Commercial Yachts to Benefit from Malta Tonnage Tax Regime

Dr. Silvana Zammit | 02 Feb 2018

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The Malta Tonnage Tax Regime, recently approved by the European Commission, shall apply also to entities operating commercial yachts.

Following the scrutiny and thereafter approval of the Malta tonnage tax regime by the European Commission last December, the Maltese Shipping Registrar has announced that the Malta tonnage tax regime shall be extended to entities undertaking shipping activities through the operation of commercial yachts. In order for commercial yacht operators to benefit from Malta Tonnage Tax Regime, they need to engage in shipping activities according to the definition provided in the newly-amended Merchant Shipping Act.
Registrar General Ivan Sammut announced this at the Super Yacht Investor Conference in London in February 2018.


The amendments to the Merchant Shipping Act via Legal Notices 127 and 128 of 2018, which came into force in May 2018, Malta officially honoured its commitment made to the European Commission to avoid distortions of competition in the EU and prevent discrimination between shipping companies, showing that ensuring that there is a level playing field between all EU Member States with regard to shipping registries is a priority for Malta. Through these amendments, Malta has restricted the scope of the scheme to maritime transport and removed tax exemptions which are deemed to constitute State aid.

Instead of being charged income tax, the Malta tonnage tax regime entitles entities undertaking shipping activities to be exempt from income tax subject to the payment of a pre-agreed tonnage tax amount. The way the Malta Tonnage Tax Regime works is that such entities are charged a flat rate of tax depending on tonnage rather than income.

For commercial yacht operators to benefit from Malta Tonnage Tax Regime, a significant part of their fleet must fly the flag of a European Economic Area Member State and at least 25% of their fleet subject to tonnage tax with an EEA flag.

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