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Ship and Yacht Registration in Malta
By George Farrugia
Updated 25 October 2007

Ship Registration

All types of vessels, from pleasure yachts to oil rigs, may be registered.

The procedure for the registration of a vessel is carried out in two stages:

Provisional registration, which in terms of law has the same effect as the so-called permanent registration, can be effected very quickly. Authority to operate a ship, however, will only be given once the Administration is satisfied that the vessel conforms to all the standards required by the relative International Conventions.

Provisional registration has a validity of six months, although this can be extended by a further six months. By this time all the documentation has to be completed for permanent registration. This includes in particular:

• Evidence of ownership
• Cancellation of former registry

Authority to operate still remains linked to conformity with the relative international standards on:

• Manning,
• Safety
• Pollution prevention

Advantages of the Maltese Flag

• Complete tax exemption to owners, charters and financiers of Maltese ships of over 1000 net tons,
• No restrictions on the nationality of the shareholders and directors of Maltese companies, and master, officers and crew of Maltese ships
• No restrictions on the sale and mortgaging of Maltese ships
• No trading restrictions
• Preferential treatment is given to Maltese ships in certain ports
• Twenty-four hour, seven days a week service in respect of urgent matters.

Bare-boat Charter Registration

Maltese law provides both for bare-boat charter registration of foreign ships under the Malta flag and also for the bare boat charter registration of Maltese ships under a foreign flag. Vessels so registered enjoy the same rights and privileges, and have the same obligations, as any other ship registered in Malta. The requirements for bare-boat charter registration are that the ship must be bare boat chartered to Maltese citizens or Maltese companies and that the ship, which is not a Maltese ship, is registered in a compatible registry.

Mortgages

A mortgage in respect of a Maltese ship may be recorded in the Maltese register as soon as the vessel is registered while transfer and discharge of mortgages may be effected immediately on presentation of relative documentation to the Registrar.

Manning Requirements

Upon registration of a ship, and on application by the owner, the Merchant Shipping Directorate, in accordance with the Solas Convention issues a minimum safe manning certificate valid for the period of the provisional registry. On permanent registration the Directorate will issue a minimum safe manning certificate valid for three years.

There are no restrictions as to the nationality of seamen engaged on Maltese ships. However, the crew on Maltese trading ships must be in possession of a recognized valid certificate of competency issued in terms of 1978 STCW Convention.

Licensed Shipping Organisations

Organisations which have their activities limited to one or more of the following activities may qualify as a licensed shipping organisation:

(i) The ownership, operation (under charter or otherwise), administration and management of a ship or ships registered as a Maltese ship and the carrying on of all ancillary financial, security and commercial activities in connection therewith;

(ii) The ownership, operation (under charter or otherwise), administration and management of a ship or ships registered under the flag of another state and the carrying on of all ancillary financial, security and
commercial activities in connection therewith;

(iii) The holding of shares or other equity interests in entities, whether Maltese or otherwise, established for any of the purposes stated in this article and the carrying on of all ancillary financial, security and commercial activities in connection therewith;

(iv) The raising of capital through loans, the issue of guarantees or the issue of securities by the company when the purpose of such activity is to achieve the objects stated in this article for the shipping organisation itself or for other shipping organisations within the same group;

Entities which may be established as a Licensed Shipping Organisation

The following types of entities may be established as a Licensed Shipping Organisation:

• Limited liability company (Public and Private) incorporated under the Laws of Malta
• Partnership En Nom Collectif
• Partnership En Commandit
• A foreign body corporate or other entity enjoying legal personality in terms of the law under which it has been established and which has a registered as place of business in Malta.

Licensed Shipping Organisations – Exemptions

Income Tax

• Income from shipping activities

• Any gains arising on the liquidation, redemption, cancellation, or any other disposal of shares, securities or any other interest, including goodwill, held in any licensed shipping organisation owning, operating, administering or managing a tonnage tax ship while she was a tonnage tax ship

• Any interest or income payable by a licensed Shipping Organisation to any person in respect of financing activities in relation to the activities carried out by the Licensed shipping organisation and / or to any ship which qualifies as a tonnage tax ship

• Any dividends paid to the shareholders of a Licensed Shipping Organisation out of profits derived from the ownership or operations of an exempted ship. The exemption also applies if the shareholder/s of a Licensed Shipping Organisation is a company. Any dividends distributed out of profits which were exempt profits of a Licensed Shipping Organisation are exempt in the hands of the company

A ‘Tonnage Tax Ship’ is a ship registered under the Merchant Shipping Act which:

a. Has a net tonnage of not less than 1000 tonnes; and

b. Is owned entirely, chartered, managed administered or operated by a Licensed
Shipping Organisation

Exemption from Social Security

Persons not resident in Malta who are officers or employees of a licensed shipping organisation, and the organisation in respect of such officers and employees, are exempt from the provisions from Social Security Act in Malta.

Exemption from Stamp Duty

No duty is payable on:

• The registration of a tonnage tax ship under the Merchant Shipping Act

• The issue of shares or securities in of a licensed shipping organisation or the purchase, transfer, assignment or negotiation of any security or interest of any licensed shipping organisation

• The sale or other transfer of a tonnage tax ship or any share thereof

• The registration of any mortgage in relation to a ship or licensed shipping organisation

• The assignment of any rights and interests, in respect of any ship

Tonnage Tax

Ships registered in Malta under the Merchant Shipping Act are subject to a registration fee and annual tonnage tax as follows:

Rates per net tonnage payable on registration and annually in respect of all ships, except pleasure yachts, of 24 metres in length overall and more:

Reductions or increases in registration fees and annual tonnage in respect of ships, except pleasure yachts, of 24 metres length overall

Disclaimer

The above information is being provided as a general guide only and should not be considered as a substitute for professional advice.

George Farrugia is the founding partner of MGI Malta. He can be reached at