Yacht Registration under the Malta Flag |
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Registering your yacht under the Malta Flag offers many tax advantages. Registering your yacht in Malta involves setting-up a Malta company which will become the direct owner of the yacht. Therefore, instead of directly owning the yacht, the yacht owner will use a Maltese company to own the yacht on his or her behalf. A Maltese company is a flexible legal entity which is allowed to carry any type of activity, such as yacht chartering, in addition to the ownership of the yacht. Owing the yacht via a Maltese company enables the yacht owner to enjoy various fiscal incentives including a significant reduction in VAT paid on the acquisition of the yacht and a very beneficial effective rate of tax on the income generated by the Malta company. The beneficial owner of the yacht is also eligible to use our fiduciary services to achieve absolute confidentiality on the ownership of his asset. Some of the benefits of registring a yacht under the Maltese flag include:
Requirements for registrationTo register your yacht as a commercial vessel under the Malta flag, the following documentation is needed:
VAT Finance Leasing StructureThe VAT department in Malta has issued guidelines intended to promote the use of the Maltese jurisdiction for yacht leasing by non-residents. The yacht leasing scheme which aims to reduce the VAT paid on the acquisition of the yacht works as follows: Step 1 The beneficial owner acquires the yacht via a Malta company. The company is not required any obtain special status or any advance revenue ruling. The main object of the company would be to lease the yacht to the beneficial owner. The Malta should also be registered for VAT purposes and obtain a VAT number from the VAT department. Step 2 The yacht is leased by the Malta company (lessor) to its beneficial owner (lessee) under a financial lease agreement. Step 3 The financial lease agreement will stipulate the sale of the yacht at a pre-determined price after the termination of the financial lease period. VAT Treatment The lease of the yacht is deemed to be a supply of services. A supply of services is deemed to take place where the person who makes the supply is established. Given that the company would be deemed to be established in Malta, the place of supply would be deemed to be Malta and therefore, the Malta company would have to charge VAT on the income derived under the finance lease. The applicable VAT rate in Malta is 18%. The supply of a lease is taxable according to the deemed use of the yacht in EU territorial waters. Since it is virtually impossible to track the movements of the yacht and thus calculate the deemed usage in EU waters, the VAT department in Malta has issued guidelines which contemplate the deemed usage percentage in EU waters as follows.
The Malta company would have the right to claim the full amount of VAT paid on the acquisition of the yacht and any expense incurred in the operation of the finance lease (such as legal and accountancy fees). Example A motor yacht with a length of 25 metres is acquired by its non-resident beneficial owner via a Maltese company. The cost of the yacht of EUR 10 million and leased to its beneficial owner under a financial lease agreement over a term of 1 year. The motor yacht is sold to the lessee for EUR 500,000. Thereafter the Maltese company is liquidated.
For more information contact Franco Falzon Disclaimer |
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| Last Updated on Mon, 21 September 2009 |
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