Aircraft Registration

Aviation is a growing industry in Malta, and actively encouraged through a number of highly attractive fiscal opportunities, such as competitive registration fees and operational costs.

Several benefits are in place for aircraft (and their engines) registered under the Malta flag, whether these are aeroplanes or helicopters.

The Maltese aviation sector has grown from a small registry established over 30 years ago, to a well-respected international registry. Our focussed strategy includes a sound legal framework and a broad network of service providers across the industry.

As Malta is an EU Member State, it is party to key international aviation conventions.

Malta has implemented EASA’s standards in aviation, while also providing highly attractive fiscal incentives on VAT and highly competitive registration fees and operational costs, in addition to minimum depreciation periods for aircraft, recognition of fractional ownership and much more.

Accession to the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol has served to bolster the value that registration in Malta brings to aircraft owners and financiers alike.

This alignment with international conventions and standards has placed Malta at the forefront as a jurisdiction of choice for aircraft registration.

In addition, as an EU member, the Malta aviation registry is well-respected and supported by a sound legal framework and a broad network of service providers across the industry.

In bankruptcy or insolvency matters, all owner claims have security preference over other creditors. Ownership and security rights for the aircraft and its engines are treated separately if the aircraft belongs to different owners, regardless of whether the engines are attached to the aircraft.

Self-help is available in the event of a mortgage default, without resorting to the courts. Subject to giving notice to the debtor, the owner may sell, take possession in full (or a share portion), maintain registration or lease and/or receive payments and income from the aircraft

Malta’s taxation system is based on the principle of domicile. A single-purpose vehicle (SPV) or a company owning a single asset, incorporated outside Malta, and therefore not domiciled in Malta, will not be subject to Maltese tax exception where the income is remitted to Malta. This is subject to certain conditions relating to ‘effective management and control’. It is important to note that some tax treaties limit this benefit.

• Lessor: Tax is only levied on the full amount of the lease income, if responsible for maintenance, and tax depreciation for wear and tear can also be deducted.
• Lessee: Can deduct 100% of the amount of lease payments, if responsible for maintenance, and tax depreciation for wear and tear can also be deducted.

• Lessor: Taxed only on the interest portion of the finance charge, which is income.
• Lessee: Regarded as the owner, they can deduct finance charges and costs for repairs, maintenance and insurance, and claim tax depreciation.

Depending on the structure employed, importation of the aircraft into the EU may be arranged so that no VAT is levied.

There is an automatic exemption of VAT for aircraft operating under an AOC. Private jets (not operated under an Aircraft Operating Certificate) are not entitled to benefit from any VAT exemptions on importation of the aircraft into the EU. However, in 2020 Malta introduced a policy allowing for the importation of private registered aircraft involved in operational leasing under certain conditions.

It’s possible to accelerate the depreciation of engines, airframe and other parts. The minimum periods are as follows:

In Malta, any person or business involved in repairing, overhauling, or maintaining aircraft, engines, or related equipment may benefit from investment tax credits against the tax due on chargeable income.

Unutilised investment tax credits may be carried forward against tax due in subsequent years at a multiplied amount.

Our services include:

• Advising aircraft owners, operators, lessors and financiers
• Assisting in the set-up and administration of an
  Aircraft Operating Certificate (AOC)
• Financial operation of an AOC
• Assisting parties during aircraft transactions
• Registration of private and commercial aircrafts, and helicopters
• Drafting and reviewing aviation-related agreements
• Assisting with applications for AOCs and AOLs
• Managing of structures for VAT and tax planning optimisation