Business Aviation | Signature Private Office

Malta Aviation Structure
As an international centre of excellence in the aviation industry, Malta offers a whole range of international aviation services and facilities as part of a comprehensive package for the business aviation industry. The island enjoys a strategic geographical position at the centre of the Mediterranean. The Malta Flag is a flag of confidence and international repute and has more than 300 aircraft on its register.
The Civil Aviation Directorate within Transport Malta regulates all aviation activities in Malta and is a member of the International Civil Aviation Organisation (ICAO), the European Civil Aviation Conference (ECAC), EUROCONTROL, and the European Aviation Safety Agency (EASA). The Civil Aviation Directorate ensures that the Maltese air transport industry, in all its aspects, continues to be developed in a safe and efficient manner in order to serve the island’s needs.

How Can We Help?
With extensive experience in the aviation industry, Signature Private Office can assist in:

Aircraft sale and acquisition
Aircraft registration and management
Aircraft leasing
Assisting with applications for Air Operator Certificates and Operating Licences
Incorporation of private jet ownership corporate structures
Company administration and management
VAT compliance and advisory
Mortgage registration
Crewing and payroll.

Benefits of the Malta Flag

Flag of confidence and international repute
Adherence to international standards and the highest levels of regulation in the
world
Full member of the EU and the Commonwealth
Stable economy, robust financial services regulatory framework and a sound political
climate
Competitive aircraft registration costs and annual fees
Attractive tax incentives for aircraft owners
VAT-efficient finance leasing structures
Aircraft can be registered in the name of a company
Registration of mortgages and international interests in accordance with the
provisions of the Cape Town Convention
Recognition of fractional ownership of aircraft

Aircraft Registration
The registration of aircraft for both private and commercial use with the Civil Aviation Directorate within Transport Malta, can be exercised by any of the following:

An owner of an aircraft
An owner of an aircraft under construction
An operator of an aircraft under temporary titles
A buyer of an aircraft authorized to operate the aircraft
A trustee for the benefit of beneficiaries.

A Maltese citizen or other person from EU is allowed to operate an aircraft. To register an aircraft in Malta, one must obtain an Air Operator’s Certificate (AOC). An owner who wishes to operate an aircraft for commercial purposes must certified and licensed by the Civil Aviation Directorate within Transport Malta. To carry out any form of commercial activity within the EU, aircraft owners must be in possession of:

Air Operator Certificate (AOC) – necessary for an air transport organisation to carry out any air service within the EU
Air Operator License (AOL) – AOC holders must also possess an AOL, permitting them to provide air services as stated in the operating license, e.g., to carry by air passengers, mail and/or cargo for remuneration and/or hire. AOL is valid within the EU, the EEA and Switzerland.

VAT on Private Aircraft Leasing
The Maltese VAT guidelines address scenarios where a Maltese company purchases an aircraft and enters into a lease agreement of the aircraft with a third party. The aim of this structure is to enable owners to pay VAT on their private jet calculated on the percentage of the time that the aircraft is used within EU airspace. In accordance with Malta’s VAT legislation, the lease by a person established in Malta of an aircraft used purely for private purposes constitutes a taxable supply of a service taking place in Malta when the aircraft:

Is put at the disposal of the customer in Malta
Is leased for a continuous period of not more than 30 days
Is leased for a continuous period exceeding 30 days to a person established in Malta.

To be eligible and qualify for the VAT on aircraft leasing, the following criteria must be met:

The lessor must be a company registered in Malta for the purpose of acquiring the aircraft
The lessor must be registered with the Malta VAT Department
The lessee is not eligible to claim input VAT
The lease agreement cannot exceed 60 months
The lease payments must be paid monthly
The lease agreement must obtain approval and confirmation from the VAT
Department.

Maltese VAT at 18% will be charged on the portion of the lease covering effective ‘use and enjoyment’ of the aircraft within EU airspace. The minimum percentage of time that an aircraft could be deemed to be in EU airspace is 30%, thus resulting in a minimum effective rate of VAT of 5.4%.

If the lessee decides to purchase the aircraft at the end of the lease, a VAT paid certificate will be issued by the Malta VAT Department.

Tax Treatment to Finance Leasing of Aircraft
Where finance leasing arrangements of aircraft do not fall within the scope of Legal Notice 369 of 2005, the Office of the Commissioner for Revenue has decided that in such special case of the finance leasing of aircraft, the following tax treatment is to be adopted for each year for the duration of the finance lease:

the lessor is charged to tax on the annual finance charge, namely the difference
between the total lease payments less the capital element divided by the number of
years of the lease
the lessee is allowed a deduction in respect of the (i) the finance charge; (ii)
maintenance; (iii) repairs; and (iv) insurance
the lessee is allowed capital allowances in respect of the aircraft and the parties may
not opt to shift the burden of wear and tear onto the lessor
where the lessee exercises an option to purchase the aircraft on the termination of
the finance lease, and the lessor is not trading in the purchase and sale of aircraft,
the purchase price received by the lessor shall be of a capital nature and no tax
thereon shall be payable by the lessor.