Advantages of registering a yacht under the Maltese Flag include:

1. No restrictions on the nationality of the ship owner
2. Low company formation and ship registration costs
3. No restrictions on the nationality of the master, officers and crew
4. No restrictions or taxation on the sale or transfer of shares of a company owning Maltese registered ships
5. No restrictions or taxation on the sale and mortgaging of Maltese registered ships

Any vessel can be registered under the Maltese flag and recent changes to the law have made it possible for all citizens of an EU Member State, and a Company registered anywhere in the world to own a Maltese registered vessel without the requirement of setting up a Company in Malta.

Notwithstanding that a company is not strictly necessary by law, the set up and registration of a company to own the yacht, whenever this is required, are also inexpensive, and the advantages of reduced personal liability, and the anonymity offered by the ownership of a yacht through a company generally attract owners to go for this option. The transfer of shares within the Company owning the yacht is also exempt from taxation, and likewise a Maltese company owning a Maltese registered yacht is not taxed on the sale and mortgage of such yacht. The first step in registering a vessel under the Maltese Flag is provisional registration which lasts 6 months, during which all necessary documentation must be provided. The vessel will subsequently be permanantly registered.

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Private Yacht Registration

Documentation required for Provisional Registration of a Private Yacht:

• Power of Attorney
• Application form including relevant yacht details

Documentation required for Permanent Registration of a Private Yacht:

• Yacht Survey
• Original Bill of Sale
• Original CE Marking Certificate
• Builder's Certificate
• Radio installation and License Application to be filled in by surveyor
• Carving and Marking (provided by the Malta Maritime Authority upon provisional registration) to be signed by Surveyor and returned to MMA
• Certificate of Cancellation (when vessel has been registered in a different registry)
• Declaration that yacht has not been registered elsewhere (when applicable)
• Returning of the Provisional Certificate

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Commercial Yacht Registration

Documentation required for Provisional Registration of a Commercial Vessel:

• Power of Attorney
• Application (including all yacht details)
• Compliance with Commercial Yacht Survey (for operational provisional)
• Load Line Certificate and International Tonnage Certificate (if vessel exceeds 24 meters)

Documentation required for Permanent Registration of a Commercial Vessel:

• Yacht Survey
• Original Bill of Sale
• Original CE Marking Certificate
• Builder's Certificate
• Radio installation and License Application to be filled in by surveyor
• Carving and Marking (provided by the Malta Maritime Authority upon provisional registration) to be signed by Surveyor and returned to MMA
• Certificate of Cancellation (when vessel has been registered in a different registry)
• Declaration that yacht has not been registered elsewhere (when applicable)
• Returning of the Provisional Certificate

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VAT PAYMENT

At Maltese law, for the purpose of VAT, the lease of the yacht is considered a supply of services with the right of deduction of input VAT by the lessor, where such right applies. This supply of services is taxable according to the use of the craft, attributed within the territorial waters of the European Union (EU), provided that the lessor is a Maltese company (including a commercial bank) which is leasing the craft to any Maltese or non-Maltese person or company.

The guidelines issued by the Maltese Vat Department establish the estimated percentage portion of the lease based on the time that the craft is used within the territorial waters of the EU. These percentages are set according to the length of the craft and its means of propulsion (power or sailing).

The standard rate of VAT of 18% is only applied on the established percentage of the lease, deemed to be related to the use of the craft in EU territorial waters. The minimum rate is paid on a yacht of 24 meters or bigger, where the 'vatable' portion is established at 30% with an effective rate of VAT and tax of between 5.4 and 6.2 per cent.

A financial leasing agreement is drawn up between a Maltese company and any Maltese or foreign person or company. Prior to the set up, approval is sought in writing from the Commissioner of VAT who is to confirm the rate applicable according to the use in EU territorial waters (depending on the size and propulsion of the craft), as well as the acceptability of the value of the craft as declared. For this purpose a valuation certificate of the craft is submitted with the application for approval.

Payments are divided into two phases - An initial contribution is paid by the lessee to the lessor amounting to 50% of the value of the craft. Subsequently, Lease instalments are paid every month by the lessee to the lessor, and the law (guidelines) requires that the lease agreement should not exceed 36 months.

Furthermore, the lessor is expected to make a profit from the leasing agreement over and above the value of the boat, and the purchase value at the end of the lease agreement must not be less than 1% of the original value of the craft, and this will is subject to the standard rate of VAT at 18%

If the lessee opts to purchase the craft at the end of the lease, a VAT paid certificate is issued to the lessee provided that all VAT due has been paid.