Overview

Malta has witnessed growth in recent years from its expertise as a hub for maritime activity to similar specialization in the aviation industry, which has attracted internationally renowned entities to the island.  In 2013, the government inaugurated the Safi Aviation Park, a $20 million project to allow the aviation and aerospace industry to continue flourishing.  As part of its economic development strategy, Malta supports diverse sectors in the aviation industry, including maintenance, repair, and overhaul (MRO) operations; back-office setups; R&D; and the production of aircraft parts.  Malta offers an attractive aviation register that includes a solid regulatory framework, including that for Air Operator Certificates, coupled with a pro-business approach.

Malta provides favorable taxation rules for aviation income.  Income from the ownership, leasing, or operation of an aircraft or aircraft engine used for or employed in the international transport of passengers or goods is deemed to be earned outside of Malta.  This could lead to zero tax leakage in Malta when applied to individuals who are resident but not domiciled in Malta.  The specific provisions also provide for accelerated depreciation - six years for aircraft airframe, engine, and overhaul, and four years for aircraft interiors and other parts – together with an exemption from the application of fringe benefit rules on income.  Furthermore, anyone leasing an aircraft carried by Maltese companies (along with performing other aviation-related activities) would benefit from the standard corporate tax rate and refund structure available in Malta.  Further benefits include taxes not withheld on the distribution of dividends or interest payments outside of Malta.

Leading Sub-Sectors

The government has incorporated its focus on the aviation industry as part of its national strategy to promote Malta as an aviation one-stop hub/cluster.  Recently revamped rules and regulations have introduced several novel concepts that aim to enhance not only aircraft registration, but also other sectors within the industry.  In particular, the country has embarked on an ambitious project to establish one of the largest aircraft registers in the world.  As of May 2021, Malta had 554 aircraft listed on its register, pursuant to the Aircraft Registration Act of 2010.  This piece of legislation implements both the Cape Town Convention on International Interests in Mobile Equipment and the Aircraft Protocol. The primary aim of the Act is to make Malta an attractive jurisdiction for both private and commercial aircraft registration within Europe, while also ensuring full adherence to the restrictions imposed by EU law on the registration and ownership of aircraft within the EU.  Impacts of the Act include:

• Recognition of fractional ownership of aircraft – ensuring partial owners are listed as such, thereby protecting their rights;
• Registration of aircraft under construction as soon as it is uniquely identifiable; and
• Offering the best environment for aircraft leasing and financing. 

Opportunities

Opportunities continue to exist for U.S. firms at all levels of aviation services and support, including MRO operations, aviation software, back-office support, and training,

Resources

Transport Malta: https://www.transport.gov.mt/aviation-502

Ministry for Transport, Infrastructure and Capital Projects (MTIP): https://mtip.gov.mt/