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There are various regulations and legislation offering significant cost-savings to ship-owners who choose to fly Malta’s flag on their vessels.

The Maltese flag is not just a flag of convenience, but of confidence, as it is well-respected around the world. The island’s status as an EU member, together with its high-standard maritime system, has gained it the reputation of a low-risk flag status, making it a popular choice worldwide.

When it comes to costs, both registration and the fees of service providers have remained very affordable. In addition to this, when choosing the Maltese flag, you can benefit from an advantageous tonnage tax system for income derived from shipping and ship management activities.

What are Malta’s tax regulations?

One of the major tax benefits related to ship and yacht registration in Malta is the fact that yachts registered as commercial vessels can pay an annual tax on the tonnage, rather than an income tax on earnings.

On the other hand, Malta operates a system of purchasing and leasing for yachts which are not commercially registered. This means that yacht owners can pay VAT on their yachts calculated on the percentage of time that the vessels are deemed to have sailed in EU waters.

Malta also has excellent protection laws for superyacht financiers against defaulters. In fact, according to the Merchant Shipping Act, the mortgagee is entitled to take possession of the yacht and to sell it privately to a third party.

A reduced VAT rate

Malta has recently also adapted a reduced VAT rate on short-term yacht charters commencing in Malta. Such charters will still be subject to a rate of 18% on the cost of the charter, however, this will only be applied proportionally based on the amount of time the charter is in EU waters.

How about taking this a step further?

At KSi Malta we have a team of experts which can give valuable advice on all aspects of yacht and ship registration. Contact me on lcaruana@ksimalta.com if you want to go a step further or for any questions/feedback that you might have.

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