Yachting in Malta
Malta's popularity as a yachting destination is reflected in the continuous extension of its yacht marinas. Yacht owners, like Malta for its weather, its strategic position and its facilities.
Malta is strategically positioned in the centre of the Mediterranean. Malta is the southernmost State of the European Union, with one of the world's most beautiful natural harbours. Malta’s, accessiblality to all Europe through scheduled flights, makes it a natural choice for yachtsmen from near and far away countries.
- Centuries old of Maritime tradition;
- Malta is situated at an important geographical point of the Mediterranean;
- Straightforward registration procedures for a trusted flag;
- No restrictions on the nationality of the master, officers and crew, serving on Maltese vessels;
- No restrictions on the nationality of shareholders and directors of Maltese shipping companies;
- No restrictions on the sale and mortgaging of Maltese yachts;
- No trading restrictions;
- Preferential treatment for Maltese yachts in certain ports;
- Serious and efficient maritime administration;
- Flag state inspectorate to ensure adherence to international standards;
- Easy access to decision-makers within the competent authorities, backed by a qualified and efficient team of technical officers available for urgent matters on a 24- hour basis;
- Sound multilateral and bilateral relations;
- Active participation in international shipping fora.
Malta's Fiscal Incentives for the Yachting Industry
VAT Treatment of Yacht Leasing
It is very difficult to trail the movements of pleasure boats in order to determine the period that the boat spends within the territorial waters of the EU and the time it spends outside the EU.
In this regard the VAT department in Malta has issued guidelines to establish the estimated percentage of the lease based on the time that the boat is used within the territorial waters of the EU. These percentages are set according to the length of the boat and its means of propulsion (power or sailing):
VAT treatment of Yacht Short Term Chartering
A short-term charter of a yacht is an agreement whereby the yacht owner/operator contracts the use of the yacht for a consideration with a crew or on a bare boat basis. The term of the charter cannot be more than 90 days.
Subject to certain conditions, the taxation of this supply would be limited to that portion of the use of the yacht within the territorial waters of the European Union (EU). It is very difficult to physically trail the movements of a yacht in order to determine the period during which the yacht is used within the territorial waters of the EU and the period during which it is used outside the EU. The standard rate of VAT of 18% is applied on the established percentage of the charter deemed to be related to the use of the yacht within EU territorial waters. The table below indicates the applicable established percentage portions:
Income Tax Implications
The income received by the Maltese Company would be deemed to be trading income since it arises from trading activities and would be subject to income tax at the rate of 35% in Malta. In terms of Malta tax legislation, the shareholders of the Malta Company, may, following receipt of dividends claim a refund of 6/7ths of the Malta tax suffered at company level on the dividends distributed from this income stream.
How can we assist you
M. Meilak & Associates provides various services throughout the different stages of vessel ownership:
- Setting up of VAT Yacht Leasing structures;
- Registration of vessel;
- Co-ordination of yacht financing transactions, preparation and review of loan agreements, security agreements, statutory mortgages, collateral deeds of covenants, issuing of legal opinions
- we provide advice in both direct and indirect tax
- handling of on-going crewing and compliance formalities with the relevant Maltese authorities
- we provide all necessary company compliance work to Maltese companies ranging from accounting, VAT returns preparation and submission to the audit of financial statements, submission of income tax returns as well as applications for tax refund