Malta – Leasing programmes for yachts & aircraft
Malta – Middle East Business Group
Newsalert No. 4
23/10/2017
Due to its geographical position in the centre of the Mediterranean, its beautiful natural harbours, and centuries of maritime tradition, Malta has always been a hub of maritime activity. Malta’s popularity as a yachting destination is reflected in the continuous development of the marinas. Malta has a number of marinas which are able to accommodate yachts of up to 135m (LOA).
The Maltese ship register is the largest in Europe and the fourth largest in the world in terms of registered tonnage. The Maltese Authorities have continuously strived to improve its standards, with respect to health and safety, and quality standards confirming its status as a flag of confidence while retaining an attractive and competitive legislative and fiscal framework.
Similarly, Malta is also an attractive location for aircraft activities. One of the main pillars for the success in attracting personal aircraft to Malta is the collective service-offering that Malta offers, which has been in place for a number of years. This includes the enactment of the Aircraft Registration Act which broadened the registration possibilities, introduced the fractional ownership concept, and provided for enhanced protection for mortgagees. Malta also acceded to and ratified the Cape Town Convention.
Malta is committed towards providing the best possible deal and service to yacht and aircraft owners, ensuring tax neutrality and removing undue tax burdens.
This Newsalert sets out some salient characteristics of two programmes available in Malta that are in place for yachts and aircraft. These separate programmes are both based on the use and enjoyment principle.
Maltese law provides for two separate but very similar programmes for yachts and aircraft which are both based on the use and enjoyment principle, and reflect the fact that the larger the yacht and the longer the range of the aircraft, the more the yacht/aircraft can be used and enjoyed outside the EU.
If the yacht/ aircraft is acquired by a Maltese company which would then lease the yacht/aircraft to the lessee, Maltese VAT of 18% (being one of the lowest VAT rates in Europe) should only be due on the part of the lease instalments that is deemed to take place in the EU in terms of the aforesaid use and enjoyment principle.
Chargeability of Maltese VAT on the yacht/aircraft
The portion of the lease instalments taking place in the EU (i.e. Malta) is established, (a) in the case of yachts by reference to the size and mode of the propulsion of the vessel, and (b) in the case of aircraft by reference to their range, as set out in the following tables:
| Sailing boats or motor boats over 24 metres in length | 30% |
| Sailing boats between 20.01 and 24 metres in length | 40% |
| Motor boats between 16.01 and 34 metres in length | 40% |
| Sailing boats between 10.01 and 20 metres in length | 50% |
| Motor boats between 12.01 and 16 metres in length | 50% |
| Sailing boats up to 10 metres in length | 60% |
| Motor boats between 7.51 and 12 metres in length (if registered in the commercial register) | 60% |
| Motor boats up to 7.5 metres in length (if registered in the commercial register) | 90% |
| Craft permitted to sail in the protected waters only | 100% |
| 7,000 and upwards | 50% |
| 5,000 - 6,999 | 40% |
| 3,000 - 4,999 | 50% |
| 0 - 2,999 | 60% |
Therefore, taking an example of a sailing boat over 24 meters in length, the Maltese VAT charge would be reduced to around 5.5% of the total lease value, while an aircraft with a range of say 6,000km would be entitled to a reduced VAT charge of around 7% of the total lease value.
These programmes for yachts and aircraft are subject to the satisfaction of certain conditions as set out under Maltese law.
At the end of the lease, and once the yacht/aircraft has been disposed of, subject to conditions, a VAT paid certificate would be issued by the Maltese VAT authorities in respect of the particular yacht/aircraft.
PwC Malta has a multi-disciplinary team to concentrate experience on Middle Eastern inbound or outbound business. If you would like to discuss further, please reach out to us on our LinkedIn group: PwC Tax Talk.
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