Although the aviation industry in Malta developed over thirty years ago, the Maltese jurisdiction, through a joint effort from the Government and the Transport Malta Civil Aviation Directorate (CAD), has placed itself on the map with aviation industry players for a vast array of reasons.

Malta's growth within the aviation industry has been exponential with concerted efforts from 2010 onwards yielding extremely positive results, with the ultimate aim of transforming the Maltese Islands into a European Aviation Hub.

Over the last decade, Malta's aviation regulatory framework has been constantly augmented in order to cater for this industry-wide push, commencing from the implementation of the Aircraft Registration Act which provided a sound legal framework on which Malta's legislators continued to expand, and the accession of the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol.

The latter has allowed Malta to boast financing and leasing standards equal to international aviation standards providing broader credit options and reduced interest rates to borrowers and granting various rights and remedies to creditors.

In addition to the aforementioned efforts and Malta's strategic geographical location, Malta as a European Union Member State adopting the standards of the European Aviation Safety Agency (EASA), is an appealing jurisdiction for aircraft owners and operators since it provides an extremely attractive fiscal regime with incentives on VAT to be paid, highly competitive registration fees and operational costs, competitive minimum depreciation periods for aircrafts, recognition of fractional ownership, access to the single aviation market, and a strong industrial relations record.

Fiscal Benefits of Malta Aviation Services

There are also a number of fiscal incentives when looking at Malta as a jurisdiction of choice to set up an aviation company and consequently own, operate and/or lease aircrafts.

Notably, in addition to the implementation of the Aircraft Registration Act in 2010, a number of fiscal and tax incentives were introduced into Maltese tax law in order to accompany the aforementioned Act, and which focus solely on the tax treatment of aviation services in Malta with the aim of increasing Malta's competitiveness within the aviation industry.

One of the most attractive benefits derived under Maltese law stems from the fact that income received from the ownership, leasing or operation of aircrafts or aircraft engines (irrespective of the country of registration of the aircraft or aircraft engine) used for international transport of passengers or goods is deemed to arise outside Malta regardless of whether the aircraft may have called at, or operated from, any airport in Malta.

In this regard, under Malta's remittance basis of taxation, income deemed to arise outside Malta will be exempt from Maltese tax. This benefit, together with the benefits on the operation of aircrafts in international traffic contained in Malta's double taxation agreements, favourable VAT treatment for both finance leases and operating leases, accelerated tax depreciation rates, reduced income tax rate of 15% for highly-qualified persons within the industry, and an exemption from fringe benefit tax for individuals who are non-Maltese residents employed by an aviation company whose business activities include the ownership, leasing or operation of aircrafts used international transport of passengers or goods, all provide an attractive opportunity for aviation industry players to set up their residence in Malta.

Reliable Aviation services with CSB Group

As disclosed above, the CSB Aviation team offers a wide range of services to aircraft owners, operators and financiers either looking to move their operations to Malta or industry players who have already selected Malta as their base and require ongoing services concerning the regulatory, technical and administrative upkeep of Maltese companies owning or operating aircrafts within our jurisdiction.

CSB Group has vast experience in the aviation industry and we provide a complete package of legal and advisory services pertaining to all aspects of aviation. Our services to civil aviation clients include:

  • Advising aircraft owners, operators, lessors and financiers;
  • Assisting in setting up and administering aviation companies in Malta;
  • Assisting both buyers and sellers during aircraft transactions;
  • Registering aircrafts in Malta;
  • Drafting and reviewing aviation-related agreements;
  • Assisting with applications for AOCs and AOLs;
  • Managing of structures for VAT and tax planning optimisation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.