Why are so many airlines registered in Malta?
Prior to the pandemic, Malta International Airport recorded over seven million passenger movements. Handling around 97.5% of all inbound tourists arriving in Malta, it is clearly the main facility for the small island nation of 525,000 people. However, despite the country’s small size, Malta’s aircraft register lists far more aircraft than its relatively small international airport could regularly handle – jets from Lauda in Austria and Hi Fly in Portugal are included. But is it?
A reputable registry
The registration of an aircraft under the aircraft register of a certain country means that these aircraft are bound to comply with the aviation regulations of that country. So while a Russian Airbus A350 from Aeroflot can operate mostly in and out of Moscow, its place on Bermuda’s aircraft registry keeps it up to Bermudian standards and regulations.
According to aircraft charter and management company Air CM, “The Maltese Aircraft Registry requires its operators to meet some of the highest levels of regulation in the world”, as it falls under the competence of the European Union Aviation Safety Agency (EASA). This, according to the company, offers aircraft owners peace of mind, with its ICAO rating as a “testimony to the strict standards of safety and security.”
Of course, if you know anything about international trade, you will know that this is not the main reason why some non-Maltese airlines register all or part of their fleets in Malta…
All about taxes (and the resulting savings)
In addition to competitive aviation registration costs, KPMG Malta points to the Maltese Authority’s “practical understanding of the aviation industry and supportive business structures”. Summarizing Malta’s Aircraft Registry as a financially beneficial destination, let’s look at some of the reasons why KPMG Malta registers an aircraft in the country: Aircraft temporarily not operated or managed can be registered here:
- The Malta Aircraft Register recognizes co-ownership interests in aircraft – “Innovative aeronautical provisions” – including the possibility of registering aircraft under construction;
- An extensive network of Maltese tax treaties with over 70 jurisdictions, including the United States;
- No withholding tax on rents where the lessor is not a tax resident of Malta;
- Attractive direct and indirect aviation tax opportunities for aircraft leasing, including tax depreciation and partial tax refunds to shareholders;
- Competitive tax depreciation rates for aviation purposes and partial tax refunds to shareholders;
- No restrictions on the nationality of shareholders and directors of Maltese airlines.
A final reason cited by a number of sources is that Malta is a signatory to the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol. A mechanism to establish international standards for leases, securities and registration of contracts, which provides creditors with a higher degree of protection and more effective remedies, while enabling lower borrowing costs.
Which airlines register planes in Malta?
Some of the most notable commercial operators that we currently see registering their aircraft in Malta are Hi Fly, Corendon, SmartLynx, as well as Ryanair subsidiaries, Lauda Europe and Malta Air. Although Malta Air obviously operates a service to Malta, this is only a small part of its more than 140 aircraft.
Eurowings, a subsidiary of the Lufthansa Group, hopes soon to also benefit from Malta’s aircraft register. According to Malta Independent, the move will include applying for an Air Operator’s Certificate in the country. However, a Eurowings spokesperson was clear on the tax implications associated with the trading decision, telling Malta Independent the following:
“The complex double taxation in Austria has been a disadvantage for Eurowings Europe crews for years. Currently, regardless of an individual’s place of residence and country of employment, the bulk of wage taxation falls on the country in which the airline’s legal domicile is located – in our case, the Austria. However, the majority of our Eurowings Europe employees live in Spain, the Czech Republic, Sweden, etc. The problem of double tax declarations and complex accounting processes would increase with each opening of a new base (Prague, Stockholm, etc.). Eurowings Europe must eliminate these disadvantages in competition (also in recruitment)… It is therefore explicitly “not about tax evasion, but taxation in the respective country of employment”.
So, did you know Malta Aircraft Registry is a tax and business friendly destination? Let us know by leaving a comment.
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