The benefits of registering aircraft in Malta

Katrina Abela, founder of Vaia Legal, explains why Malta is so popular with owners, operators and financiers.

The benefits of registering aircraft in Malta

Katrina Abela, founder of Vaia Legal, explains why Malta is so popular with owners, operators and financiers.

MALTA HAS EMERGED as a premier location for aircraft registration, offering a robust legal framework, tax incentives and a highly efficient regulatory environment for operators, owners and financiers worldwide. With its strategic location in the Mediterranean, a strong history of aviation regulation, and a commitment to adhering to international standards, Malta has positioned itself as a leading jurisdiction for aircraft registration. This article explores the benefits, process, and key considerations for registering an aircraft in Malta.

The country offers a streamlined and efficient aircraft registration process, with relatively low costs for both company formation and aircraft registration. The Maltese flag enjoys global recognition, particularly for its esteemed reputation in the maritime sector. There are several compelling reasons why Malta is a preferred jurisdiction for establishing aircraft operations:

  • Strategic location and stability Malta is a politically stable EU jurisdiction located at the heart of the Mediterranean, with favourable weather conditions throughout the year. Its central position makes it an ideal aviation hub, offering excellent connectivity to major global destinations and strong links with the Middle East and North Africa.
  • EU Member State advantages Malta is a full member of the European Union (EU), meaning that aircraft registered in Malta are recognised across all EU member states. This opens up significant operational and commercial opportunities for aircraft owners, lessors and operators within the EU aviation market. Furthermore, registration under Malta offers the advantage of EU aviation regulations, which are generally seen as among the most robust and internationally respected in the world.
  • Internationally recognised regulatory frameworkMalta’s aviation industry is governed by the Civil Aviation Directorate (CAD) of the Transport Malta Authority. The CAD operates in accordance with international standards set by the International Civil Aviation Organization (ICAO) and the legal framework is built to be flexible and investor-friendly, with Malta adopting modern and efficient aircraft registration procedures that comply with both EU regulations and ICAO guidelines. In addition, Malta is also an European Union Aviation Safety Agency (EASA)-certified state and holds an FAA Category 1 rating, adhering to the highest international standards for aviation safety and security.
  • Robust legal framework and financial servicesMalta boasts a well-established legal system that prioritises the rights of financiers with mature legislation on trusts and asset protection. The island is also home to a strong network of legal and financial professionals with extensive experience in aviation and international business.
  • Favourable taxation framework Reduced VAT rates. Malta applies VAT at a reduced rate for aircraft leasing, which is highly advantageous for aircraft lessors. In some cases, aircraft leasing transactions can be structured to minimise VAT exposure.

The island offers a favourable tax regime for aircraft owners and operators. Aircraft registered in Malta may benefit from various tax incentives, including:

- Corporate tax benefits: Malta’s corporate tax rate is competitive, and owners and operators of aircraft may also benefit from the country’s full imputation tax system, which allows for the refund of a portion of the tax paid on profits.

- No inheritance tax: Malta does not impose inheritance tax, making it an attractive option for individuals looking to transfer aircraft assets to heirs.

  • Ease of registration and efficient process The process of registering an aircraft in Malta is straightforward and efficient, with clear timelines and minimal bureaucracy. Aircraft owners can expect a smooth process for initial registration, with quick turnaround times and a high level of service from the relevant authorities.
  • Skilled and multilingual workforce Malta has a highly efficient, skilled, and cost-effective workforce, with English as one of its official languages, facilitating seamless communication and operations.
  • Cost efficiency Operational costs in Malta are generally lower compared with most other European countries, making it a cost-effective choice for aircraft operators.
  • Pro-business environment Malta’s government has a clear, forward-thinking policy that supports business development, including the aviation sector and its various sub-sectors.
  • Award-winning airport Malta International Airport, open 24/7, is highly regarded and has been recognised in Europe for its excellence in service and operations.

Considerations for aircraft owners and operators

While Malta offers numerous advantages for aircraft registration, there are a few considerations to keep in mind:

  • Aircraft maintenance Malta requires aircraft owners and operators to adhere to the EU regulations on aircraft maintenance. The country is home to several certified maintenance, repair, and overhaul (MRO) providers, which can offer quality services to maintain aircraft in compliance with regulatory standards.
  • Flight crew licensing Pilots and crew members operating aircraft registered in Malta must hold valid EASA licenses. This is particularly important for commercial operators, as flight crew requirements must comply with both EU and ICAO standards.
  • Ownership structures While registering an aircraft in Malta is straightforward, structuring the ownership of an aircraft can be more complex. Many aircraft owners opt for leasing arrangements or Special Purpose Vehicles (SPVs) to optimise tax efficiency and ensure flexibility in ownership. Malta also offers cell structures which help secure multiple assets in one efficient structure.

Who is eligible to register an aircraft?

Qualifying registrants may register aircraft in Malta in any one of the following capacities:

  • An owner operating an aircraft.
  • An owner of an aircraft under construction or temporarily not being operated or managed.
  • An operator of an aircraft under a temporary title.
  • A buyer of an aircraft under a conditional sale or title reservation agreement authorised to operate the aircraft.
  • A trustee for the benefit of beneficiaries

When registering an aircraft, the registrant may register several securities in favour of any person (legal or natural) with an interest, such as:

  • A mortgage.
  • A priority notice.
  • A deregistration power of attorney.
  • An irrevocable deregistration and export request authorisation.
  • Registration of interests in the international registry.

AOC applications

Vaia Legal currently supports a wide range of operators that have established themselves in Malta. Authority guidelines stipulate a general six-month time period for obtaining AOC, however this is assessed on a case-by-case basis as necessary.

Customs importation

Customs importation of an aircraft into the European Union, through Malta is available for both privately operated aircrafts as well as commercial operated aircrafts, as detailed below.

Commercial use

This procedure is characterised as one of full importation. In this case It is necessary for the aircraft to be physically present in Malta in order to undergo the required VAT and customs procedures. It is possible for the majority of the paperwork to be processed prior to the aircraft’s arrival in Malta and thus minimal turnaround time of a few hours is ensured.

Regarding the VAT regulations currently in force, aircraft which are put on an AOC are considered to be “aircraft destined to be used by airline operators for reward chiefly for international transport of passengers and/or goods” and therefore favourable conditions apply when importing such an aircraft. These are as follows:

  • VAT is not chargeable when importing, acquiring and/or leasing and aircraft destined to be put on an AOC.
  • VAT is not chargeable on services consisting of the modification and maintenance of the aircraft.
  • VAT is not chargeable on the supplies of good for the fuelling or provisioning of the aircraft.

Once this full importation procedure has been finalised, the aircraft will be deemed to be in free circulation with the European Union.

Private use

The procedure for the full importation of a privately operated aircraft into the EU via Malta is subject to the payment of VAT set at a rate of 18% on the value of the aircraft upon importation. An importation of an Aircraft destined for private use must complete the VAT payment procedure before having the aircraft imported. These two procedures are done back-to-back, and once the aircraft is in Malta, down time is minimal.

Registering security interests

Under the Aircraft Registration Act (Chapter 503 Laws of Malta), aircraft are a particular class of movables separate and distinct from the assets and estates of their owners. A mortgage can be registered in the Aircraft Register as security for the payment of a debt. In such a case, should there be bankruptcy or insolvency proceedings for the owner, the aircraft and all actions and claims to which the aircraft may be subject shall have preference over all other debts of the owner’s estate. By means of a registered mortgage, an executive title is created whereby the secured debt is certain, liquidated, and due, or where the maximum secured sum is expressly stated in the mortgage instrument and recorded in the register.

Before registering a mortgage, a creditor can register his privilege on any part, appurtenance, or accessory of an aircraft. A seller reserving ownership rights on an aircraft, or any part of such aircraft, may also register his interest in the Aircraft Register. An aircraft is considered to include the airframe, equipment, engines, and replacement engines. However, in cases where the engine attached to the airframe is not owned by the same owner, the security does not cover such an engine.

When registered, a mortgage entitles the mortgagee to a set of remedies which can be executed in the event of default on the part of the mortgagor, upon giving notice in writing to the debtor and without the need to initiate any court proceeding. The mortgagee may:

  • Take possession of the aircraft;
  • Sell the aircraft or any share of it on which the mortgage is registered;
  • Do all things in the name of the owner to maintain the status and validity of the aircraft registration;
  • Receive payment of the price, lease payments, and any other income generated from the operation and management of the aircraft;
  • Secure the deregistration of the aircraft
  • Procure the export and physical transfer of the aircraft from the territory where it is situated.

Furthermore, a foreign mortgage may be recognised under Maltese law as a mortgage with the status and all the rights and powers specified, subject to certain conditions.

Special privileges on aircraft

The following debts enjoy priority on an aircraft without the need for registration, in the ranking listed below, and any debts secured by a mortgage shall rank after such debts:

  1. Judicial costs incurred in respect of the sale of the aircraft and the distribution of the proceeds thereof pursuant to the enforcement of any mortgage or other executive title;
  2. Fees and other charges due to the Director General arising under the applicable law of Malta in respect of the aircraft;
  3. Wages due to crew in respect of their employment on the aircraft;
  4. Any debt due to the holder of a possessory lien for the repair or preservation of the aircraft to the extent of the service performed on and value added to the aircraft;
  5. The expenses incurred for the repair or preservation of the aircraft to the extent of the service performed on and value added to the aircraft; and
  6. Wages and expenses for salvage in respect of the aircraft.

A person in possession of an aircraft and enjoying a possessory lien shall not be forced to release the aircraft until all sums due to him are unconditionally discharged or otherwise secured to his satisfaction. In any such case, he shall rank first on such security as may be granted.

The two debts listed below are considered registrable privileges as they enjoy preference and the status of such right in relation to the aircraft once registered in the International Registry, and only if a claim is created by the owner of the aircraft:

  • Taxes, duties, and/or levies due to the Government of Malta in respect of the aircraft; and
  • Wages and expenses for assistance or recovery in respect of the aircraft.

Irrevocable Deregistration and Export Request Authorisations (IDERAs)

Under Maltese aviation law, Irrevocable Deregistration and Export Request Authorisations (IDERAs) are legal instruments that allow parties holding an interest in an aircraft, such as lenders or lessors, to request its deregistration and export from the Malta Aircraft Register in cases of default or specified conditions. The purpose of an IDERA is to protect the rights of these parties by enabling swift action to recover assets without the aircraft owner's consent, offering security to financial institutions involved in aircraft financing or leasing.

Deregistration Power of Attorney (DPOA)

The Deregistration Power of Attorney (DPOA) is another crucial legal instrument in the Maltese aviation industry that allows a party with an interest in an aircraft, such as a lender or lessor, to designate another party to request the deregistration of the aircraft from the Malta Aircraft Register. This mechanism is typically used in cases of default or insolvency, ensuring that creditors can swiftly take action to protect their assets without the owner’s consent. The DPOA must be recorded in the Malta Aircraft Register, where only one DPOA can be in effect per aircraft, ensuring clarity and streamlined enforcement.

DPOAs in Malta are aligned with international standards, particularly the Cape Town Convention, and provide an added layer of security in aircraft financing and leasing transactions. By establishing a regulated process for recording and executing DPOAs, Malta reinforces its position as a leading jurisdiction for aircraft registration and legal enforcement, offering transparency and protection to both aircraft owners and creditors.

Prohibitory notice clauses

In Maltese aviation law, prohibitory notice clauses serve as a legal mechanism to prevent certain actions, such as the deregistration or export of an aircraft, pending the resolution of a dispute or the enforcement of a claim. These clauses are commonly used in cases where an aircraft owner or another interested party seeks to block the execution of actions related to an aircraft’s registration, typically in the context of unpaid debts, breach of contract, or other contractual disputes. The prohibitory notice, once issued, prevents any changes to the aircraft’s registration status or its removal from the Malta Aircraft Register without prior court approval or resolution of the underlying issue.

The procedure for issuing a prohibitory notice in Malta is outlined under the Aircraft Registration Act. In practice, a party seeking to prevent the deregistration or export of an aircraft must file a request with the court, providing evidence of their claim and the potential harm they may suffer if the action is not stopped. If the court finds merit in the application, it may issue a prohibitory notice to halt the deregistration process until the matter is resolved, ensuring that the rights of the claimant are protected.

However, the effectiveness of a prohibitory notice is not unlimited. In the case IDERAs, which are granted to creditors or lessors, the enforceability of such notices can be limited. As seen in recent Maltese case law, such as the Air X Charter and Hi Fly rulings, the court has upheld the enforceability of IDERAs even when a prohibitory notice is in place, emphasising the special status of IDERAs under international conventions like the Cape Town Convention. This ensures that creditors’ rights to de-register aircraft for non-payment or other breaches are not easily obstructed by prohibitory notices, maintaining a balance between protecting the rights of the parties involved and ensuring the swift resolution of disputes.

International interests

Malta’s implementation of the Cape Town Convention means that Malta has accepted the creation of International Interests registered in the International Registry, which are recognised by all contracting states to the Convention. Under the Convention, interests or privileges in aircraft, aircraft engines, or helicopters may be registered in the International Registry, and International Interests enjoy priority ranking over national security interests, irrespective of the date of registration.

International Interests in airframes, helicopters, or aircraft engines which are:

  • Granted by the chargor under a security agreement;
  • Vested in a person who is the conditional seller under a title reservation agreement; or
  • Vested in a person who is the lessor under a leasing agreement may be registered in the International Registry and shall be regulated by the First Schedule to the Malta Aircraft Registration Act.

Since International Interests take priority over national security interests registered in the National Aircraft Register, and since such International Interests have full legal force in Malta, it is not necessary to re-register them in the Maltese National Aircraft Register. Additionally, once an International Interest has been registered in the International Registry, a prohibitory notice can be filed in the National Aircraft Register, effectively prohibiting the registration of security interests in the national register without the express consent of the creditor in question.

Financing and deregistration

Is there a requirement for a governing law of mortgage?

Mortgaging of Aircraft Order 1972 as applied to the Isle of Man.

What is most common choice of law for financings?

It is dependent on the preference of the lender and other factors. Typically, registered mortgages in the Isle of Man are governed by English, Isle of Man or New York law.

Can financiers file a priority notice of their interests?

Yes. A Registry fee of £150 applies.

Can financiers file a Deregistration Power of Attorney / Irrevocable Deregistration Power of Attorney (IDERA)?

Yes. The Cape Town Convention became operational on the Isle of Man from January 1st 2018.

Is there a public mortgage registry?

Yes. A search of the Isle of Man Register of Aircraft Mortgages can be requested online at: https://ardis.iomaircraftregistry.com

Is it easy for financiers to perfect a mortgage?

A completed Form 26 accompanied by a certified copy of the mortgage document is required to register a mortgage in the Isle of Man Register of Aircraft Mortgages. All documents can be submitted electronically. A fee of £425 applies.

How long is the period during which a moratorium may be imposed in the event of a lessee or borrower insolvency?

Relevant and appropriate legal advice would need to be sought in this regard. The Aviation Business Directory lists a number of legal professionals based in the Isle of Man. The directory can be accessed here: https://www.iomaircraftregistry.com/about-us/isle-of-man-aviation-business-directory/

In the case of bankruptcy or insolvency are aircraft typically deemed to be part of the lessee’s property?

Legal advice would need to be sought in this regard. The Aviation Business Directory lists a number of legal professionals based in the Isle of Man. The directory can be accessed here: https://www.iomaircraftregistry.com/about-us/isle-of-man-aviation-business-directory/

Does the registry / aviation authority require a notarised/authenticated document to deregister an aircraft?

No.

What are the requirements for deregistration of an aircraft?

The following are required:

  • Form 11, Application for Deregistration signed by an authorised signatory of the registered owner, together with evidence of signing authority for such person. Electronic copies are accepted;
  • Discharge of registered mortgage(s) (if applicable);
  • Revoking of recorded IDERA (if applicable);
  • Release of Letter of Undertaking (if applicable);
  • Settlement of any outstanding registry fees prior to deregistration.

All documents and applications can be submitted electronically.

Registry Publication RP 12, Export Certificate of Airworthiness and De-registration of aircraft provides additional guidance. Further information is available at: https://www.iomaircraftregistry.com/media/1170/rp12-export-c-of-a-and-de-registration-of-aircraft.pdf

What are the requirements for deregistration of mortgage?

A completed Form 28, Application for Discharge of Mortgage and a copy of a deed of release or equivalent document. A Registry fee of £300 per mortgage discharge applies. All documents can be submitted electronically.

Cape Town

Has the jurisdiction ratified the Cape Town Convention?

Yes. Further information is available at: https://www.iomaircraftregistry.com/services/cape-town-convention-and-idera/

What date did it come into effect?

January 1st 2018.

Which Cape Town declarations have been made?

The Annex to RP60 (Guidance on the Application of the Cape Town Convention to the Isle of Man) provides a table showing the options taken by the Isle of Man for each provision in the treaty, and how these can be traced to the content of the Regulation. Further information is available at: https://www.iomaircraftregistry.com/media/1548/rp60-guidance-cape-town-convention.pdf

Which insolvency regime has been chosen?

Neither Option A nor Option B were selected, so Isle of Man insolvency legislation applies.

Are buyers eligible for the OECD Aircraft Sector Understanding discount?

We recommend seeking specialist legal advice on this issue.w

Importing and exporting aircraft

The aircraft does not need to be imported into the Isle of Man in order to be registered with IOMAR.

This subject is not an IOMAR aircraft registration issue, but one of VAT and customs. Specialist tax advice will be required. Further information is available at: https://www.iomaircraftregistry.com/about-us/isle-of-man-aviation-business-directory/

Is an Export Certificate of Airworthiness, licence of permit required to export an aircraft?

No, not from an Isle of Man Aircraft Registry perspective. Registry Publication RP 12, Export Certificate of Airworthiness and Deregistration of aircraft provides guidance on obtaining an Export Certificate of Airworthiness, if one is requested by the civil aviation authority of the aircraft’s new jurisdiction of registration. Further information is available at: https://www.iomaircraftregistry.com/media/1170/rp12-export-c-of-a-and-de-registration-of-aircraft.pdf

Specialist tax advice should be sought in respect of any physical export of the aircraft.

How much does it cost to get an Export CoA and how long does it take to get one?

An Export C of A can only be requested before an aircraft is deregistered from the Isle of Man Aircraft Registry and only if the aircraft holds a current Isle of Man issued C of A.

An Export C of A can be issued without the need for a survey. The issue date on the Export C of A will be the same as the C of A that was issued as the result of the last aircraft survey.

If a more recent issue date is needed on the Export C of A, a survey can be scheduled within seven working days from application.

There is a fee of £500 for an Export C of A, and if a survey is required, there will be: surveyor’s travel time; work hours; expenses; and airfares to be charged, where applicable.

Are there significant taxes or fees involved in exporting aircraft?

See above.

Judgements and arbitration

Are any legislation or regulatory changes planned?

We have an ongoing project to update and enhance our civil aviation legislation. A new Aircraft Registration and Marking Order recently came into effect on August 1st 2022.

The following new Orders are anticipated in 2024/25:

  • Carbon Offsetting and Reduction Scheme for International Aviation;
  • Airworthiness;
  • Flight Operations;
  • Safety Information Protection;
  • Ramp Inspection;
  • Aircraft Environmental Standards.

Aircraft Operating Certificates

Not applicable – aircraft registered in the Isle of Man are prohibited from undertaking Commercial Air Transport.

Official Guide to Aircraft Registration 2025

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