Aside from assisting clients with the registration of a pleasure yacht, Be.Legal may also coordinate the registration of a yacht in terms of the Malta Commercial Yacht Code. Maltese law remains very advantageous for the operation of commercial yachts, as it allows yacht owners the opportunity to register their yachts under the Malta flag as a commercial vessel enabling them to benefit from the tonnage tax regime instead of income tax on earnings with savings made on building and operational costs.
Yachts eligible for registration as a commercial yacht:
- Yachts in commercial use of over 15 m in length and which do not carry cargo and do not carry more than 12 passengers;
- All types of yachts can be registered as a commercial yacht under the Malta flag, including historical and training yachts;
- Yachts over 24 metres in length are to be built to the requirements and standards of a classification society authorised to issue statutory certificates on behalf of the Government of Malta. Malta recognises all leading classification societies. Yachts below 24 metres in length do not require to be classed.
An initial survey is required to draw up records of compliance with the code, further to which a Certificate of Compliance to Trade as a Commercial Yacht is issued. Compliance surveys may be carried out by one of the appointed ship surveyors or by a recognised organisation.
Thereafter, an annual survey is to be carried out. On yachts below 24 metres in length the annual survey may be carried out by the Master/Engineer, appointed ship surveyor or recognised organisation while, on yachts of more than 24 metres in length the annual survey are to be carried out by an appointed ship surveyor or recognised organisation.
A renewal survey is to be carried out every 5 years (every 4 years for yachts below 24 metres). During a renewal survey a survey similar to the one carried out during initial survey must be carried out.
Yacht Leasing Structure
In accordance with the yacht leasing structure available in Malta, a yacht owned by a Maltese company may be leased to third parties with an option to purchase the yacht at the end of the lease. Such structure may be set up in terms of the new guidelines issued by the Office of the Commissioner for Revenue (“CfR”) on the 12th March 2020 (the “Guidelines”) in connection with the leasing of pleasure yachts and the corresponding treatment of such leases for VAT purposes, which guidelines are essentially based on Article 59a of the EU VAT Directive.
In terms of the Guidelines, the CfR recognises that lessors of yachts intended for pleasure use will not be able to assess, at the date of each chargeable event, the extent to which the yacht is effectively used and enjoyed by the lessee within and outside territorial waters if lease payments are charged by the lessor in advance. Accordingly, the CfR shall only consider the place of supply of the leasing of pleasure yachts that are deemed to take place in Malta, as being situated outside EU territorial waters if the actual effective use and enjoyment of the lease takes place outside territorial waters.
Summarily therefore, the standard VAT rate of 18% is chargeable on the leasing of pleasure yachts however subject to certain conditions as set out in the Guidelines, the ‘Use and Enjoyment’ provisions may be availed of such that the VAT charged would correspond to the actual time that the yacht spends within EU territorial waters. To this end, actual proof such as logs maintained by the captain of the yacht, GPS data and any other documentation evidencing the yacht’s location during the term of the lease must be provided to the lessor in order that the time spent within EU territorial waters may be determined and VAT calculated accordingly only on such portion.
How can we assist you?
Our maritime experts at Be.Legal may assist you with the following services:
- implementation of yacht-leasing structures;
- registration of commercial yachts and issuance of a Certificate of Compliance to Trade as a Commercial Yacht;
- registration and deletion of pleasure yachts;
- registration, amendment and transfer of mortgages;
- coordination of temporary importation procedures;
- enforcement of claims against vessels registered under the Malta flag and yachts situated within Maltese territorial waters.