Long Tradition, professional expertise and modern facilities make Malta one of the most attractive maritime centres in the Mediterranean.
Tradition plus innovation: that is the success formula of Malta’s maritime sector. Not only has the number of ships sailing under the red and white flag with the cross increased in the past decades, Malta’s maritime sector also offers a complete range of services, from ship registration to ship repair, cruise liner harbours to cargo port facilities capable of handling any type of cargo as well as offering an ideal yachting infrastructure and environment. The strategic location of the Maltese Islands, at the heart of the Mediterranean Sea, makes them an ideal place to service the shipping industry” the ports are just six nautical miles off the main East” West shipping lane from Port Said at the Mediterranean end of the Suez Canal and the Straits of Gibraltar, gateway to the Atlantic.
Malta has been a maritime centre for most of its history. Among the ruins of its prehistoric temples dating back 4,500 years, ancient Greek and Egyptian goods have been found. Obsidian from Lipari and Pantelleria and copper from Spain provided its tools. By the 17th century, Malta was a centre for the corsairing trade, and under British rule in the 19th and 20th centuries it was a major naval base. The reality now is perhaps less colourful, focusing on commercial and leisure shipping. But this history has left a strong maritime culture and some of the best maritime facilities in the Mediterranean. Malta has a well-established network of shipping agents and maritime lawyers servicing the international shipping trade, and a state-of the art maritime legal framework with deep roots. Malta also hosts the Regional Marine Pollution Emergency Response Centre for the Mediterranean Sea, the IMO International Maritime Law Institute, and the International Ocean Institute.
A Flag of Confidence
Surprisingly, however, the Malta flag is relatively young: the register was only opened in the early 1970s. Since then it has gone from strength to strength and is now the second largest flag fleet in Europe, after the Greek flag. Safe ships and clean seas are the priority for Malta’s maritime industry, a policy that is successfully attracting increasing numbers of ships to its register. Since accession to the European Union in 2004, the pace of development in the industry has picked up considerably. In 2010, the fleet expanded by 6 per cent, with just over 39 million tons of shipping registered under its flag. At the end of 2010 the number of ships registered on the Malta Flag stood at 5,543 vessels, according to Transport Malta.
The Malta flag is today a flag of confidence, not one of convenience. Dedicated legislation, tighter registration criteria and improved regulation, all in line with EU Directives and IMO conventions, have spearheaded Malta’s determination to protect the reputation and image of the Register. Substantially reduced detention rates have been achieved as a result of increased inspections and tighter documentation processes and in July 2006, Malta was recognised as one of the flag States with a high-quality ranking by the Paris Memorandum on Port State Control. Since 2006 Malta has been on the Paris MOU ‘White List: which represents quality flags with a consistently Iow detention record. A significant development over the last few years has been the introduction of a ‘sliding’ fee structure that provides a reduction on registration fees and tonnage tax to young vessels, while a surcharge is applied to vessels over 15 years of age. This policy is now paying dividends with the average age of vessels being registered reduced to just over seven years old.
Straight forward ship registration
All types of vessels, from pleasure yachts to oil rigs, may be registered in the name of legally constituted corporate bodies or entities, irrespective of nationality, or by European Union citizens: there are no trading restrictions. However, ships of 15 years and over, but under 20 years, must pass an inspection by an authorised flag State inspector before or within a month of provisional registration; while ships of 20 years and over but less than 25 years must pass an inspection by an authorised flag State inspector prior to being provisionally registered. As a rule trading ships of 25 years and over are not registered.
Maltese law provides both for bare boat charter registration of foreign ships under the Malta flag and also for the bare boat charter registration of Maltese ships under a foreign flag. Such registered vessels enjoy the same rights and privileges, and have the same obligations as any other ship registered in Malta.
In 2010, the fleet expanded by 6 per cent, with just over 39 million tons of shipping registered under its flag. At the end of the year the number of ships registered on the Malta Flag stood at 5,543 vessels!
Attractive taxation for shipping companies
Shipping companies are subject to corporate tax at the normal rate. However, under the Merchant Shipping Act, all gains or profits of a Malta company derived from the operation and ownership of a Maltese-registered vessel are exempt from income tax.
This tax benefit applies to companies owning registered vessels of not less than 1,000 net tons engaged in the carriage of goods and passengers and is also administratively extended to most vessels of under 1,000 net tons.
Growing super yachts market
Malta is also an attractive base for super yachts. The super yacht market (vessels over 30 metres in length) has been undergoing considerable evolution. In 1984, there were approximately 200 super yachts over 30 metres in the entire world. Now there is a worldwide fleet of more than 7,000 boats. The fleet spends some 8 billion euro a year on maintenance and operations. These figures make the super yacht market an attractive one. A number of super yachts have already chosen Malta as their base in order to take advantage of the location of the country and the cost-effective services provided by marinas and ancillary companies, as well as the favourable tax regime for boat ownership, which makes registering a new yacht over 10 metres in length under the Malta flag an attractive proposition.
VAT incentives for Yacht Owners
‘Two other incentives were introduced by means of legislation in early 2006. The first one being provisions of the Commercial Yacht Code and the second on the guidelines issued by the VAT department regarding yacht leasing. The commercial yacht code gives super yacht owners the opportunity to have their yachts registered as commercial vessels, meaning they pay an annual tax on the tonnage of their yacht instead of income tax on earnings. As far as yachts which are not commercially registered are concerned, the Maltese guidelines provide for the payment of VAT on the lease of the yacht which is considered as a supply of services.
The amount of VAT that is payable in relation to this supply of services is calculated on the basis of the percentage of time spent by the yacht in EU waters – based on the assumption that the larger the yacht, the less time it stays there – and enables owners to receive a VAT paid certificate at the end of the process provided that all the conditions established by the VAT department have been satisfied. For example, a 24 metre sailing boat or motor yacht is presumed to spend only 30 per cent of its time in EU waters and thus VAT (at I8 per cent) should only be calculated at 30 per cent of the lease fee paid.
The guidelines relative to yacht leasing allow the yacht to be bought by a Maltese company with a VAT number, which is the owner/lessor of the yacht. If the purchase is made from an ED supplier, no VAT is paid on the purchase of the vessel since that purchase would amount to an intra-community acquisition. The Maltese company is then free to lease the yacht to a Maltese or foreign person, the lessee, who pays for the lease in instalments, at the end of which time the lessee, has the option to buy the yacht at one per cent of the declared value. At the end of the lease, a VAT paid certificate is issued by the VAT department of Malta which is valid all across the EH.
Malta also made important changes to its legislation in January 2009 to protect super yacht financiers from defaulters. These enable any person with an executive title to obtain a court-approved sale. The Merchant Shipping Act also entitles the mortgagee to take possession of the yacht and to sell it privately to a third party – usually for much more than he/ she would get from a judicial sale. Vessels/yachts have been sold by mortgagees in a matter of a few weeks from the date of the arrest. With these measures in place and building on Malta’s well regarded reputation as a service centre and port of call for super yachts crossing the Mediterranean, the country’s maritime sector is confident that Malta is now an even more competitive proposition.
Transport Malta is a new government authority established in January 2010 to assume the functions previously exercised by the Malta Maritime Authority, the Malta Transport Authority, the Department of Civil Aviation and the Network Infrastructure Directorate. The vision for Transport Malta is to promote Malta as a centre of excellence in the transport industry. This new organisational structure, the authorities believe, will enhance Malta’s capability to further the potential opportunities the country offers as a service centre of the global maritime industry.
Offering a 24/7 service for registration, Transport Malta has technical staff on hand to guide ship owners and managers through whatever problems might arise and ensure that vessels are not delayed longer than necessary. A select number of inter-national classification societies and a worldwide network of appointed flag- state inspectors extend the technical arm of the Maltese administration to practically all ports in the world. In addition, ship owners benefit from attractive tax incentives, a flexible approach to crewing and preferential treatment at many ports.
Yacht maintenance and repair centre
Malta is fast establishing itself as an attractive yachting centre and winter berthing base. The yachting community is well catered for when it comes to providing repair, haulage, storage and maintenance facilities. It boasts skilled boat builders, as well as shipyards, slipways and floating docks, catering for any vessel from the more modest to the most luxurious super yacht. Manoel Island Yacht Yard specialises in the refitting and repairing of vessels up to 40 metres while Malta Super Yacht Services is regarded as one of the leading super yacht repair, maintenance and refit centres in the Mediterranean with some of the world’s most well-known yachts regularly using the country’s facilities for both scheduled maintenance and full refits. The Manoel Island Yacht Yard was recently sold to a Maltese consortium, which includes Bezzina Ship Repair, Mizzi Holdings, Hili International, Virtu Steamship and Midi. The Malta Super Yacht Services has also been privatised and was acquired by Neapolitan firm Palumbo SPA in December 2010.
Efficient and effective
Malta has a flourishing international shipping centre, and is regarded as an efficient jurisdiction in which to establish ship management operations. The country is a convenient base for shipping companies that take advantage of the low costs involved in operations from Malta and of the beneficial financial structures which exist Malta also provides a wide variety of quality financial and corporate services.
The development of the shipping register has encouraged the establishment of several Malta based international ship-management and ship. owning companies, which activity is supported by numerous shipping related service providers, including maritime lawyers, accountants and banks offering comprehensive services to the owners and operators of ships worldwide. Malta’s shipping industry now ranks among the world’s best and is an economic and efficient centre for the ownership and management of all types of ships.