Malta’s old maritime tradition offers the international shipping community a reputable open ship register that is the largest in Europe and the seventh largest register in the world. The Malta Flag is a flag of confidence and is on the Paris MOU “white” list. Owners and operators have come to recognize the island as a secure and cost–efficient centre for the registration and management of vessels.
Ship registration in Malta is regulated by the Merchant Shipping Act, 1973 (the “Act”) as amended. The Act harmonizes Maltese legislation with the provisions of international maritime conventions including among others, IMMARSAT, LL66/88, the STCW ’95, ISM Code, the ILO Convention and applicable EU legislation.
All types of vessels, from pleasure yachts to oil rigs, may be registered under the Malta flag, irrespective of their owner’s nationality. A Maltese ship may also be bareboat charter registered under another flag.
- As a rule, trading ships of 25 years and over are not registered.
- Merchant ships of 20 years and over but less than 25 years may be registered subject to a pre-registration inspection.
- Merchant ships of 15 years and over but less than 20 years may be registered but must be presented to the flag State for an inspection within one month from registration under Malta Flag.
Registration of ships under the Maltese flag offers the following main advantages:
- E.U. Flag;
- No costs for annual Flag State Inspections;
- Low company formation and ship registration costs;
- No restrictions on the nationality of the shipowner;
- No restrictions on the nationality of the master, officers and crew;
- No trading restrictions;
- An effective mortgage system;
The ownership of a vessel may be registered under the Malta Flag in either of the following ways:
(i) By incorporating a Maltese Shipping Organisation which will be the registered owner of the vessel;
In this case, the vessel is owned by a Maltese shipping organisation licensed in terms of Article 84Z of the Maltese Merchant Shipping to carry out any of the following activities:
- The ownership, operation (under charter or otherwise), administration and management of a ship/s registered as a Maltese ship, or of a ship/s registered under the flag of another state, and the carrying on of al ancillary financial, security and commercial activities in connection therewith;
- The holding of shares or other equity interests in entities, whether Maltese or otherwise, established for any of the purposes stated above;
- The raising of capital through loans, the issue of guarantees or the issue of securities by the company when the purpose of such activity is to achieve the objects stated in this article for the shipping organisation itself or for other shipping organisations within the same group of companies.
- Under the Merchant Shipping Act, all gains or profits of a Maltese shipping organisation derived from the operation and ownership of a Maltese registered vessel are exempt from income tax, save for the tonnage tax due on the ship, which consists in the registration and annual fees of a vessel.
For a ship to qualify as a “tonnage tax ship” and consequently for a shipping organisation to be exempt from income tax on the shipping activities, the following conditions must be satisfied:
The ship must be entirely owned or chartered by a Maltese shipping organisation;
- The ship has a net tonnage of 1000NT or more; and
- The ship is engaged in the carriage of goods or passengers.
A licensed shipping organisation offers the following further fiscal benefits:
- An exemption from income tax in respect of gains or profits derived from the ownership or operation of the yacht;
- An exemption from duty on documents on any instrument connected with or involving the registration of the yacht, the allotment of newly issued shares in the company, or the purchase, transfer, assignment or negotiation of any share in such company; or the sale or other transfer of the yacht or share thereof; and on the registration of any mortgage or other charge over the yacht, the transfer or discharge of such mortgage or charge granted in relation to the financing of any vessel registered in Malta, or the securing of claims against such vessel.
(ii) By appointing a Maltese resident agent in Malta who will act on behalf of the international owner.
An international owner (e.g. a foreign ship owning company) may register a vessel directly under the Malta flag through the appointment of a resident agent in Malta, provided the following conditions are met:
- The international owner must be a corporate entity that is duly incorporated and registered under the law applicable to it; and
- The Registrar of Shipping is satisfied that the international owner is a duly incorporated body corporate.
A resident agent must be:
- Habitually resident in Malta;
- Is not interdicted or incapacitated or is an undischarged bankrupt;
- Has not been convicted of any of the crimes affecting public trust or of theft or of fraud, or of knowingly receiving property obtained by theft or fraud; and
- Has satisfied the Registrar-General of Shipping to be a person capable of carrying out the functions of Resident Agent.