Maltese Tonnage Tax Consultancy

We provide comprehensive advisory services on all matters, deliverables and aspects of the Maltese tonnage tax regime including the structuring of shipping entities compliant therewith. We assist clients on the incorporation, management and compliance aspects of shipping organizations to own and operate tonnage tax ships in line with the applicable tonnage Regulations.

Following the publication on the 19 th  December 2017 of Commission Decision on State Aid (SA.33829(2012/C) with respect to Maltese tonnage tax scheme and other State measures in favour of shipping companies and their shareholders, the Merchant Shipping (Taxation and other Matters Relating to Shipping Organizations) Regulations were amended with a view to bring the Maltese tonnage tax regime in line with the Commission Decision. With effect from 01 st  May 2018 a system of registration of shipping organizations that wish to benefit from the Maltese tonnage tax came into force.

Ships registered or to be registered in Malta are not automatically granted the status of a tonnage tax ship upon provisional registration. A number of eligibility criteria must be met for a ship to be granted tonnage tax status and to maintain such status. Qualifying shipping organizations are now issued with a tonnage tax status certificate upon settlement of the tonnage tax for any particular year.

A shipping organization must have assumed the risks and responsibilities related to the operation of a tonnage tax ship or to the carrying out of shipping activities. Ships registered in the ownership of foreign body corporates cannot participate and benefit from the Maltese tonnage tax regime. Similarly, shipping organizations shall not qualify for tonnage tax benefit where the ship owned by such shipping organization has been chartered out on bareboat charter terms unless specific conditions are met. The new Regulations have also expressly excluded certain ships from the Maltese tonnage tax regime. As a general rule for a ship to qualify as a tonnage tax ship it must be engaged in shipping activities, that is, the international carriage of goods or passengers by sea in terms of the EU Maritime State Aid Guidelines and approved as such by the Minister in terms of the Regulations.

A new concept of “Union Ship” has been defined in the Regulations and refers to a ship registered under the laws of a Union State. Ships registered in any Union State other than Malta shall qualify as “Union Ship” if an amount equivalent to the Malta tonnage tax is paid to the Registrar- General with provision for relief in respect of any tonnage tax imposed under the laws of such Union State where the ship is registered.

As was the case under the old tonnage tax regime, if all the conditions and eligibility criteria are met and all relevant tonnage taxes are duly paid by the shipping organization, then no further tax under the Income Tax Act shall be charged or payable on the income of that shipping organization, to the extent that such income is derived from shipping activities. Furthermore, no further tax under the Income Tax Act shall be charged or payable on any income, profits or gains of a shipping organization derived from the sale or other transfer of a tonnage tax ship which had been acquired and sold whilst under the tonnage tax system or from the disposal of any rights to acquire a ship which when delivered or completed would qualify as a tonnage tax ship.

Shipping organizations which have no income other than income from shipping activities must now submit an annual return to the Commissioner for Revenue and the Registrar General in lieu of a tax return required in terms of the Income Tax Management Act. On the 01 st  April 2019 MSD Notice 150 brought into effect the reporting obligations contained in the Regulations. Shipping organizations operating a tonnage tax ship and approved as such shall submit an annual declaration to the Commissioner for Revenue and the Registrar General in the forms set out in the Annexes to the aforesaid notice.