Aviation in Malta

Malta offers attractive tax incentives to owners of both private and commercial aircraft and it has a robust legislative framework.

Advantages of setting up in Malta:

  • Competitive minimum depreciation periods for aircraft and aircraft equipment;
  • Broad registration possibilities for aircraft not used in commercial air transport;
  • More visibility of rights and interests in aircraft;
  • Recognition of fractional ownership of aircraft;
  • Implementation of the Cape Town Convention on International Interests in Mobile Equipment and its Aircraft Protocol, facilitating the acquisition of aircraft and granting extensive powers to secured lenders to enforce their rights;
  • The Directorate of Civil Aviation provides a wide range of services, including the licensing of air operators;
  • An efficient, skilled, cost-effective and multi-lingual workforce;
  • Availability of a wide range of aviation services ranging from aircraft and engine maintenance, repair and overhaul to software development, aircraft management, aircraft maintenance training and ancillary support services;
  • Malta is an EU member state, politically stable, and a leading maritime and financial services jurisdiction;
  • A clear strategic political vision supporting business, the aviation industry and its clusters

Tax and Aviation

With respect to aircraft used for private purposes, subject to the approval of the Maltese VAT authorities and depending on the specifications of the craft, the effective VAT rate on the acquisition of the craft may be reduced to as low as 5.4%. 

This initiative is again based on the use and enjoyment principles of VAT, whereby Maltese VAT is only applied on the portion of the activity which is deemed to be carried out within the EU airspace.

Since it is not easy to determine the period of time that an aircraft spends within and outside the EU airspace, the Maltese VAT Department have commissioned an expert technical study in this respect and have established a formula to establish the percentage of the use of the aircraft which is deemed to take place within the EU airspace.

This formula takes into consideration:

  • Aircraft type
  • MTOM (kg)
  • Maximum Fuel Capacity (kg)
  • Fuel burn (kg/hr)
  • Optimum cruising speed – true airspeed (knots)
  • Optimum altitude (feet at ISA conditions)