In 2013, Malta implemented a new aircraft registration regime, structured in a manner to accommodate efficient registration of smaller aircrafts, in particular business jets. The regime is governed by The Aircraft Registration Act, Chapter 503 of the Laws of Malta which will serve as the framework for the registration of aircrafts in Malta.
In recent years Malta has been actively positioning itself as a favourable aviation base in the EU. Malta has so far attracted several international carriers to operate from Malta and more importantly, the successful establishment of aircraft maintenance facilities such as those of SR Technics and Lufthansa Technik.
The Aircraft Registration Act addresses several important issues such as different types of registrants, the concept of fractional ownership and the protection of creditors and special privileges which may exist on the aircraft. Aircraft registration is administered by the Authority for Transport in Malta.
An aircraft may be registered by the owner, operator or its buyer under a conditional sale. Only qualified persons are entitled to register an aircraft in Malta. Qualified person/s should be beneficially owned at least to the extent of 50% by individuals who are citizen of the European Union, EEA or Switzerland. Qualification for registration is more flexible when it comes to the registration of private jets. An aircraft which is not used for ‘air services’ may be registered by any undertaking established in an OCED Member State. Registration caters for issues of confidentiality in the sense that it is possible for the aircraft to be registered by a trustee. Foreign undertakings registering an aircraft in Malta are obliged to appoint a Maltese resident agent.
Maltese registration allows the possibility for separate registration of the aircraft and its engines. An aircraft which is still under construction may also be registered in Malta. The notion of fractional ownership is fully recognised by Maltese law allowing that the ownership of an aircraft to be split into one or more shares. Details recorded on the public register include the physical details of the aircraft, physical details of its engines, name and address of the registrant/s, details of any registered mortgage/s and details on any irrevocable de-registration and export request authorisation.
Maltese law allows the aircraft to act as a security for a debt or other obligation. A mortgage on an aircraft may be registered and as such all registered mortgages including any special privileges are not affected by the bankruptcy or insolvency of its owner. Furthermore, the law protects the judicial sale of the aircraft (instituted by the registered mortgagee) from being interrupted by curator in the bankruptcy proceedings of the owner. A mortgage may be transferred or amended according to the relevant preferences and circumstances of the creditor. Special privileges are granted in respect in respect of certain judicial costs, fees owed to the Malta Transport Authority, wages payable to the aircraft’s crew, debts owed in relation to the repair and preservation of the aircraft and if applicable, to wages and expenses in relation to salvage. Interpretation of the provision of the governing legislation has been consolidated and facilitated by Malta’s ratification of the Cape Town Convention.
The regime has also been supported by attractive fiscal incentives:
- Income derived by a person from ownership, operation of leasing of aircrafts is not taxable in Malta unless this is remitted to Malta
- 0% withholding tax on outbound lease and interest payments made to non-resident persons
- Beneficial depreciation period for wear and tear
- Exemptions from certain fringe benefits