Malta promotes itself as a superyacht hub and claims the title of largest superyacht registry in the world.

Situated in the middle of the Mediterranean sea, it’s not only strategically located but its mild climate makes it an inviting destination for yachts, all year round. Malta has a long maritime tradition, and the jurisdiction has developed a strong regulatory and legal platform over the years. This has led to Malta being regarded as the flag of choice for superyacht owners worldwide.

The robust legal framework and, in particular, the Commercial Yacht Code and Commercial Passengers Yacht Code, has set a standard of construction and operation that bolsters the robust legal framework that supports this exciting enterprise.

For smaller commercial yachts, the Small Commercial Yacht Code provides a tailored framework for boats less than 24m in length that are intended for charter, applying reduced technical requirements specific to the smaller build of these vessels.

Through the empowerment of the administration (Transport Malta Merchant Shipping Directorate), the strengthening of the maritime infrastructure, and the constant improvement of the legal framework and applicable codes, the yachting industry continues to attract a substantial number of superyachts.

It is possible to establish a specialised corporate entity, the Shipping Organisation, under the Merchant Shipping Act, that has a structure and organisation that is more aligned with the operation of ships and yachts.

A Maltese company (whether a Shipping Organisation, or as a standard company) can be set up cost-effectively, affording several income, corporate and VAT advantages, including:

• The lowest corporate tax rate in Europe (at the time of writing), ranging from 0% to 6.25 %. A general average rate for trading companies would be 5%. A wide network of double taxation treaties is also in place.
• No withholding of taxes on outgoing payments of dividends, interests and royalties.

The first step to registering a Maltese vessel is provisional registration for six months. The following needs to be provided:

• Application form and fee
• Proof of qualification to own a Maltese ship (or yacht)
• Appointment of a resident agent for international owners
• Declaration of ownership (sworn)
• Ship Radio Station Licence (depending on equipment)
• Bill of Sale (with apostille, if not witnessed in Malta)
• Cancellation of previous registry (or possibly a declaration that the yacht was not registered anywhere before).

Provisional registration may be extended for up to a further six months, allowing the prospective owner to collate all the documents necessary for permanent registration where these are not easily available.

If any of the technical requirements have not yet been met, a non-operational certificate is issued. Non-operational certificates serve to register that the yacht may not sail until converted to an operational registration, whether provisional or permanent.

Upon successful submission of any remaining documents (or of originals where scans were provided at the provisional registration stage), the yacht is permanently registered. The provisional registration certificate is returned and exchanged for a permanent registration certificate.

Examples of documents which may be pending include the necessary survey by a government-approved surveyor and a carving and marking note, by which the said surveyor affirms that the yacht’s name and its port have been marked on its hull as required by law.

Permanent registry is renewable annually upon payment of the annual fee and any tonnage tax, if the tonnage tax scheme is applied for.

Yachts can be registered for private use (pleasure yacht), or commercially (commercial yacht) for charter.

Any vessel larger than 6m is eligible to be registered under the Malta flag. Vessels between 6m and 12m may opt to be registered under the Small Ships Register, which would allow them to operate in Maltese waters only (i.e. within 12 miles from the coast).

Pleasure yachts are registered with fewer formalities since they are solely for private use by the owner(s).

Commercial yachts have to meet the requirements of the different codes: Commercial Yacht Code, Small Commercial Yacht Code, and Commercial Passenger Yacht Code, depending on their build and intended use.

Commercial registration entails fiscal advantages in terms of the ability to set off VAT incurred through expenses, as against the VAT applicable on charters, which assists the yacht owner’s cash flow.

The codes clearly set out standards of safety, pollution prevention and crew welfare that are appropriate for the size and navigation notation of the yacht. These take into account international conventions, EU measures and industry standards. This ensures that the yachting industry under the Malta flag remains of the highest standard.

It’s possible to switch between commercial registration and pleasure registration, and vice versa. When switching from private to commercial, there will need to be a survey to ensure that the requirements of the applicable code are met. Thus, a commercial yacht which is switched to a private registry would do well to continue to carry out the maintenance and surveys in accordance with the previous commercial registry so as to facilitate switching back, if and when the need arises. Owners requesting a switch must provide an undertaking to return the old (inactive) certificate once the new one has been received onboard.

There is no limit to the number of times a yacht can switch from pleasure to commercial, or vice versa. The payment of any adjustment to the registration fees will be required.