Super Yachts: What’s Special About Malta?
Malta, having the largest maritime registry in Europe and the sixth largest in the world, vaunts of close to 4,700 yachts registered under its flag, 85% of which are yachts over 24 metres. In light of this, one wonders, what is so special about this island nation in the context of super yachts? Whilst Malta’s history, sun, sea and majestic sailing sites might be a good reason for yacht enthusiasts to go to the island, they are surely complementary but not the sole reasons to attract prospective yachting owners and operators to Malta. Indeed, to the yachting world, Malta must represent more than that.
Studying Malta’s fiscal and legal regime, the following were identified as key factors contributing to the steady growth of the super-yacht industry in Malta:
- the flexibility of catering for the needs of all types of vessels small, medium and super yachts including vessels still under construction which are wholly owned by European Union (EU)/Swiss citizens or by duly constituted corporate entities;
- the absence of restrictions on the nationality of the master, officers and crew engaged on Malta flagged vessels;
- the executive/administrative powers that mortgagees may resort to over the mortgaged vessel and the possibility to sell the vessel privately (not through sale by auction) in cases of default;
- the special protection afforded to mortgagees and privileged creditors in the context of bankruptcy or insolvency of the owner of the vessel: vessels are granted a special status being separate and distinct assets within the estate of their owner. In case of bankruptcy of the owner of the vessel, all actions and claims, to which the vessel may be subject, have preference, on the said vessel, over all other debts of the estate. Additionally, this status allows any arrest or enforcement against the vessel by mortgagees or privileged creditors of maritime claims to proceed irrespective of the bankruptcy or insolvency proceedings;
- the possibility of fiscal planning and VAT payment minimization in the context of private yachts and super-yachts based on their use in the EU. Yacht leasing set-ups as detailed in the Guidelines Regarding VAT treatment of Yacht Leasing issued by the Maltese VAT department, provide for the payment of VAT due in relation to the supply of services, that is the leasing of the yacht, depending on the percentage of time the yacht is sailed within EU waters, potentially applying an effective VAT rate of 5.4%.
On assessment, these identified features portray a position which provides flexibility to yacht owners from a practical point of view. Additionally, it ensures that financiers, possibly involved in the transaction and financing purchases, are happy and comfortable with the choice of flag and jurisdiction for the protection of their position vis-à-vis the particular yacht in question.
Whilst providing a favourable environment for the economic and personal interests of yacht owners, financiers, yards and brokers, notably and possibly uncommonly, the national and international thrust for a sustainable maritime sector encircles these interests. It comes as no surprise, therefore, that Malta’s stint at hosting its first presidency of the European Union since its accession in 2004 in the first six months of 2017, was proliferated with maritime related activities. Acknowledging that the EU in general will be increasingly dependent on the seas and oceans whether for trade or for pleasure, Malta took the opportunity to push on the agenda initiatives in an effort to ensure the sustainability and continuing development of the maritime sector, under the EU Integrated Maritime Policy.
In consideration of the above, this inherent commitment of the country towards sustainable development, together with Malta’s increasing sensitivity to the needs of yacht industry players, regulators, the international maritime community and entrepreneurs seem to be the ingredients that make this island national special in the yachting world, seemingly balancing out what are usually two opposing needs: those of proper regulation and sustainable development on the one hand, and the needs of the industry, particularly vessel owners/operators and entrepreneurs, on the other.
Silvana Zammit heads the Chetcuti Cauchi Transport Practice Group which services clients in the maritime, aviation and general transport industries. Silvana’s practice mainly focuses on assisting clients with business start-ups requiring a license for their operation. Silvana has in-depth experience in licensing processes, especially those relating to online gaming, banking and other credit institutions, insurance and investment services. Working closely with the regulatory authorities in Malta, Dr. Zammit provides tailor-made advice for the obtainment and maintenance of licenses referring to the specific operations of the client. On the attainment of a license, Silvana provides ongoing legal support to clients in making sure that all requirements relating to their licensed operations are adhered to.
Managing the Property & Development department, Silvana also focuses on property deals and probate procedures, assuring that on any property deal; be it commercial, residential or otherwise, the necessary safeguards and protection of clients are undertaken. Silvana is also strongly involved in the Aviation and Employment & Labour Departments.
Dr Silvana Zammit can be contacted at [email protected] and on +35622056764