Category: Yachts
Why Malta is a Great Location for Flagging or Reflagging a Vessel?
Background
A lot of uncertainty has been generated within Europe following on from the Brexit vote, and certain other countries who are beginning to reassess their position within the EU. This is having an impact on the marine industry, with a number of vessel owners seeking to reflag ships and yachts.
The choice of flag registration is an important decision and a jurisdiction must be selected that satisfies relevant criteria relating to how and where the vessel will be used.
The Jurisdiction of Malta and Ship and Yacht Registration
Malta, with its central and strategic position at the heart of the Mediterranean, offers a wide range of international maritime facilities and services. This jurisdiction offers an active International Ship Register, with an excellent reputation, and it currently ranks as the largest merchant shipping flag in Europe.
The Malta Flag is a European Flag, a flag of confidence and a flag of choice. Many leading ship owning and ship management companies register their vessels under the Malta Flag, and international banks and financiers often recommend the Maltese Register and Malta Ship Registration.
Benefits Offered to Ships and Yachts Registered in Malta: Fiscal, Corporate and Legal
A number of advantages are available to vessels registered under the Malta Flag, which include:
- Vessels registered under the Malta Flag have no trading restrictions and are given preferential treatment in many ports.
- The Malta Flag is on the white list of the Paris MoU, Tokyo MoU and on the Low Risk Ship List of the Paris MoU. In addition, Malta has adopted all International Maritime Conventions.
- All types of vessel, from pleasure yachts to oil rigs, may be registered in the name of legally constituted corporate bodies or entities (irrespective of nationality), or by European Union citizens.
- A Maltese vessel may also be bareboat charter registered under another flag.
- There are no trading restrictions for the vessels.
- Vessels less than 25 years old may be registered. Where relevant, the following criteria apply:
- Ships aged 15 years and over, but under 20 years, must pass an inspection by an authorised flag state inspector before or within a month of, provisional registration.
- Ships aged 20 years and over but under 25 years, must pass an inspection by an authorised flag state inspector prior to being provisionally registered.
Registration of a Vessel in Malta – the Procedure
The procedure for the registration of a vessel in Malta is relatively straightforward. Provisional registration, which in terms of the law has the same effect as permanent registration, can be effected very quickly.
Authority to provisionally register a ship will only be given once the Malta Maritime Administration is satisfied that the vessel conforms to all of the standards required by the relative international conventions.
Provisional registration is valid for six months, although this can be extended by a further six months; by this time all of the documentation must have been completed for the permanent registration. Specifically this must include evidence of ownership from a former registry, unless the vessel is new. Authority to operate remains dependent on meeting the relevant manning, safety and pollution prevention measures as detailed in international standards.
Bareboat Charter Registration
Maltese law provides for bareboat charter registration of foreign ships under the Malta flag and for the bareboat charter registration of Maltese ships under a foreign flag.
Vessels so registered enjoy the same rights and privileges and have the same obligations as a ship registered in Malta.
The main factor relating to bareboat charter registration is the compatibility of the two registries. Matters regarding title over the ship, mortgages and encumbrances are governed by the underlying registry, while the operation of the vessel falls under the jurisdiction of the bareboat registry.
A bareboat charter registration lasts for the duration of the bareboat charter or until the expiry date of the underlying registration, whichever is the shorter, but, in any event, for a period not exceeding two years. It is possible for the bareboat charter registration to be extended.
Yacht Registration Services Offered by Dixcart Malta
Dixcart Management Malta Limited has extensive experience in registering yachts under the Malta Register and providing the ancillary services needed to maintain such a registration.
Dixcart can establish the ownership structure for the vessel and provide advice on the most efficient structure, depending on the type of use of the vessel as well as the place of use.
For further information, please speak to your usual contact at Dixcart or email the Dixcart office in Malta: advice.malta@dixcart.com
Hiring of Pleasure Boats in Malta – The Guidelines
The Malta Commissioner for Revenue has just published the guidelines that are to be used to determine the place of supply for the hiring of pleasure boats. These will be applicable, retrospectively, for all leases commencing on or after 1 November 2018.
These new guidelines are based on the fundamental VAT principle of ‘use and enjoyment’ and provide the mechanism to determine the amount of VAT to be paid on the lease of a pleasure boat.
The lessor (the party leasing the asset) needs to obtain from the lessee (the party paying for use of the asset), reasonable documentation and/or technical data to determine the effective use and enjoyment of the pleasure vessel both within and outside EU territorial waters.
By using a ‘Preliminary Ratio’ and an ‘Actual Ratio’ the lessor will be able to apply VAT to the proportion of the lease relating to effective use and enjoyment, within EU territorial waters.
Additional Information
The Dixcart office in Malta has extensive experience in assisting with yacht ownership and registration in Malta. Please speak to Jonathan Vassallo: advice.malta@dixcart.com or to your usual Dixcart contact.
Why Use The Azores (Portugal) for Yacht Importation?
Background
The Archipelago of the Azores is composed of nine volcanic islands and is situated in the North Atlantic, about 1,500 kilometres west of Lisbon. These islands are an autonomous region of Portugal.
What Advantages are Offered by the Azores for Yacht Importation into the EU?
- The standard rate of Portuguese VAT is 23% but the Azores benefits from a reduced VAT rate of 18%.
In relation to the EU as a whole, the Azores has the second lowest rate of VAT within the EU (equal to Malta), with only Luxembourg enjoying a lower rate at 17%. The low rate of VAT is a major reason why the Azores continues to be a popular location for yacht importation into the EU.
The Azores also provides a geographical advantage as it is on the route used by yachts crossing the Atlantic, from the US and the Caribbean, to Europe.
Dixcart: Yacht Importation Services Using the Azores
Dixcart has extensive experience importing yachts through the Azores.
The yacht must physically travel to the Azores and it must be moored there for two to three working days, to enable customs clearance to take place.
Dixcart undertakes the preparation work at their office in Madeira and then organises for the appropriate professionals to travel to the Azores, to be there at the correct time and for the relevant number of days. These professionals assist with the customs clearance procedures and payment of VAT.
Steps and Procedures
Four steps take place:
Step 1: Application for a VAT number for the yacht owning company, as a Portuguese taxpayer
Requirements:
- Relevant documents to prove the yacht owner’s identity.
- Power of Attorney from the yacht owner in favour of the relevant Dixcart company. This company will apply for a VAT number and will be registered as the yacht owner’s fiscal representative, for VAT purposes, with the Portuguese Tax Authorities.
Step 2: Preparation of the relevant VAT and other customs forms
Requirements:
- ‘Declaration of Conformity’.
- ‘Bill of Sale’ and related invoices.
- Customs in the Azores will make their own evaluation as to the value of the yacht.
Step 3: Importation
The Azores Customs Authority will:
- Survey the yacht.
- Calculate the applicable VAT on importation, and any other relevant charges.
- Implement the customs clearance.
Step 4: VAT payment
The Portuguese tax representative of the yacht owner (provided by Dixcart) will pay the VAT applicable on the yacht importation and will receive the following items:
- ‘Declaration of Importation’. This document confirms customs clearance for the yacht and details of the relevant VAT payment. It must be kept on board the yacht at all times.
- Receipt of payment.
Additional Information
If you require additional information regarding yacht importation using the Azores, please speak to your usual Dixcart contact or to Catarina Sardinha at the Dixcart office in Madeira: advice.portugal@dixcart.com.
Additional Reasons to Consider Malta for Yachting Solutions
Malta: Recent History – the Marine Sector
Over the past decade, Malta has consolidated its status as an international Mediterranean centre of maritime excellence. Currently Malta has the largest shipping register in Europe and the sixth largest in the world. In addition, Malta has become a world leader for commercial yacht registration.
As well as its strategic position, in the centre of the Mediterranean, one of the main contributors to Malta’s success is the business-friendly environment adopted by the Maltese authorities. The authorities are approachable and flexible in their practices, while at the same time meticulously follow a rigid framework of guidelines and regulations, and this has created a cutting edge for Malta within this sector.
Additional Benefits in Terms of VAT – Maltese Registered Yachts
The Malta Authorities recently announced further attractive measures, which have already been put in place, regarding the importation of yachts to Malta.
Yachts, intended for commercial use, can be imported into the EU via Malta, for relevant VAT and customs procedures to be undertaken. Subsequently, the yacht can then be chartered, and can sail freely within EU waters.
Apart from the already inherent attraction for yachts to be imported into Malta, due to the low VAT rate of 18%, yachts used for commercial chartering can benefit from VAT deferral. The deferral mechanism has now been made more attractive as follows:
- Deferment of VAT on the importation of commercial yachts, by Maltese owning entities having a Maltese VAT registration, without the requirement for the importing entity to set up a bank guarantee;
- Deferment of VAT on importation of commercial yachts, by EU owning entities having a Maltese VAT registration, provided that the company appoints a VAT agent in Malta, without the requirement for the importing entity to set up a bank guarantee;
- Deferment of VAT on importation of commercial yachts by non–EU owning entities, as long as the importing entity sets up a bank guarantee for VAT, equivalent to 0.75% of the value of the yacht, capped at €1 million.
Dixcart: Yacht Registration Experience
Our office in Malta has extensive experience and can assist clients with all of the commercial aspects in relation to yacht ownership:
- Yacht ownership structures
- Importation of yachts
- Flag registrations
- Deferment applications
- Crew payrolls
- Day-to-day administration
- VAT registration in multiple jurisdictions
- Resident agent services
- Tax and VAT advice
- Accounting and secretarial services
Assistance
The Dixcart office in Malta has professionals who can assist your business with all aspects of yacht registration in Malta and can help ensure that you take advantage of the specific VAT deferment, applicable to your circumstances. Please speak to your usual Dixcart contact, or alternatively, please email: advice.malta@dixcart.com.