Whether for corporate, pleasure or commercial use, an aircraft is a significant investment made up of time, effort and money.  Abacus Aviation can assist with the diverse requirements essential for effective ownership, planning and operation of an aircraft, our tax efficient ownership structures are tailored to each client’s individual needs and requirements.  

Abacus is one of the longest established and reputable service providers on the Isle of Man, our group has established a track record of more than 40 years of excellence in providing fiduciary and administration services. As part of ongoing plans to strengthen our yacht proposition and expand our team in Malta, we are pleased to offer clients an extended range of jurisdictions for aircraft registration purposes.

ABACUS - ISLE OF MAN OFFICE

Background to the Isle of Man Aircraft Register

The Isle of Man Aircraft Register is the largest dedicated corporate aircraft register in Europe. Since its inception on 1 May 2007, the Island has registered in excess of 800 aircraft and focuses on the high quality end of the privately owned business jet/twin turbine helicopter aircraft industry. 

Why register an aircraft on the Isle of Man Aircraft Register?

It is no surprise that the registry has been such a success; it offers a number of benefits to any aircraft owner registering their asset in the Island:

-       high regulatory standards

-       a sound international reputation

-       competitive scheme of charges

-       secure mortgage register

-       English common law

-       politically neutral “M” registration prefix which can be transferred between different aircraft as a ‘cherished registration’

-       customer focused service

-       specialist business infrastructure

Even though the Island is considered ‘offshore’ and regulates its own affairs separate to that of the UK or EU and is formally recognised as a Crown Dependency, it is still considered part of the EU for VAT and Customs duty purposes via Protocol 3 of the Treaty of Accession of the UK to the EEC signed in 1972.  This affords owners registering their aircraft in the Isle of Man the unique benefit of holding their aircraft through an offshore special purpose vehicle, trust or partnership, as well as affording them the ability to import the aircraft into the EU for VAT purposes allowing free circulation within the EU.

The Isle of Man is, therefore, an attractive and effective proposition, which offers the private aircraft industry an offshore ‘one stop shop’ for aircraft registration, ownership structuring and VAT importation services, attributes which few other ‘offshore’ aircraft registries possess.

ABACUS – MALTA OFFICE

Malta as a registration jurisdiction

It is a well-known fact that the Maltese Maritime register is the largest in Europe. With a view to following closely in its footsteps, Malta enacted the Aircraft Register in 2010. The 2010 Act addresses various important aspects of the aviation industry with the most prominent aspects being the registration of aircraft and the registration and enforcement of aircraft mortgages.

Malta has ratified the Cape Town Convention offering lenders unrivalled security in enforcing their rights. The Cape Town Convention provides financiers with additional self-help remedies, without recourse to the courts, in cases of insolvency of the borrower or operator. This makes the Malta Aircraft Register one of the most attractive within the EU, as anyone, irrelevant of EU National status or not, may register an aircraft in Malta. The Malta Aircraft register also allows the possibility to register an aircraft still under construction as well as allowing fractional ownership and trustee interests.

The procedure for the registration of aircraft in Malta is fast and efficient, with the costs associated with company formation and aircraft registration being relatively low.

Full imputation system

Malta has, since the introduction of income tax, adopted a full imputation system of taxation. The general rule under Maltese law is that dividends paid by a Maltese company to its shareholders are taxed at the rate of 35%. However, the applicable rules of the full imputation system ensures no dividend received by a shareholder is taxed twice.

The imputation system therefore allows the shareholder to deduct the amount of tax paid by the Maltese company from the tax paid by the shareholder on the gross dividend received. The profits of a Maltese company are therefore only taxed once and effectively no further tax is payable by the shareholder on distributions.

Malta also boasts an extensive double tax treaty network with over 70 treaties in place. 

VAT

Another interesting tax aspect in Malta which is popular with the private aircraft sector is with respect to the VAT treatment of aircraft leases in Malta. For VAT purposes aircraft leases are considered to be a supply of a service which is subject to VAT at the standard rate (currently 18%) in Malta.

As it is very difficult to identify beforehand the movement of an aircraft in order to determine the period that an aircraft is used within EU airspace and the time that it is used outside the EU the VAT Authorities carried out an extensive study to review how the percentage portion of the lease based on the time that the aircraft is used in the airspace of the EU is calculated.

The outcome of this study determined that the standard rate of VAT is to be applied on the established percentage of the lease, deemed to be related to the use of the aircraft in EU airspace. Therefore depending on the range of an aircraft the amount of VAT due on a leasing arrangement may be as low as 5.4% VAT, representing significant VAT savings.

Whether you need a straightforward holding company or a special purpose vehicle, we have significant experience in a wide range of international ownership services, managing risk tax and privacy issues for aircraft owners.