Malta being an island in the central part of the Mediterranean has always been a centre of trade with a maritime tradition. Whilst Malta's strong maritime tradition has meant that foreign vessels have long been registered in Malta, the last few years have seen the island's open ship registry develop swiftly. In this highly competitive market place gross tonnage of Maltese-registered ships has significantly increased and Malta is amongst the first rank of maritime nations in terms of ship registrations.
All sectors of maritime activity in Malta are co-ordinated by the Malta Maritime Authority which operates a comprehensive maritime centre adequately supported by the right administrative, legal, fiscal and infrastructure framework. The Malta Maritime Authority's objective is to internationally enhance Malta's image ensuring respect for the Maltese flag and yet lure ship owners – and ship financiers – to registering vessels in Malta. In order to be eligible under the Malta flag, a vessel must be wholly owned by a citizen of Malta or by a company established under the laws of Malta.
However, it is recommended that a Maltese shipping company be registered for each vessel.
Vessel registration under the Maltese flag and the operation of ships is regulated by the Merchant Shipping Act (Chapter 234 of the Laws of Malta originally enacted in 1973) which is a law based on the UK legislation but subsequently revised and amended. Any type of vessel from pleasure yachts to oil rigs may be registered under the Malta flag. It is also possible under the Merchant Shipping Act for ships under construction to be registered.
A vessel is first registered provisionally under the Malta flag for six months, extendible for a further period of six months during which period, all documentation necessary for permanent registration must be finalised.
Full registration is then obtained by the delivery of the relevant documentation and this has to be effected within the six months of provisional registration.
Bareboat Charter Registration
The Merchant Shipping Act also provides both for bareboat charter registration of foreign ships under the Malta flag and for the bareboat charter registration of Maltese ships under a foreign flag. Vessels so registered enjoy the same rights and privileges and have the same obligations as any other ship registered in Malta.
A bareboat charter registration lasts for the duration of the bareboat charter or until the expiry date of the underlying registration, whichever is the shorter, but in no case for a period exceeding two years. Registration may however be extended.
Provisional or permanent registration of a vessel under the Maltese flag may be used as security for a debt by means of a mortgage.
International banks have found the Maltese ship mortgage satisfactory. The Maltese mortgage finds its origin in the English mortgage and has similar powers, but has been supplemented with additional powers and status from the Civil Law system applying in Malta. The Maltese mortgage for instance, is an executive title and can be enforced without the need for a judgment; the mortgage has rights in relation to the registry in so far as certification of the ship and maintenance of the status of the registration is concerned. A ship cannot be sold or re-mortgaged without the consent of the mortgagee and the mortgage attached to the proceeds of insurance and mishaps.
The priority of a registered mortgage is established at both the date and the time of the registration. A foreign mortgage will be recognised as a mortgage and will have the status, rights and powers of a Maltese mortgage if it satisfies the requirements listed in the Merchant Shipping Act.
Amongst the most important advantages of a Maltese mortgage one finds the following:
- Mortgage is well protected and is high up in the list of debts given priority in the distribution of the proceeds of a forced sale;
- Registered mortgage attached to the ship in respect of which it is registered until it is discharged;
- No document stamp duty is payable in respect of mortgage instruments;
- Mortgage on a Maltese ship is widely recognised and enforced.
VAT Treatment of Yacht Leasing
For the purpose of VAT, the lease of the craft is a supply of services with the right of deduction of input VAT by the lessor, where such right applies. This supply of services is taxable according to the use of the craft, attributed within the territorial waters of the European Union (EU, provided that the lessor is a Maltese company - including a commercial bank) which is leasing the craft to any Maltese or non-Maltese person or company.
Due to the nature of the use of pleasure crafts, it is very difficult to trail the movements of pleasure crafts in order to determine the period that the craft spends within the territorial waters of the EU and the time it spends outside the EU. In this regard, The VAT department have issued guidelines that establish the estimated percentage portion of the lease based on the time that the craft is used within the territorial waters of the EU. These percentages are set according to the length of the craft and its means of propulsion (power or sailing).
Remote Gambling in Malta
With the publication of the Remote Gaming Regulations in 2004, Malta established a comprehensive legislative framework aiming to provide a secure on-line environment to players and simultaneously guarantee remote gaming operators a competitive framework.
These regulations were published after extensive consultation with the operators resulting in a flexible legislative instrument that while setting down the fundamental regulatory principles leaves sufficient space and scope to deal with future requirements. Malta has set new standards for operators who want to locate their business in a stable and reputable jurisdiction to obtain a competitive edge within their market.
Today under the regulatory watch of the Lotteries and Gaming Authority, the present gaming and gambling situation is a far from that present only a few years ago. Each operator requires a licence issued by the authority and is obliged to comply with ongoing reporting standards. Stringent licensing criteria intended to ensure that only those who are fit and proper are considered for licensing accompanied by certification and review procedures helps ensure that abuses of the system are avoided and the interests of customers are safeguarded.
The local regulatory system provides for four separate classes of licences depending on the nature of the operator's intended activity.
- Class 1: For operators managing their own risk on repetitive games. This class covers casino-type games, skill games and online lotteries.
- Class 2: For operators managing their own risk on events based on a matchbook. Under this class falls fixed odds betting, pool betting and spread betting.
- Class 3: Operators taking a commission from promoting and/or abetting games. This class includes P2P, poker networks, betting exchange and game portals.
- Class 4: To host and manage remote gaming operators, excluding the licensee himself. This is intended for software vendors who want to provide management and hosting facilities on their platform.
The ever increasingly presence and convenience of online services has led to the booming of the international online gaming market with the local industry taking a significant chunk thereof. This is mainly a result of:
- Malta's beneficial tax treatment of companies
- Malta's EU membership since May 2004
- An excellent financial services sector and a balanced regulatory framework
- Detailed procedures relating to control systems together with the financial protection of players
- International bandwidth security ensured by several fibre optic cables and a microwave connection to mainland Europe
- The availability of a skilled workforce at competitive salaries.
One should also consider that the European Commission is moving towards the removal of Member State gaming and gambling monopolies, being in violation of the Treaty, as the European Court of Justice has clearly held that any prohibition or obstacle to inter-Community trade must be applied in a consistent and methodical manner, and not giving undue preference to a domestic operator.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.