Malta - European Yacht Importation by Oceanskies

It is a requirement of the International Convention on the Law of the Sea, 1982 (UNCLOS) that all vessels sailing internationally must be registered and carry on board officially issued documents as evidence of their registration and therefore their nationality.

The Certificate of Registry issued by a vessel’s state of registry (flag state) effectively acts as a passport for the vessel.
Whilst sailing on the high seas the vessel will be subject to the laws of its flag state.

Whilst operating inside the territorial waters of another flag state the laws of the vessel’s own flag state still apply but it must also comply with any local laws that may apply.
A vessel that is operating outside the territorial waters of the owner that is not registered in accordance with UNCLOS is a stateless vessel meaning that the vessel is operating in contravention of international law and can be seized and prevented from leaving port. The stateless ship then becomes subject to local rather than international law which can have other unwelcome implications of a legal and fiscal nature.

The concept of registering vessels can be traced back to Roman times. Registration is essentially the act of recording within the public records of a jurisdiction, the particulars of a vessel.

In addition to attributing nationality to a vessel, the act of registration provides a mechanism through which its ownership can be determined.

The yacht owner faces an extensive and potentially bewildering choice of registration options for their vessel.They will need to choose between registering the yacht in a home state, where they have a genuine connection by way of nationality, residence or economic ties, or alternatively choosing to register in a flag state that may offer them benefits not afforded by the home state.

The yacht may be one of the most valuable possessions of the owner and it therefore follows that the decision on where to register their vessel should be well informed.

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The chosen jurisdiction should ideally offer prestige and universal acceptance whilst providing political and economical stability without subjecting the owner and the yacht to unnecessary regulation and bureaucracy.

Many yacht owners are not aware that there exists annually updated tables ranking the performance of the world’s shipping registers in form of the Paris and Tokyo MoUs whereby the world’s registries are categorised into ‘white’, ‘grey’ and ‘black’ lists and ranked in order of quality.

Although these tables are aimed at commercial shipping, yacht owners selecting registries listed on the ‘grey and ’white’ lists of such tables can expect, for good reason, a greater level of control and inspection from the authorities and difficulties in obtaining insurance cover.

A yacht owner might also wish to consider the image that be projected by flying the flag of any jurisdictions whose location might be hard to pinpoint on a map, that might have no seafaring heritage or be a tax haven of ill repute.

The British Register of Ships has traditionally been recognised as the ‘go to’ international register for yachts largely due to being a high quality, prestigious and universally accepted register predicated by many centuries of seafaring tradition and maritime history.

Crucially the British Register of Ships has in recent years been at the forefront of the adaption of international maritime law into substantially equivalent yacht friendly regulations.

All things being equal the British flag and the registries comprising the ‘red ensign’ group provide the best operating system for a yacht of any size and type.
Other nations have also developed their registers in recent years to entice yacht owners with Malta and the Republic of the Marshall Islands becoming increasingly popular alternatives to the British Register of Ships.

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Introduction

The purpose of this guide is to introduce the EU member state of Malta as a potential location for the importation of a yacht into the European Union.

The guide also introduces the services that can be provided by Oceanskies (Malta) Limited to assist with the EU importation of yachts in Malta.

Oceanskies (Malta) Limited specialises in the registration of yachts under the Malta flag and provides agency services to yachts visiting Malta.

We would stress that this guide should not be construed as legal or fiscal advice and we would recommend that any owner always take their own legal and fiscal advice on whether or not Malta should be used for importation purposes.

Malta – Geographical Position

Malta is located in the heart of the Mediterranean approximately 90 kilometres south of Sicily and 300 kilometres Northeast of Tunisia

The location of Malta makes the island a convenient stop off location for many yachts transiting through the Mediterranean.

Malta – Fiscal Position

Malta became an EU member state in 2004.

Upon becoming an EU member state VAT in Malta was harmonized with the European Council Directive regarding VAT.

EU VAT in Malta in theory applies to all goods that are imported into Malta from outside the VAT territory of the EU unless eligible for relief.

The current standard rate of VAT is one of the lowest in the EU set at 18%.

This means that the VAT applicable to the European importation of a yacht in Malta is 18%.

EU customs duties in theory also apply to all goods imported into Malta from outside the customs territory of the EU unless eligible for relief.

Oceanskies (Malta) Limited Services

Acting as port agents, Oceanskies (Malta) Limited are able to assist yachts visiting Malta by arranging berthing and the handling of all customs, import and immigration formalities either as a stand-alone service or as part of its range of yacht registration services.

Through our locally based, customs approved, partner surveyor in Malta we can also organise yacht valuation surveys in order to determine vessel value for customs importation purposes where necessary.

It should be noted that a yacht does not have to be owned or registered in Malta for its EU importation to be carried out in Malta. Crucially to create an EU import the vessel’s must make Malta its first port of physical entry to the EU.

Types of Importation

The three most common types of yacht importation scenario are as follows:

Full importation with the payment of the standard rate of VAT in Malta at 18% and any applicable duties. This results in a fully EU VAT paid vessel eligible for free circulation within the EU as a private or commercial yacht.
Full importation with the deferral of VAT and any applicable customs duties. This applies usually to a vessel that is a commercial yacht operated for charter as part of a bona fide earnestly pursued commercial yacht charter business.
Temporary Importation whereby the payment of VAT and any applicable customs duties are suspended on the arrival of the vessel on the basis that the vessel is visiting the EU and is eligible for entry and subsequent operation within the EU under the rules of Temporary Admission or other available temporary customs relief.