Since Malta is an island surrounded by the Mediterranean Sea with famously known ports all around Europe, maritime law is becoming more diffused by time and under Maltese legislation, it comprises two different categories, which are:
- precautionary warrants and executive warrants with regard to ships and vessels
- ship registration and shipping finance
Precautionary warrants and executive warrants with regard to ships and vessels
As time passes by, ships and vessels are used more often and thus, they are gaining lots of importance. Under the Maltese Court of Organization and Civil Procedure (COCP), there is the warrant of arrest of ships and vessels that can be both a precautionary warrant and also an executive warrant. Read more regarding precautionary warrants and executive warrants
Ship registration and Shipping Finance
Malta has a reputable open ship register ranking amongst the top ten registers in the world that has been, without any doubt, advantageous to the country. Read more regarding ship registration and shipping finance
Bareboat Charter Registration
Maltese law provides both for bareboat charter registration of foreign ships under the Malta flag and also for the bareboat charter registration of Maltese ships under a foreign flag. The two main principles adopted at law on bareboat charter registration are
- The two registries must be compatible, and
- All matters relating to title over the ship, mortgages and encumbrances are governed by the underlying registry, while the operation of the vessel falls under jurisdiction of the bareboat charter registry.
A bareboat charter registration may exist for the duration of the bareboat charter or until the expiry date of the underlying registration, whichever is the shorter, but in no case may such period exceed two (2) years.
The requirements for bareboat charter registration in Malta are that the ship:
- Must be bareboat chartered to Maltese citizens or Maltese bodies corporate;
- Is not a Maltese ship, and is registered in a compatible registry;
- Is not registered in another bareboat registry
Furthermore, the following documents must be produced:
- An application for registration by the charterer or an authorized representative;
- A declaration of bareboat charter accompanied by the charter agreement;
- A transcript or an extract of the underlying registration;
- A copy of the ship’s International Tonnage Certificate;
- The consent in writing of the underlying registry, owners and mortgages;
- Evidence of seaworthiness; in the case of trading vessels, confirmation of class;
- Payment of initial and annual registration fees.
The fees for bareboat charter registration are the same as those payable for normal registration.
Authorized Classification Societies and Appointed Inspectors
Prior to and during the period of the ship’s registration, merchant vessels must be classed with a classification society authorised to issue statutory certificates on behalf of the Maltese Government, namely, American Bureau of Shipping, Bureau Veritas, China Classification Society, Det Norske Lloyd, Germanischer Lloyd, Korean Register of Shipping, Lloyd’s Register of Shipping, Nippon Kaiji Kyokai, Russian Maritime Register of Shipping, Registro Italiano Navale.
International Conventions and Agreements
Malta has practically adopted all the major international maritime conventions including: CLC 92; Tonnage 69; COLREG 72; Fund 92; INMARSAT; Load Lines 66 (including 1988 Protocol); London Dumping 72; MARPOL 73/78; SOLAS 74/78 (including 1988 Protocol); STCW 78 (including 95 amendments); SUA 88 (including SUA Protocol 1988); SAR 79; FAL 65; OPRC 90 and OPRC-HNS Protocol 00 and ILO Conventions Numbers 8, 16, 22, 53, 73, 74, 87, 98, 108, 138, 147 (including 1996 Protocol and 180).
Malta has also entered a bilateral agreement with the United States of America exempting shipping(and air) operations from income tax, thus making it possible for Maltese companies owning or operating ships calling at US ports to claim an exemption from the 4% gross transportation tax levied on transportation income attributable to transport which begins or ends in the USA. Malta also has a reciprocal fleet agreement with the USA on the carriage of empty containers in the US coastwise trade exempting Malta flagships from the relative fees of the US Jones Act. Similar agreements with the Republic of China and the Russian Federation have also been concluded. Maltese ships trading to Greece benefit from an exemption from taxes on their earnings by way of reciprocity.
Mortgages
Registration, transfer, amendment and discharge of mortgages may be affected immediately on presentation of the relative documents to the Registrar. The 1986, 1988, 1990, 2000 and 2004 amendments introduced important safeguards to the mortgages of Maltese ships making financing more attractive. However, the term ‘mortgages’ is not defined under our law and thus, one has to refer to foreign sources.
Sultana Legal will inform and direct its clients about the registration procedure that is involved and will even prepare the necessary documents in accordance with its client’s wishes and business.
Tax exemptions for shipping organisations
Shipping organisations are entities, which include Malta registered limited liability companies, whether private or public, partnerships, trusts, foundations, foreign corporate bodies or other entities which have established a place of business in Malta, and which are licensed by the Registrar-General of Shipping and Seamen to carry out one or more of the mentioned activities in the Merchant Shipping Act Chapter 234 under article 84Z.
Exemption from Income Tax
A number of tax exemptions are listed hereunder, as follows:
- no further income tax shall be charged or payable on the income, to the extent that such income is derived from shipping activities of a licensed organisation; or
- no further income tax shall be charged or payable on any gain arising on the liquidation, redemption, cancellation, or any other disposal of shares, securities or any other interest, including goodwill, held in any licensed organisation owning, operating, administering or managing a tonnage tax ship.
The above exemptions apply as long as all relevant registration and tonnage taxes are paid by the owner and that in respect of which such exemption of tax is applied, separate accounts were kept, clearly distinguishing the payments and receipts by the organisation concerned in respect of their activities.
Moreover, no income tax shall be payable by any person on interest or other income payable to him in relation to any financing of shipping operations or the financing of any tonnage tax ship. With respect to persons resident in Malta, this exemption is applicable only to persons who are licensed banks, credit or financial institutions.
In the case where a licensed shipping organisation, has no income whatsoever or has no income other than income from their activities, a declaration in this regard is to be submitted to the Commissioner of Inland Revenue.
Other exemptions:
- the regulations on exchange control shall not apply to any licensed shipping organisation, in relation to any transaction connected with the ownership, operation, administration, management, purchase or financing of a tonnage tax ship, or any other activity, or transaction ancillary thereto;
- persons not resident in Malta who are officers or employees of a licensed shipping organisation, and the organisation in respect of such officers and employees, shall be entitled to be exempt from Social Security;
- exemption from duty with respect to:
• the registration of a tonnage ship;
• the issue or allotment of any security or interest of a licensed shipping organisation or the purchase, transfer assignment, or negotiation of any security or interest of any licensed shipping organisation or other company;
• the sale or other transfer of a tonnage tax ship or any share thereof;
• the registration of any mortgage or other charge over or in relation to any ship or licensed shipping organisation, any transfer or discharge thereof, and receipt relative thereto, and any assignments granted in connection therewith; or
• the assignment of any rights and interests, or the assumption of obligations in respect of any ship or share thereof.
Sultana Legal will guide its clients accordingly as to what exemption shall be applied and under what circumstances by taking into consideration its client’s needs and type of business.