The Malta Aviation Industry

With the enactment of the Aircraft Registration Act, intended to firmly put Malta on the map of international aviation registers, Malta is well along the way of restructuring its aviation sector. The new legislation which was recently brought into force has implemented the Cape Town Convention on International Interests in Mobile Equipment and the Aircraft Protocol thereto.

The primary aim of the recent enactment is to make Malta an attractive jurisdiction for aircraft registration for private aircraft and also commercial aircraft within Europe while ensuring full adherence to the restrictions imposed by EU law on the registration and ownership of aircraft within the EU.

Newly Introduced Concepts

• Recognition of fractional ownership of aircraft – ensuring partial owners are listed as such thereby protecting their rights
• Registration of aircraft under construction as soon as it is uniquely identifiable
• Broadening of registration possibilities for non air service aircraft
• Possibility to register mortgages on Malta registered aircraft in the international register in terms of the Aircraft Protocol to the Cape Town Convention on International Interests in Mobile Equipment

It is now possible for the following persons to own aircraft registered in Malta:

Aircraft used in Air Service

• Government of Malta
• Citizen of Malta or member state of EU, or Switzerland or EEA having a place of business or residence in one of these states
• An undertaking formed and existing in accordance with the laws of Malta, member state of EU, EEA or Switzerland. The undertaking must have its registered office, central administration and principal place of business in one or more of said states and must have not less than 50% of its ownership owned (directly or indirectly) by the Government of Malta, EU member state or persons referred to in the last preceding point.

In order to operate an aircraft for public transportation of persons or goods, the operator would require an air operator’s certificate.

Private Aircraft (not used in Air Service)

A natural person who is a citizen of, or an undertaking established in a member country of OECD or any country approved by the Minister is qualified to register aircraft in construction or one not used in air services provided it:

• Has legal capacity to own/operate said aircraft in terms of law
• Appoints a local resident agent to represent the owner in Malta in matters concerning registration
• Complies with applicable regulations/guidelines.

Persons so qualified under these provisions are referred to in the Act as International Registrants.

Fiscal Advantages available to Aviation

Complimenting the aircraft registration regime, Malta has also introduced specific provisions with regard to the taxation of aviation income. Income from the ownership, leasing or operation of an aircraft or aircraft engine used for or employed in the international transport of passengers or goods is deemed to arise outside of Malta. This could lead to nil tax leakage in Malta when applied to persons resident but not domiciled in Malta. The specific provisions also provide for accelerated depreciation – 6 years for aircraft airframe, engine and overhaul and 4 years for aircraft interiors and other parts together with an exemption from the application of fringe benefit rules on income.

Furthermore, leasing of aircraft (together with other aviation related activities) carried by Maltese companies would be entitled to benefit from the standard corporate tax rate and refund structure available in Malta together with an absence of withholding taxes on the distribution of dividends or payment of interests outside of Malta.

RSM Malta’s team of aviations specialists will help ensure you fully benefit of Malta’s aviation regulations and assist you with the tax implications of registering your aircraft in Malta taking into consideration the specific nature of your activities, help throughout the aircraft registration process and the provision of a locally resident agent.