Aircraft Registration

Registration of Aircraft in Malta

Aviation is a growth industry for Malta, and actively encouraged through a number of highly attractive fiscal opportunities and 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 more than 30 years ago, to a well-respected international registry with a focussed strategy which includes a sound legal framework and a broad network of service providers across the industry.

Compliance with International Standards

Malta is an EU Member State and is party to key international conventions relating to aviation.

As an EU Member State, Malta has implemented EASA’s standards in aviation while also providing highly attractive fiscal incentives on VAT, highly competitive registration fees and operational costs, 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 an aircraft owner and financiers alike.

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

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

Security of Creditors’ Interests

In bankruptcy or insolvency matters, all owner claims have security preference over other creditors. Security in the aircraft and engine, whether attached or not, is separated insofar as the assets are property of different owners.

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

Taxation of Income

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

Finance & Leasing

The finance lessee is considered the owner of the aircraft, rather than the finance lessor. This results in the following benefits:

Operating Leases:

• Lessor – tax only levied on the full amount of the lease income; if responsible for maintenance, tax depreciation for wear & tear, which can also be deducted.
• Lessee – can deduct 100% of amount of lease payments; if responsible for maintenance, tax depreciation for wear & tear, which can also be deducted.

Finance leases

• Lessor – taxed only on the interest portion of the finance charge which is income.
• Lessee – regarded as owner and can deduct finance charges and cost for repairs, maintenance and insurance and claim tax depreciation.

Importation of Aircraft

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

There is automatic exemption for aircraft operating under an AOC – no VAT is levied. Private jets (not operated under an AOC) 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.

Depreciation – Short Wear & Tear Periods

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

Investment tax credits

Any person carrying on a trade or business consisting of the repair, overhaul or maintenance of aircraft, engines or equipment incorporated or used in such aircraft may benefit from investment tax credits against the tax due on its chargeable income in Malta.

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

Our Services

• Advising aircraft owners, operators, lessors and financiers;
• Assisting in set-up and administration of AOC;
• Financial operation of 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.