IN448 - What Does Malta Offer as a Jurisdiction for Aviation?

Malta’s reputation, within the EU, as an efficient and relevant jurisdiction for aircraft registration is growing rapidly. 

Brexit negotiations could have a significant impact on UK registered aircraft doing business in the EU. Airline operators who receive their operating licences from the UK Civil Aviation Authority may no longer be deemed Community Carriers and may no longer enjoy the right to fly between two non-UK points in the EU/EEA and/or two points within a single EU Member state.

This opens the door for a number of EU registries as an airline may need to obtain its Air Operator's Certificate from an EU Member State and have its principle place of business in that Member State.

Malta as a Base for Aircraft Operations – Recent History

In recent years, Malta has positioned itself as a favourable aviation base within the EU and has attracted several international carriers to move there. It has also successfully established a number of aircraft maintenance facilities, such as those of SR Technics and Lufthansa Technik.

The Advantages of the Maltese Aircraft Register

  • The aircraft and the aircraft’s engines can be registered separately.
  • An aircraft that is still under construction may be registered in Malta.
  • The notion of fractional ownership is fully recognised by Maltese Law. The ownership of an aircraft can therefore be split into one or more shares.
  • Maltese Law allows the aircraft to act as a security for a debt or other obligation.

Tax Advantages

A number of tax advantages are available. Income derived from the ownership, operation or leasing of an aircraft or aircraft engine and relating to the international transport of passengers, is not taxable in Malta, unless remitted to Malta.

There is no withholding tax on outbound lease and interest payments made to non-resident individuals. There is also a beneficial depreciation period for wear and tear.

VAT – Two Attractive Options

There are two options regarding VAT:

  1. Importation of the aircraft at the Malta standard rate of 18% - if the aircraft is being used predominantly by an EU-based business. The business may be entitled to reclaim the input VAT. This is based on a number of factors including: the type of aircraft, the maximum fuel capacity, fuel burn, optimum altitude and the optimum cruising speed, all of which are used to calculate the amount of time the aircraft will spend in EU airspace.
  2. Importation of a “qualifying aircraft” at 0% using a “qualifying airline” – this option is available if the aircraft is imported by an airline operating “chiefly for profit and on international routes”.

Why Consider Malta if You Are an Executive in the Airline Industry?

Malta offers reduced employment income tax rates which may well be relevant to an employee working in the aviation industry.

Expats employed in the airline industry, entering Malta under the Highly Qualified Persons Scheme, and meeting certain criteria, will pay income tax at a flat rate of 15% on their employment income.

Summary and Additional Information

Malta provides an on-shore EU alternative with attractive corporate tax and VAT regimes, well suited to aviation businesses operating in the EU and internationally.

Dixcart has extensive experience in coordinating the registration of aircraft and has an office in Malta. This helps to make coordination of the aircraft registration process as efficient as possible. Services include establishing and administrating the relevant ownership structures and managing the registration process.

If you require additional information on this topic, please speak to Henno Kotze at the Dixcart offices in Malta:



Categories: Malta, 2016, Air Marine