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Ship and Yacht Management in Malta

Ship and Yacht Management in Malta

Benefits for ship and yacht management companies for highly qualified individuals in shipping and yachting.

Benefits for ship and yacht management companies.

Ship and yacht management activities represent the operational side of the shipping industry. Maltese authorities, conscious of the scarce presence of third party managers on our shores, together with industry stakeholders, analysed the deficiencies in our current legal framework and have, for this reason, decided to take action in a consistent manner concurrently with the recently revamping of its tonnage tax rules.

The intention of Maltese Authorities is clearly that of attracting players on Maltese shores in order to strengthen the already robust ship registration and ship financing offering. These rules, together with the recently revamped tonnage tax regime, the sound corporate tax measures and the attractive social security policies are set to make Malta as the perfect home port for ship management activities.  

Ship Manager’s treatment under Tonnage Tax Rules

As an alternative to the ordinary corporate tax on income, Ship Managers may be eligible to benefit from the tonnage tax exemptions with respect to the income derived from the management of ships and yachts.

The conditions to be fulfilled in order to benefit from the tonnage tax exemption are the following:

  1. Provision of technical and/or crew management services. Commercial management is excluded from the exemption.
  2. Ship management companies must be set-up as Shipping Organisations in accordance with the provisions of the Merchant Shipping Act (Cap. 234 Laws of Malta) and duly approved as such by the Authority for Transport in Malta;
  3. Must be established in the European Union (EU) or in the European Economic Area (EEA); Maintaining of separate accounts clearly distinguishing the payments and receipts by the ship manager with respect to ship management activities from those not connected to such activity; and   
  4. At least two-thirds of the tonnage of the ships to which the ship manager provides ship management activities is managed from the territory of the European Union or EEA;
  5. The tonnage in respect of which the ship manager provides ship management activities satisfies the flag-link requirement.

Highly Qualified Expatriates in Malta – Maritime Sector

The Maltese Government has confirmed its commitment towards the Shipping and Maritime cluster through the recently introduced Legal Notice 140 of 2018 aimed at attracting Ship and Yacht Management activities to Malta.

The Qualifying Employment in Maritime Activities and the Servicing of Offshore Oil and Gas Industry Activities (Personal Tax) Rules, 2018 introduced a favourable flat tax rate of 15% chargeable on employment income derived by individuals with respect to work or duties carried out in Malta or in respect of any period spent outside Malta in connection with such work or duties related to the ship and yacht management industry.

Highly Qualified Expatriates resident and non-domiciled in Malta may opt to be taxed at the flat tax rate of 15% on their income earned from a qualifying contract of employment in an eligible office, provided that the income, excluding any fringe benefits, amounts to at least €65,000. Furthermore, no tax would be charged on qualifying income exceeding €5,000,000 earned during the eligibility period.

Highly Qualified Expatriates involved in ship and yacht management and who are EEA or Swiss nationals resident and non-domiciled in Malta will be able to benefit from the flat tax rate for a consecutive period of five years commencing from the first year of assessment in which that person is first liable to tax. With respect to third country nationals involved in such ship and yacht management activities, the 15% flat tax benefit shall apply for a consecutive period of four years. In all cases, these periods may be extended by another 5 year period, for a maximum period of 10 years (9 years in the case of third country nationals).

The Schedule to Legal Notice 140 of 2018 lists the employment and offices eligible to the flat tax rate. Highly Qualified Expatriates involved in ship management or yacht management, and holding positions such as Chief Executive Officer, Chief Operations Officer, Managing Director and a number of other managerial roles will benefit from the flat tax.

A number of conditions must be satisfied in order to be eligible for the flat tax rate, which include amongst others that the income must arise from a qualifying contract of employment; the person must not be domiciled in Malta; the person must have health insurance in respect of all risks for himself/herself and the members of his/her family; and the person may not have received any other benefit or arrangement in terms of business incentive laws. In order to be eligible, the Highly Qualified Person would be required to apply to the Authority for Transport in Malta for a formal determination confirming eligibility to the favourable tax rate.

Download our Highly Qualified Expatriates in Malta – Maritime Sector below.

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