The registration of aircraft under the Malta Register falls to be governed by the “Aircraft Registration Act, 2010” which was enacted in October 2010 pursuant to Legal Notice 446 of the same year. The bill meets the framework of the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol. This is an autonomous initiative and not an EU Law which is being transposed into Maltese legislation and is flexible in order to be able to react to the dynamism within the industry. The Bill’s versatility positively addresses various types of owners, real rights, guarantees and mortgages such as the ability to register aircraft still under construction, provided that airframe may be uniquely identifiable as well as aircraft engines, opening up possibilities for engine financing. The inclusion of private aircraft to the register and making the system also available to OECD jurisdictions is yet another positive trend.
Application for Registration
The manner in which an aircraft is registered under Maltese legislation is intrinsically provided for in the new Act. In comparison to its predecessor, the 2010 Act provides for the broadening of the possibility of services under the aviation sector especially via the possibility of registering any aircraft which is still under construction provided that it is uniquely identifiable according to the conditions laid down by the Minister responsible. Moreover, the law lays down a rebuttable presumption in stating that unless it is otherwise proven, the manufacturer shall be deemed to be the owner of the aircraft who is entitled to register the aircraft under the Act.
Malta Aircraft Registration Eligibility Rules
An aircraft may be registered in Malta by any of the following persons:
An owner who also operates the said aircraft;
An owner of an aircraft under construction or temporarily not being operated or managed;
An operator of an aircraft under a temporary title; or
A buyer of an aircraft under a conditional sale or title reservation agreement or similar agreement, and who is thereby authorized to operate the vessel.
Fractional Ownership and Trust Agreement
One of the advantages of registering aircraft under Maltese law is that the application for registration may be for an aircraft where ownership is vested in more than one person provided that 50% of the owners fall under the requirements of a qualified person. The same shall apply for an aircraft being registered on the basis of its operation. Moreover, the same applies in the event of the aircraft being held under a trust agreement in relation to the trustee. As a result of the introduction of The Trusts and Trustees Act in 2004, the institution of a trust agreement under Maltese law had a great impact and has been made use of with great success. Therefore, the possibility of registration of aircraft which is held under a trust agreement provides an extension to the object of a trust.
Fiscal Benefits of Maltese Aircraft Registration
- There is no import duty on the importation of civil aircraft into Malta.
Aircraft do not attract any stamp duty.
- Income derived from the ownership, lease or operation of an aircraft or aircraft engine engaged in the international transport of passengers or goods is deemed to arise outside Malta, so is exempt from Maltese tax.
- This foreign source rule applies regardless of the country of registration of the aircraft, or whether the aircraft has called at, or is operated from a Maltese airport.
- Malta has over 60 Double Taxation Treaties in force. In addition, there are a number of other agreements that have been negotiated and are in the process of coming into force and yet more that are in the process of being negotiated.
- Where there is no double tax treaty in place, Maltese legislation has rules in place to allow unilateral relief on income arising outside Malta.
- Low minimum capital requirements.
- Companies can pay tax in any currency and receive tax rebates in any currency, thereby eliminating exchange risk.
- Competitive accelerated depreciation periods – As from the year of assessment 2010, the minimum period to claim wear and tear deductions for depreciation of aircrafts, engines and interiors has been shortened as indicated below:
- Aircraft airframe, engine and overhaul: 6 years
- Aircraft interiors and other parts: 4 years
The Valsen Advantage
- Speedy, Efficient and consistent Services.
- Relentless effort to obtain bank accounts.
- Expert advice on structuring options.
- Dedicated ongoing compliance support.