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MALTA BUSINESS AVIATION ASSOCIATION www.mbaa.org.mt
Malta Malta is a small island in the centre of the Mediterranean having a population of just over 400,000 people, famous for its sun, sea, history and culture and more recently for its vibrant, open economy, within the European Union. A member of the Eurozone, it has a GDP of €14,000(US$ 20,000) per capita which is well within the average of EU-member countries. The Island’s mild climate has attracted an increasing number of foreign high net worth individuals who have made Malta their choice of residence. Reasonable yet stable property prices whether for sale or lease, residential and commercial properties are available throughout the island and because of Malta’s size; one is never further than thirty minutes from the airport. Malta has no natural resources except the most vital: its people. Our focus naturally tends towards areas where we can add value. Malta developed the legislation and infrastructure necessary to become a major voice in the shipping industry. Today Malta is the second largest shipping register in Europe, and a significant maritime hub in the Mediterranean sea. Malta’s international banking centre has been gaining considerable ground in establishing itself as a finance hub in the Mediterranean region. Over the past decade or so, the sector has transformed itself from one having four retail banks serving the local population to a reputable international banking centre. This influx, which includes several leading banking groups, has added dynamism to Malta’s thriving financial services industry, and the expectation is that many other banking institutions will follow this lead. Aviation is as vital an area for our island’s economy as the maritime sector. The Government has once again taken an inclusive
approach, drawing on the input of the private sector to develop a dynamic and comprehensive policy with the aim of creating an aviation cluster in Malta. Our unique attraction is our approach: flexible, inclusive, and always ready to adapt to, and harness, different technologies. It is a stable, EU and bilingual (all legislation is published in both Maltese and English) jurisdiction with a well established legal infrastructure that is sensitive to the rights of holders of security interests in aircraft, and having a mature law on trusts, as well as an efficient company registration and redomiciliation system.
Maltese Tax System As part of Malta’s commitment to facilitate aviation business and remove undue tax burdens, below is an outline of the fiscal implications relating to aircraft No import duty is chargeable in terms of the Import Duties Act on the importation of civil aircraft into Malta; Aircraft do not attract any stamp duty in terms of the Duty on Documents and Transfers Act; Income derived from the ownership, lease or operation of an aircraft or aircraft engine engaged in the international transport of passengers or goods is deemed to arise outside Malta. This foreign source rule applies regardless of the country of registration of the aircraft, or whether the aircraft has called at, or is operated from a Maltese airport. Income tax implications of aircraft leases: Benefits available to MALTESE LESSEES of aircraft where the Lessor is a Foreign Company and the lease Benefits available to MALTESE LESSORS of aircraft where the payments are accruing to the foreign Lessor: Lessor is a Malta Company and lease payments are accruing to a Maltese Lessor: (i)
No withholding tax applies on lease payments made to lessors of aircraft used for the international transport of goods or passengers.
(ii)
If the lease is an operating lease, lessees may generally claim full deduction for lease If the lease is an operating lease, then lessors are subpayments against their income. ject to tax on the full lease payment.
(iii)
Lessees may claim capital allowances if they suffer the burden of wear and tear.
If the lessor suffers the burden of wear and tear, the lessor is entitled to claim capital allowances in respect of the aircraft.
(iv)
If the lease is a finance lease, lessees are entitled to a deduction in respect of:
If the lease is a finance lease, then lessors are only chargeable for tax on the interest element of the finance lease, without any deduction for capital allowances.
Interest element of the finance lease; Repairs and maintenance; Insurance, and Capital allowances at the applicable rates. (v)
Lease income is taxed at the standard rate of 35%. However, upon a dividend distribution of such taxed However, upon a dividend distribution of such taxed profits, shareholders may be enti- profits, shareholders may be entitled to a refund of 6/7ths of the Malta tax paid. tled to a refund of 6/7ths of the Malta tax paid. Profits accruing to lessees are taxed at the standard rate of 35%.
Competitive accelerated depreciation periods – As from the year of assessment 2010, the minimum period to claim wear and tear deductions for depreciation of aircrafts, engines and interiors has been shortened as indicated below: - Aircraft airframe, engine and overhaul: - Aircraft interiors and other parts:
6 years 4 years
VAT – The VAT implications vary according to the manner in which the aircraft is used, that is, whether the aircraft is employed by an airline operator for reward chiefly for international transport of goods or passengers, or whether it is purely for private use. VAT implications similar to those applicable in other EU Member States would be applicable in respect of importations, intra-community acquisitions, or supply of aircraft. Managed aircraft operated on an AOC even when used by their owners are not levied any VAT. All aircraft operated on an AOC are VAT exempt irrespective of the number of flights done for the owner(s) or third parties. The private use of an aircraft by a non-resident individual who is an employee or officer of a company whose business includes the ownership, leasing or operation of aircraft engaged in the international transport of goods or passengers is deemed NOT to constitute a taxable fringe benefit. Any person that carries on a trade or business consisting of the repair, overhaul or maintenance of aircraft, engines or equipment incorporated or used in such aircraft, may benefit from investment tax credits against the tax due on its chargeable income in Malta. Malta has an extensive Double Taxation Treaty network with over fifty countries.
Maltese Aircraft Registration Legislation A cohesive law on aircraft registration and aircraft security; Introduction of a more flexible and viable structure for aircraft registration; An all-inclusive National Aircraft Register, as opposed to a separate aircraft and mortgage register, which integrates the aircraft’s ownership and technical information along with details of third party rights over the aircraft and/or its engines; Straightforward registration procedures; Extensive qualifying rules for aircraft registration including access to the aviation register by as many owners and operators as possible, while simultaneously ensuring that it is not available to everyone; Narrowing of nationality and form requirements and extension of ownership of Maltese aircraft - under specified circumstances - to nationals of countries other than EU Member States, EEA States or Switzerland. Accordingly and subject to supplementary conditions, it is possible for a foreign undertaking in an approved jurisdiction to register an aircraft which is under construction, or which is not used to provide air services; Possibility of registering an aircraft still under construction, provided such aircraft is uniquely identifiable; Option of having an aircraft registered not only by the respective owner but also by operators under a temporary title, in addition to buyers under a conditional sale or title reservation or similar agreement;
Introduction of fractional ownership of an aircraft allowing more than one person to have a vested interest in an aircraft; Improved measures aimed at protecting creditor’s rights placing them in a better position to enforce their rights in the event of insolvency/default; Enhanced rights of creditors including the possibility of registering an irrevocable power of attorney for de-registration and export of the aircraft; Extensive protection and increased authority to mortgagees in relation to the cancellation of an aircraft from the register; Preservation of special privileges or reservation of title of aircraft on accessories of aircraft; Acknowledgement of interests of engine owners; Implementation of the provisions of the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol which serve, inter alia, to expedite the activity of acquiring and financing aircrafts.
Human Resources Malta’s success in the services industry can be attributed to good work ethics, discipline and a strong regard for the value of hospitality. Whilst Malta cannot boast a huge pool of aviation specialists, private and public schools, institutes and universities have recognised the importance of this sector and are starting to produce a number of aviation professionals. This includes the training of category A, B1 and B2 licensed engineers who have proven to be an asset to various maintenance facilities in Malta. The local flying schools produce a steady supply of pilots. For private non complex aircraft, flown VFR any license issued by an ICAO state would be acceptable. That said as an EU jurisdiction human resources can be sought from across Europe and a number of local recruitment firms have setup aviation departments to assist the industry. A number of training facilities are available in Malta from flight schools to airline standard training. The natural aptitude for training is evident in the Maltese trainer. Training support to the industry has fast become successful thanks to the adaptability of the Maltese and their flexibility in dealing with multicultural tra-
ditions. Crew Resource Management, Safety Training, Dangerous Goods Training and others such as Aviation English are just a few of the training courses available in Malta. Specialised aviation seminars are provided on a regular basis. Maltese qualified professionals have been providing AOC supporting documentation for a number of years. Operations manuals and expositions are produced and tailored specifically to meet each operator’s requirements. With today’s communications and technologies, managing specialised documentation can become highly cost effective when managed remotely in the hands of experts with years of experience in the field. In addition to a number of established aircraft management opportunities that exist in Malta, specific aviation management services are also available in support of the various operational fields that fall under the responsibility of an operator’s Postholder. These support services are essential in the pre and post AOC issue periods. Private aircraft management is also offered. Collectively, these services render the transition from private operations to Commercial Air Transport a feasible and relatively straight forward option. Malta’s highly regarded general services and IT sectors are also well geared up to providing expertise in software, financial and legal affairs associated with air transport.
Aircraft Finance The law of aircraft finance in Malta has the advantage of being generally associated with the already mature body of law and practice that has grown around the maritime and ship finance field, and which has seen Malta grow to global prominence. It was therefore not a major enterprise to ensure that such a well-tested system be harnessed and further developed for the aviation field. Indeed, with Malta’s ratification of The Cape Town Convention, our asset finance mechanisms were further refined to provide enhanced security and freedom of action to financiers. Some short highlights include:
Judicial sale proceedings (and other enforcement actions) instituted by a registered mortgagee or special privilege holder, cannot be interrupted for any cause except a cause that could be set up by the owner of an aircraft;
Comprehensive self-help remedies for mortgage holders, including security trustees;
- Any security over an aircraft does not extend to any engine which does not belong to the owner of the airframe;
Prohibition on transfers or further mortgages possible, enforceable also by the Registrar;
Mortgages can secure the payment of a principal sum and interest, an account current, as well as the performance of any other obligation, including a future obligation
Enforceability of irrevocable de-registration and export mandates; Inter-creditor agreements also specifically recognized; For the purposes of security, an aircraft comprises: All data, manuals and technical records; The airframe, all equipment, machinery and other appurtenances as accessories belonging to the aircraft, which are on board or which have been temporarily removed therefrom; and Any engines owned by the owner of the aircraft whether attached to the aircraft or not, as well as any replacement engines which are designated for use on the aircraft and owned by the owner of the aircraft but temporarily not attached to the aircraft
As far as engines are concerned: - May generally be subject to special privileges in accordance with the Civil Code, but subject to the provisions of the Cape Town Convention;
Securing future obligations is possible: in such a case, a mortgage must state a maximum sum by way of principal, and can only be granted in favour of a credit institution in an approved jurisdiction; When an international interest is registered, the debtor (if the registrant or owner of the aircraft) can execute a prohibitory notice, which blocks transfers of the aircraft or any further consensual security rights, except as allowed by the ii holder; All mortgages registered on the NAR rank after any international interest, prospective international interest, and other rights registered in the International Register.
Eligibility An undertaking formed and existing in accordance with the laws of Malta, of a Member State of the E.U., of an EEA State, or of Switzerland and having its registered office, central administration and principal place of business within Malta, or the E.U., or the EEA, or Switzerland, whereof not less than 50% of the undertaking is owned and effectively controlled by the Government of Malta, or by any Member State of the E.U. or by persons referred to above, whether directly or indirectly through one or more intermediate undertakings is eligible to operate any business in Malta. An aircraft may be registered in Malta by any of the following persons – An owner of the aircraft who operates the said aircraft; An owner of an aircraft under construction or temporarily not being operated or managed; An operator of an aircraft under a temporary title; or A buyer of an aircraft under a conditional sale or title reservation agreement or similar agreement, and who is thereby authorized to operate the aircraft.
Any aircraft (whether for private or commercial use)
Private aircraft
The Government of Malta;
A natural person who is a citizen of, or an undertaking established in a member country of the Organisation for Economic Co-operation and Development and any other country approved by the Minister by notice for the purposes of the Act (termed “International Registrant” in the Act), provided it –
A citizen of Malta or a citizen of a Member State of the E.U. or of an EEA State, or Switzerland, having a place of residence or business in Malta, the E.U., the EEA, or Switzerland, including a person sharing in the ownership of such aircraft by virtue of the community of acquests subsisting between such person and a citizen as described above in whose name the aircraft is registered; An undertaking formed and existing in accordance with the laws of Malta, of a Member State of the E.U., of an EEA State, or of Switzerland and having its registered office, central administration and principal place of business within Malta, or the E.U., or the EEA, or Switzerland, whereof not less than 50% of the undertaking is owned and effectively controlled by the Government of Malta, or by any Member State of the E.U. or by persons referred to above, whether directly or indirectly through one or more intermediate undertakings.
1) has legal capacity to own / operate an aircraft in terms of law; 2) appoints a local resident agent to represent the owner in Malta for matters concerning the registration of the aircraft; 3) complies with applicable regulations/guidelines.
Incentives and Support offered to the Aviation Industry by the Maltese Government. Business Advisory Services: Tailor-made advisory services to help your business grow Malta Enterprise is offering 10 free hours of specialised advisory services to businesses interested in improving their operations to become better market players but lack the know-how to go about it. Our advisors can help you in areas such as: starting up your business, improving marketing initiatives, developing and patenting your product, embarking on quality or management improvement programmes and research, development and innovation. More information can be found at http://support.maltaenterprise.com/advisory Microinvest: Innovate, expand, develop and invest in your business. All companies that employ less than 10 may benefit from Microinvest. By investing in their activity, businesses employing less than 10 workers may benefit from a tax credit of as much as â‚Ź25,000 on tax due on profits. The tax credit approved may be equivalent to 40% of the total investment if this is made between January 2010 and December 2011. Eligible investments vary from a simple refurbishing of the premises to wage costs on new jobs created. Network Support: Business & Development Networks Collaborating in a network will enable a enterprises to build synergies and attract business deals which would otherwise be difficult to conclude as individual enterprises. Business Networks Business Networks are made up of between 3 and 10 independent enterprises working together to achieve a specific business objective. Through the sharing of resources, enterprises forming part of the network can benefit from transfer of knowledge, combined capacity, improved busi-
ness prospects and achieve higher competitiveness. Malta Enterprise will support approved network projects with a cash grant which shall not exceed â‚Ź60,000. This grant may be used to part finance approved costs up to 60%. Eligible costs include: - the engagement of a Network Manager; - the participation in trade fairs and trade events; - studies, consultancy services and certifications required for the target market; - promotional material including brochures, multilingual websites and CD-ROMs. Development Networks Development networks bring together enterprises operating within the same sector or having complimentary activities for the purpose of achieving collaborative and collective development. Development networks should be operated on the principles of not-for-profit organisations, must have an established secretariat and the necessary statutory mechanisms to accept and process membership applications and ensure democratic leadership. This incentive supports development network by part financing their operation in their first 3 years. Trade Promotion Participation at International trade fairs, and trade missions are a unique and rewarding experience. Participation will undoubtedly allow enterprises to reap a number of benefits since they will be able to experience the market on a first hand basis, discover new insights, and establish potential business partners.
This incentive will support: - enterprises participating in trade events coordinated by Malta Enterprise; - enterprises forming part of a contingent participating together in a particular trade fair. Malta Enterprise may part finance, up to 60% of costs incurred for: - Rental of exhibition space / stand; - Stand construction services; - Freight expenses incurred for shipping materials / exhibits required to setup and run the stand; - Travel and Per Diem. Access to Finance This assistance is solely at the Corporation’s discretion and highly dependent on the return to the economy. Assistance may be in the forms of Soft Loans, Interest Rate Subsidies and Loan Guarantees. Companies engaged in the aircraft maintenance sector, including bench testing and R&D would be eligible for investment aid in the form of investment tax credits, and financial assistance through our access to finance schemes. Charter and Aircraft Sales Brokers and Flight Operations Support Organisations engaged solely in a call centre activity would be eligible for investment aid in the form of investment tax credits and possibly financial assistance through our access to finance schemes. Obviously all the companies referred to above could be eligible for training assistance and employment aid via the Employment Training Corporation (ETC). However the individuals have to apply for the scheme on their own steam and not via the company.
Get Qualified: Get Qualified is an initiative that supports the personal development of individuals for the achievement of qualifications and certifications required by industry. The incentive is applicable to individuals following a course of studies leading to a certification, diploma, degree or post-graduate degree courses. Upon successful completion the student will benefit from a tax credit thus recovering part of the costs incurred. Students following courses approved by Malta Enterprise are granted tax credits of up to 80% on the following costs: - fees paid by the individual to the university, institution or other entity recognized by Malta Enterprise for the training and educational services leading to the approved qualification; - fees for sitting for examinations required to achieve the approved qualification. Information on all schemes administered by Malta Enterprise may be accessed at http://support.maltaenterprise.com/index.htm
Conclusion International renowned names such as Orion (Malta) Limited and Carre Aviation operate on a Maltese AOC. Operators in Malta claim to have benefited from tax incentives and positive legislation. They claim that the Maltese authorities focus on client service rather than rather than unnecessary bureaucracy. Malta’s cosmopolitan business life and strong economic activity have also helped attract these players to the island. Malta was also chosen for its cosmopolitan business life and the strong economic activity. DC Aviation which is also one of the largest operators in Europe has setup its handling facility and regional sales in Malta since 2008. Business Aviation traffic increases in Malta an average of 10% per annum with a record increase in 2010 of 38%. Companies such as Maintenance Centre Malta Ltd. (M.C.M.) and Mediterranean Aviation Company Limited have contributed to the growth of business aviation through their Part-145 Maintenance Organisations. These companies provide line and base maintenance for a large selection of business aviation aircraft. There are 4 flight schools in Malta and a number of Training organisations offering a myriad of aviation courses and seminars. Maltese professionals have made major contributions in their respective fields across the globe. In aviation, a number of Maltese pilots today head the training organisations of the world’s leading airlines and have played their part in the introduction of state of the art aircraft such as the Airbus 380 into the fleets of major airlines. The Maltese Civil Aviation Directorate (CAD) already has close to a hundred aircraft on its register and eight AOC’s with the majority of the operators being Business Jet and Air Taxi operators. The following is a list of all business jets on the Maltese register: Airbus A318/9 CJ 7 Challenger 605 3 Hawker 800B 1 CRJ200SE 1 BBJ 1 Lear Jet 60 1 Global Express 4 Dassault Falcon 900 1 Global 5000 2 As a full JAA and subsequently EASA member state, Malta has consistently earned a reputation for maintaining high regulatory standards in aviation. These credentials will help ensure that Malta’s flag is not one of convenience but one of confidence, respected across the globe. Most importantly Malta has a clear strategic political vision and national policy supporting business, the aviation industry and its clusters.
MBAA Directory
3A Accountants Accountants and Auditors +356 27572757 christian@3a.com.mt www.3a.com.mt
DC Aviation Ltd. FBO and Regional Charter Sales +356 21375973 dispatch@dc-aviation.com.mt www.dc-aviation.com.mt
Globe Ground Malta Ltd. Licensed Ground Handling Service Provider +356 79431455 generalaviation@globegroundmalta.com www.ga-malta.com
BizAv Services Ltd Aviation Consultants +356 21470829 malta-office@bizav.eu www.bizav.eu
Carre Aviation Ltd Operator, Aircraft Management Maintenance Charter and Leasing, Flight Operations +356 21338282 info@carreaviation.com www.carreaviation.com
Executive Training Institute Professional Language and Aviation Training +356 23796321 info@etimalta.com www.etimalta.com
Fenech & Fenech Advocates Law Firm
Ganado & Associates Advocates Legal Services
+356 21241232 joseph.ghio@fenlex.com www.fenechlaw.com
+356 21235406 daquilina@jmganado.com www.jmganado.com
International Management Services Limited Financial Services +356 21341219 info@imscons.com www.imscons.com
Mediterranean Aviation Co. Ltd. (Medavia) Operator, Maintenance, Charter and Leasing, Ground Handling, Flight Operations +356 22490120 info@medavia.com.mt www.medavia.com
Nexia BT Accountants and Auditors +356 21637778 karl.cini@nexiabt.com www.nexiabt.com
Aeronautica Aircraft Registration / International Corporate Structuring +356 22583631 info@aeronauticaworld.com www.aeronauticaworld.com
Aequitas Legal Legal Services +356 21234085 info@aequitas.com.mt www.aequitas.com.mt
DC Aviation Flight Crew Ltd. Crew Recruitment +356 21373546 birgit.friedrich@dc-aviation.com.mt www.dc-aviation.com.mt
DC Aviation GmbH Aircraft Management and Charter Sales +49 71193306333 stanley.bugeja@dc-aviation.com.mt www.dc-aviation.com.mt
EMCS International Corporate service providers Tax advice Accounting +356 27772540 enquiries@emcsinternational.com www.emcsinternational.com
Fenech Farrugia Fiott Legal Law Firm +356 25496000 tfenech@fff-legal.com www.fff-legal.com
M.C.M. Maintenance Centre Malta Ltd. EASA Part 145 Maintenance Provider +356 23978100 office@mcm-airport.com.mt www.mcm-airport.com.mt
Orion(Malta) Ltd. Aircraft Management +356 21257270 director@orion-malta.com www.orion-malta.com
Civil Aviation Directorate Civil Aviation +356 25552353 civil.aviation@transport.gov.mt www.transport.gov.mt
Malta Enterprise Government Agency +356 25420000 info@maltaenterprise.com www.maltaenterprise.com
Transport Malta Transport Authority +356 21222203 info.tm@transport.gov.mt www.transport.gov.mt
Malta Business Aviation Association Association +356 99445555 office@mbaa.org.mt www.mbaa.org.mt
MALTA BUSINESS AVIATION ASSOCIATION www.mbaa.org.mt