Why Are So Many Airlines Registered In Malta?
Prior to the pandemic, Malta International Airport saw more than seven million passenger movements. Caring for about 97.5% of all incoming tourists arriving in Malta, this is clearly the primary facility for the nation’s tiny island of 525,000 inhabitants. However, despite the country’s small size, Malta’s aircraft register lists far more aircraft than its relatively small international airport can handle on a regular basis – aircraft from Lauda of Austria and Hi Fly of Portugal. are included. But is that the case?
Register of fame
The listing of an aircraft under the aircraft register of a certain country means that those aircraft are maintained in accordance with the air regulations of that country. Thus, while the Russian Aeroflot Airbus A350 can operate mainly inside and outside Moscow, its place in the Bermuda aircraft register keeps it in line with Bermuda standards and regulations.
According to the aircraft management firm Air CM, “The Maltese aircraft register keeps its operators at some of the highest levels of regulation in the world,” as it falls under the jurisdiction of the European Union Aviation Safety Agency (EASA). This, the firm says, offers peace of mind to aircraft owners, with its ICAO rating as a “a testament to strict safety and security standards.”
Of course, if you know anything about international business, you know that this is not the main reason why some non-Maltese airlines register some or all of their fleets in Malta …
All about taxes (and subsequent cost savings)
In addition to the competitive costs of aviation registration, KPMG Malta emphasizes the Maltese authority’s “practical understanding of the aviation sector and favorable corporate structures”. In summary of Malta’s aircraft register as a financially beneficial destination, let’s examine some of KPMG Malta’s reasons for registering an aircraft in the country: Temporary aircraft which are not being operated or administered may be registered here:
- Malta Aircraft Register recognizes fractional ownership interests of aircraft – “Innovative arrangements for aviation” – including the possibility of registering aircraft under construction;
- An extensive network of Maltese tax treaties with more than 70 jurisdictions, including the United States;
- No withholding tax on rental payments where the tenant is not a tax resident in Malta;
- Attractive direct and indirect aviation tax opportunities for aircraft leasing, including tax depreciation, and partial shareholder tax refunds;
- Competitive tax depreciation rates for aviation purposes, and partial shareholder tax refunds;
- No restrictions on the nationality of shareholders and directors of Maltese aviation companies.
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 for setting international standards for leases, security interests, and contract registration offers creditors a higher degree of protection and more effective remedies, while at the same time allowing less loan costs.
Which airlines register aircraft in Malta?
Some of the most notable commercial operators we are currently seeing register 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 portion of its 140+ aircraft.
The Lufthansa Group Eurowings subsidiary hopes to soon take advantage of Malta’s aircraft register as well. According to the Malta Independent, the move will include the application for an Air Operator Certificate in the country. However, a Eurowings spokesman was clear about the tax implications associated with the business decision, telling Malta Independent the following:
“Complex double taxation in Austria has been a disadvantage for Eurowings Europe crews for years. At present, regardless of the individual’s place of residence and country of employment, most payroll taxation falls to the country in which the legal domicile of the individual is located. airline – in our case, Austria. However, the majority of our Eurowings Europe employees live in Spain, the Czech Republic, Sweden, and so on. The problem of double tax returns and complex accounting processes increases with each opening of a new base (Prague, Stockholm, etc.). Eurowings Europe wants to eliminate these competitive disadvantages (including in recruitment) … So explicitly “not about tax avoidance, but about taxation in the respective country of employment. “
So did you know about Malta’s aircraft register as a tax and business destination? Let us know by leaving a comment.
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