Fiscal Benefits of Aviation in Malta

• There is no import duty on the importation of civil aircraft into Malta;
• Aircraft do not attract any stamp duty;
• Income derived from the ownership, lease or operation of an aircraft or aircraft engine engaged in the international transport of passengers or goods is deemed to arise outside Malta, so is exempt from Maltese tax. This foreign source rule applies regardless of the country of registration of the aircraft, or whether the aircraft has called at, or is operated from a Maltese airport.
• Competitive accelerated depreciation periods – As from the year of assessment 2010, the minimum period to claim wear and tear deductions for depreciation of aircrafts, engines and interiors has been shortened as indicated below:

–  Aircraft airframe, engine and overhaul:          6 years

–  Aircraft interiors and other parts:                     4 years

• VAT – The VAT implications vary according to the manner in which the aircraft is used, that is, whether the aircraft is employed by an airline operator for reward chiefly for international transport of goods or passengers, or whether it is purely for private use.  VAT implications similar to those applicable in other EU Member States would be applicable in respect of importations, intra-community acquisitions, or supply of aircraft.
• The private use of an aircraft by a non-resident individual who is an employee or officer of a company whose business includes the ownership, leasing or operation of aircraft engaged in the international transport of goods or passengers is deemed NOT to constitute a taxable fringe benefit.
• Any person that carries on a trade or business consisting of the repair, overhaul or maintenance of aircraft, engines or equipment incorporated or used in such aircraft, may benefit from investment tax credits against the tax due on its chargeable income in Malta.
• Malta has over 60 Double Taxation Treaties in force. Where there is no double tax treaty in place, Maltese legislation has rules in place to allow unilateral relief on income arising outside Malta.
• Low minimum capital requirements
• Companies can pay tax in any currency and receive tax rebates in any currency, thereby eliminating exchange risk.
• Malta has fulfilled the criteria in the ASU 2011 for Cape Town Discount eligibility. Malta has thereby been approved as a suitable candidate for the Cape Town Discount and is currently going through the process which will enable Maltese registered aircraft to avail of the Discount.
• Income tax implications of aircraft leases:

Malta’s Double Tax Treaties