Malta’s aircraft register is one of the most attractive in the EU.  Having a cluster of aviation services related to the management, maintenance, financing and leasing of aircraft complemented by Malta’s ratification of the Cape Town Convention  and the highly attractive fiscal incentives applicable to aircraft operators render Malta a fully-fledged aviation centre.

Advantages of the Maltese Flag

• Maltese law endeavours to limit nationality and form requirements while ensuring that the Aircraft Register is not accessible to anyone and everyone
• Possible to register aircraft which is still under construction
• Both fractional ownership and use of Trusts can be recorded
• Effective security of financiers’ and lenders’ interests
• Commercial operators are issued with EU-OPS certification
• VAT exemptions for operators and lessors of aircrafts
• Income derived from leasing or operation of the aircraft used for international transport is considered to arise outside Malta and not taxed unless received in Malta
• Competitive minimum depreciation periods for aircraft and capital allowances for aircraft lessees
• Tax credits for companies engaged in the repair, overhaul or maintenance of aircraft, engines or equipment incorporated therein
• No taxable fringe benefits arising from the private use of aircraft by non-resident individuals being shareholders, employees, officers of companies involved in the international transport of goods or passengers
• No need to incorporate new company as redomiciling existing companies to Malta is easy
• Full imputation tax system granting the option to the shareholders, upon distribution of a dividend, a 6/7ths refund of the Malta tax paid by the company
• An extensive network of double taxation treaties

aircraft leasing

There are no withholding taxes on lease payments made by Maltese lessees to non-residents in respect of aircraft operated in the international transport of passengers or goods and on interest payments made by the Maltese lessees to non-resident financial lessors.

vat on supply of aircraft

The supply of aircraft for use by airline operators for reward, mainly for international transport of passengers and/or goods, is VAT exempt with credit. The same principle applies for intra-community acquisitions and/or importation of aircraft. There is no exemption in the case of aircraft acquired for private use.

vat on aircraft leasing

The lease of an aircraft, other than aircraft used by airline operators in international traffic, is considered to be a supply of a service which is subject to VAT with the right of deduction of input VAT by the lessor. This lease is taxable according to the use of the aircraft attributed within the airspace of the European Union.

It is very difficult to determine beforehand the movements of an aircraft so as to define the period that the aircraft is used within EU airspace and the time outside the EU. Consequently, the estimated percentage portion of the lease based on the time that the aircraft is used in EU airspace is established on the basis of an expert technical study. The calculation of the chargeable proportion of the lease is dependent on:

• aircraft type
• MTOM
• maximum fuel capacity
• fuel burn
• optimum altitude
• optimum cruising speed