easily register your vessel and get proper maintenance in the future.
Get in touch with us if you want to register your vessel or jet without much hassle.