The introduction of the Aircraft Registration Act has formalised Malta’s commitment to develop the jurisdiction as a successful base for the aviation industry. This Act together with Malta’s accession to the Cape Town Convention, its EU status and highly competitive registration fees are all factors which are expected to contribute in developing the jurisdiction as a strong aviation hub. The above factors are complemented by a favourable tax regime, making Malta a competitive jurisdiction for aviation operations. The aircraft register has been developed in an accessible manner, distinguishing between commercial and private aircraft. The Maltese register allows registration of aircraft in construction, and acknowledges partial, fractional, joint and trustee ownership.
The local tax regime together with the significant number of double tax treaties result in significant fiscal efficiencies for investors and companies set up locally. Its full imputation tax system enables shareholders, on distribution of dividends, to claim 6/7ths tax refund of tax paid by the company.
Under the Aircraft Registration Act there is a possibility of registering both commercial and private aircraft. Commercial aircraft may be registered by the Government of Malta, a citizen/resident of Malta/EU/EEA/Switzerland and an undertaking formed and existing in Malta/EU/EEA/Switzerland. The process for registration is quite simple and straightforward with the list of required documents being easily ascertained with the relevant authorities.
On the other hand private aircraft may be registered by a foreign undertaking in an approved jurisdiction qualified to register an aircraft which is not engaged in air service, provided that it has legal capacity to own or operate aircraft. A citizen of Malta/EU/EEA/Switzerland not having a place of business in the aforementioned states, a Maltese undertaking with less than 50% of ownership or effective control in Malta (shareholders and directors must be citizens in an approved jurisdiction) and a trustee where the beneficiaries are any of the persons detailed above also qualify to register a private aircraft.
Trust and Joint Ownership
Fractional, partial, joint and ownership through trustees are all recognised interests which may be recorded in the national register. The provisions regulate ownership and usage of a number of persons in relation to a specific aircraft. In the case of a trust, the trust deed will dictate the arrangements and the rights and interests of the beneficiaries.
Security of Creditors’ Interest
Malta’s legal framework favours the rights and interests of creditors, even more so with the ratification of the Cape Town Convention. Any interest registered under the Maltese register can therefore be registered in the international registry in parallel.
The legal framework in place establishes a system of super privileges arising from law and recognises possessory liens and foreign mortgages.
Malta’s Income Tax Act has been amended so that income derived from the ownership, leasing or operation of an aircraft fuselage and/or aircraft engine used for the international transport of passengers and goods is deemed to arise outside Malta. Such income arising outside Malta will be exempt from Maltese tax unless remitted to/received in Malta. This treatment will apply regardless of whether the aircraft fuselage or engine is registered in Malta or whether the aircraft may have called at, or operated from, an airport in Malta.
Further to this no withholding tax applies on lease payments and interest if the aircraft is used for international transport of goods or passengers. The Income Tax Act has been recently amended to provide beneficial depreciation periods for aircraft airframes, engines and equipment.