Aircraft Registration in Malta

By Dr Michael Tanti-Dougall

Posted: 22nd July 2013 08:38

Aviation Law has a wide spectrum of fascinating areas, and Malta’s main objective is to attract the registrations of aircraft, aware that Malta`s taxation regime provides an excellent platform where aircraft owners could feel confident to register their aircraft in Malta.  Besides favourable taxation treatment to non-residents, Malta offers a wide spectrum of advantages, such as a good and stable economic and political environment, qualitative services which provide the customer a one-stop shop, and a solid legal and judicial system.  Indeed, all these factors which have attributed to the growth of the maritime industry in Malta, could now also serve as the basis for a successful aviation industry.
 
It need not be stated that Malta is a small island; however, it carries a remarkable reputation abroad, since it has been at the forefront of creating initiatives to attract foreign investors and settlers in Malta.  With all this as a background, Malta has since 1 October, 2010 embarked with a new legislation for aircraft registration with an attractive portfolio. 
 
Indeed, in October 2010, Malta has entrenched the Aircraft Registration Act (Chapter 503 of the Laws of Malta).  It could be said that Malta is now deemed to be a highly competitive jurisdiction for aircraft registration having established itself as the first Member State to accede to the Cape Town Conventionand Aircraft Protocol following accession by the EU.  However, the Aircraft Registration Act cannot be taken as a sui generis, since interlinked therewith is a spectrum of other laws, on an international level, on the European level with the European Regulations regarding aviation, and on a national level such as the fiscal and investment incentives.   
 
The responsibility of the registration of aircraft falls under the Authority of Transport Malta (that is within the ministry responsible for Transport), which is in turn delegated to the Director General of Civil Aviation.  It is a member of the International Civil Aviation Organisation, the European Civil Aviation Conference (ECAC), Eurocontrol and the European Aviation Safety Agency.  Consequently, the Civil Aviation Directorate is also responsible for the safety of aircraft, aircraft and aerodrome operators, air navigation service providers, the licensing of aeronautical personnel and the conclusion of international air services agreements. 
 
On the other hand, the ministry responsible for the Office of the Manager Airport Security (OMAS) deals with aviation security, which is totally different and distinct from safety in aviation.  In this respect, Malta enjoys a high performance level of both aviation safety and security.
 
When dealing with aircraft registration, the Director General of Civil Aviation will record information such as physical details of the aircraft, registration mark, engine details as well as replacement thereof, the name, address and capacity of the person registering the aircraft, details of mortgages as well as details of irrevocable de-registration, type and model of aircraft, number of passengers, and use thereof.
 
National Aircraft Register
 
The Aircraft Registration Act provides for a National Aircraft Register although there is no separate register for aircraft engines.  However, its legal and fiscal framework is intended to attract aircraft owners and lessors who would want to register their commercial and private aircrafts in Malta, subject to certain restrictions, allowing them also the possibility to register an aircraft still under construction once it is uniquely identifiable.  The definition of an aircraft includes air balloons, gliders, seaplanes and helicopters.
 
Registration of an Aircraft renders information public and the legal effects thereof also create priority between rights.
 
Who is Eligible to Register an Aircraft?
 
It is the manufacturer, unless agreed otherwise, who is considered as the owner and may thus register the aircraft.
 
Eligible registrants include an owner of an operating aircraft, or an owner of an aircraft under construction or being temporarily inoperative.  A registrant also includes an operator under a temporary title, as well as a buyer under a conditional sale or title reservation agreement and a trustee for the benefit of qualified persons.
 
A commercial aircraft may be registered by a citizen or resident of the EU or an EEA Member State, as well as Switzerland.  An undertaking formed and existing in the EU or Switzerland also has the capacity to register the aircraft.
 
Furthermore, a private aircraft may be registered by a foreign undertaking in an approved jurisdiction, such aircraft not being engaged in air service and provided it has the legal capacity to operate or own such aircraft, that it appoints a local resident agent, and that it complies with applicable regulations.  It may also be registered by a citizen of the EU or Switzerland, not having a place of business in the mentioned states.  A director, being a natural person, of an undertaking or trust, shall be the Resident Agent.
 
The pillars of the aviation register would be technical excellence, and excellence of service around the clock.  The register would be open to a very wide range of aircraft registration, including mortgaging and fractional ownership.  In addition, the Malta register would be offering a number of fiscal incentives, such as accelerated depreciation.
 
Tax Regime Applicable:
 
It is to be emphasised that the primary objective of the tax regime applicable to this sector is to minimise the tax implications of leasing income and to maximise the benefits of Malta tax refund system.
 
(a)    Direct Taxation
 
There are two options to tax purposes:
 
1. Company registered and domiciled in Malta - Effective rate of tax 5% arising from payment of 35% tax on profits arising from operating activities with applicable refund of 30%. 
2. Company resident BUT NOT domiciled in Malta or vice versa - Effective rate of tax is 0% as long as funds from operations are not remitted to Malta. 
 
(b)   Indirect Taxation
 
1. If management and control is in Malta – than it is deemed to fall within scope of VAT and may qualify for exemptions, thus is registered for VAT purposes in Malta, has a Maltese VAT number but need not charge VAT – i.e. zero rated.  The company will be considered exempt with credit and therefore can claim any VAT incurred locally. Such is considered as a great advantage.
2. If management and control is abroad there is no need to register for VAT in Malta as it is deemed to fall outside the scope of VAT.  If it falls outside the scope of VAT in Malta but operates in the EU it is necessary to ensure that the place where the company would be domiciled / resident  does not fall with the scope of VAT of that country (vide direct taxation point 2 above) which would result in a negative VAT situation.
 
In order to obtain maximum tax benefit for an Aircraft registrationit is necessary to ensure that the aircraft can be registered using combination of residence and domicile (vide direct tax point 2 above) unless client deems 5% tax rate as feasible. 
 
For us to achieve this we need to ask client if;
 
(i) he already enjoys an AOC ( Air Operators Certificate) and in which country such certificate is registered.  This is important to see the agreement between that country and Malta vis-a-vis combination of residence and domicile.
(ii) where his management and control would be.
 
Thereafter, we can find the best combination of countries for tax purposes.
 
ü  Fees and charges for the registration of an aircraft can be provided on request at no charge.
ü  Application Form for Registration/De-Registration/Change of Details in Registercan be provided on request at no charge.
ü  A template for the Irrevocable De-Registration & Export Request Authorisation (IDERA)can be provided on request at no charge.
ü  The Mortgage Formfor both Individual Ownersas well asBody Corporate can be provided on request at no charge.
 
In the aviation sector,Tanti-Dougall & Associates, Advocates can provide services in connection with aircraft registration, taxation as well as on Health & Safety and aircraft security issues, cyber terrorism, Airport Safety & Security and Airport Emergency Plan in line with the International Civil Aviation Organisation (ICAO) and relative European regulations.
 
Tanti-Dougall & Associates, Advocates, a seasoned, multi-disciplinary Law Firm was founded in Valletta, Malta by Dr Michael Tanti-Dougall and Dr Jacqueline Tanti-Dougall, having between them almost  40  years of personal experience in the legal profession, with the aim of providing services based on commitment, loyalty and respect towards clients whether they would be private clients, medium-sized or large corporate clients, local or international, adopting first a solution driven approach which has won our dynamic team a favourable repute with clients, before going for litigation.  The legal services offered by Tanti-Dougall & Associates, Advocates address a wide range of practice areas including corporate and tax advisory services, yacht, shipping and aircraft registration, occupational health & safety services with relative risk assessments, separations, divorces, annulments and adoptions, debt collecting, employment and industrial relations, competition law, intellectual property, film industry, real estate, travel and tourism.

Tanti-Dougall & Associates, Advocates forms part of the European Law Group established in 1983, consisting of a network of leading law firms across Europe and beyond, to assist clients in their respective jurisdictions.  The Mission Statement of our Law Firm is "Committed to Our Clients" and do take pride in serving local and foreign clients.

 
Dr Michael Tanti-Dougall is a Senior Partner at Tanti-Dougall & Associates, Advocates. He can be contacted via email at info@tdlegal.com or through www.tdlegal.com.
 
Disclaimer:This Information issued by Tanti-Dougall & Associates, Advocates is only intended to serve as a guideline and not as a legal advice on the subject matter. Should one require legal advice thereon, one should seek to contact the above-mentioned person.
 

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