An Air Operator Certificate ('AOC') is a European required certificate which allows an operator to perform specific operations of commercial air transport. The AOC will confirm that the operator in question has the professional ability and organisation to ensure the safety of operations specified in the certificate, as provided in the relevant provisions of EU or national law, as applicable.
It is important to note that every holder of an AOC is also required to obtain an Air Operator's Licence ("AOL") in order to undertake the commercial air transport activities.
The aviation sector in Malta has in recent years experienced significant growth, with the Malta aircraft register listing over 500 aircrafts and the number of AOC holders approaching 70 in number. Some of the factors contributing to this recent growth in the aviation sector are listed hereunder.
Malta is an attractive option for air operators in the international carriage of passengers and goods for reward. The reasons for which commercial operators may opt for a Malta AOC are various:
Tax incentives are available to both companies and individuals. At a corporate level, all aircraft parts may be tax depreciated over an accelerated period of four years. No withholding tax is imposed on dividends, interest and royalties, including lease payments irrespective of the residence state of the lessor. A special source rule deems income from international air transport as arising outside of Malta which therefore enables certain entities not to be subject to tax on such income. According to the Qualifying Employment in Aviation (Personal Tax) Rules (SL 123.168), a fifteen per cent (15%) personal tax rate applies to certain expats working in aviation provided that the income amounts to at least forty-five thousand Euro (?45,000) annually. The fifteen per cent (15%) tax rate applies for a consecutive period of five (5) years. Individual income from a qualifying contract of employment qualifies under these rules when it is received by a beneficiary in an eligible office (which include position of inter alia, CEO, COO, CFO etc.).
An individual may benefit from the fifteen per cent (15%) tax rate if the person satisfies all of the following conditions:
- s/he is an individual who derives income subject to tax under article 4(1)(b) of the Act, being emoluments payable under a qualifying contract of employment, and received in respect of work or duties carried out in Malta, or in respect of any period spent outside Malta in connection with such work or duties, or on leave during the carrying out of such work or duties;
- s/he is protected as an employee under Maltese law, irrespective of the legal relationship, for the purpose of exercising genuine and effective work for, or under the direction of, someone else, is paid, and has the required adequate and specific competence, as proven to the satisfaction of the competent authority;
- s/he proves to the satisfaction of the competent authority that s/he is in possession of professional qualifications or experience;
- s/he fully discloses for tax purposes and declares emoluments received in respect of income from a qualifying contract of employment and all income received from a person related to his/her employer paying out income from a qualifying contract as chargeable to tax in Malta;
- s/he proves to the satisfaction of the competent authority that s/he performs activities of an eligible office; and
- s/he proves to the satisfaction of the competent authority that:
- s/he is in receipt of stable and regular resources which are sufficient to maintain himself and the members of his family without recourse to the social assistance system in Malta;
- s/he resides in accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in force in Malta;
- s/he is in possession of a valid travel documentation;
- s/he is in possession of sickness insurance in respect of all risks normally covered for Maltese nationals for himself and the members of his family; and
- s/he is not domiciled in Malta.
Ratification of the Cape Town Convention
The Cape Town Convention ('CTC') established a centralised system for the registration of aircraft ownership, liens, leases and contracts, thus permitting financiers of Malta-registered aircraft ease of enforcement of their registered security rights in each jurisdiction signatory to the CTC. The CTC also establishes the right of owners of aircraft to grant an Irrevocable De-Registration and Export Request Authorisation ('IDERA') to a secured party;
A robust Aircraft Registration Act
The Aircraft Registration Act ('ARA') introduced rules facilitating the registration of aircraft, and provides for a creditor-friendly body of laws meant to allow owners the possibility to grant mortgages and register international interests over aircrafts and engines (prevailing over Maltese-registered mortgages), IDERAs to be filed, and for owner and lessor interests to be registered in the National Aircraft Register;
Costs for obtaining a Maltese AOC are highly competitive but not at the detriment of the quality offered by the Maltese authorities and local service providers that may be assisting;
Malta being a member of the EU, Maltese AOC holders enjoy access to the single aviation market, as well as all open skies arrangements between the EU and others countries;
Obtaining a Maltese AOC is a structured process, split into well-defined stages. The Transport Malta Civil Aviation Directorate ('CAD') maintains a 24-hour service, and an AOC can be obtained within approximately 3-6 months, provided all documentation is in order.
Maltese AOCs are issued in accordance with all EASA regulations and standards. Costs for acquiring premises as well as employing personnel in Malta, as may be required for the operation, are relatively low;
There are various existing services providers and professional advisors to meet the need of air operators;
English is an official language of Malta.
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.