Vessel Regulations & Taxes

Any type of vessel can be registered in Malta, including:

• private and commercial yachts
• cruise liners
• super tankers
• oil rigs
• barges
• vessels under construction

Malta also provides for bareboat charter registration of foreign ships, meaning that matters regarding title over the ship, mortgages and encumbrances remain the remit of the foreign registry, while the operation of the vessel falls under the jurisdiction of the Maltese registry.

There are no restrictions on the nationality of the master, officers, crew, shareholders, or directors. Vessels may be registered personally by EU citizens or through an EU-registered corporate body with owners of any nationality.

Inspection requirements vary by the ship’s age, but there are no fees or hidden costs associated with inspections. Ships that have been in service for 25 years or more are typically not accepted, although this restriction may be waived in certain circumstances.

Responsibility for the Merchant Shipping Register lies with Transport Malta, an independent regulatory public agency. The Maltese Government has signalled that it is committed to the growth and continued improvement of the registry and is working closely with private stakeholders to attract further interest while keeping abreast of the changing international regulatory landscape and ensuring that sustainability considerations are placed at the heart of the sector’s development.

Ship owners and operators find in Malta the full range of necessary services, including ship repair and maintenance facilities, supply chain provision, crew provision, training, bunkering, technical services, certification, and more, providing support to vessels as well as to the oil and gas industry in the Mediterranean.

Malta’s attractive tonnage tax regime does away with the traditional method of taxation in favour of a highly competitive tax on a vessel’s net tonnage (NT). As part of the Maltese registry’s efforts to maintain a modern fleet with minimal environmental impact, ships that are less than 10 years old are eligible for discounts.

The tonnage tax system is straightforward. Under this regime, revenues derived from shipping activities are exempt from Maltese income tax. Profits made from the sale of such ships, or from the sale of stock in companies owning them, are also untaxed, as are dividends paid to shareholders from shipping-related profits. The rules become even more attractive when considering Malta’s wide network of double taxation agreements.

The below shows registration fees and annual tax for different types of vessels.

A company may register under the tonnage tax rules when at least 60 per cent of its fleet is flying an EU/EEA flag. However, the registry is flexible and allows considerable leeway for new registrants, which only need to have a minimum of 25 per cent of their fleet meeting this criterion – although this must gradually increase.

Eligibility for non-EEA ships depends on having their commercial and strategic management based in an EU/EEA country.

Ships that are not registered under tonnage tax rules have their profits taxed at the standard corporate rate of 35 per cent, and shareholders receiving dividends arising from this taxed income are therefore entitled to claim a refund, limiting their tax exposure.

Central to the tonnage tax regime’s functioning is the requirement to maintain separate ring-fenced accounts for activities that are derived from shipping activities and therefore tax-exempt, and those that are not. In cases where there is no income except that derived from shipping-related activities, the organisation can submit a simplified tax declaration instead of a regular income tax return.

Ships registered in Malta and engaged in commercial activities are generally subject to extensive VAT exemptions. Commercial yachts, for example, are exempt from VAT on supplies and maintenance, and are not obliged to charge VAT on charter revenue.

Shipping organisations and financiers of ships registered under the Maltese flag enjoy a secure environment with reliable levels of protection comparable to those found in the English Merchant Shipping Act.

Constituting an executive title, mortgages are enforceable upon default, with no need for a prior court judgement. Further mortgages, transfers and deletion of vessels are conditional only on the mortgagee’s permission. Financiers can also rest assured that registered mortgages take priority over special privileges or liens that were not previously recorded on the appurtenances or accessories of a vessel, while also being attached to proceeds from insurance and indemnities for mishaps.

Since vessels are considered separate and distinct assets within the estate of their owner, any arrest or enforcement by mortgagees can proceed irrespective of any other insolvency proceedings. It is also possible to register a mortgage under a trust for the benefit of anyone to whom an obligation is due.

In 2024, Malta signed the Beijing Convention on the Judicial Sale of Ships, which brings additional clarity to an area that had at times caused costly interruptions to trade. Under the treaty, buyers of vessels at judicial auction can rest assured that their title is free from encumbrances, while sellers can negotiate better terms, as financiers benefit from increased certainty.