Advantages of Obtaining a Malta Air Operators Certificate (AOC)

An AOC is a European required certificate which allows an operator to perform specific operations of commercial air transport. The AOC will confirm that the operator in question has the professional ability and organisation to ensure the safety of operations specified in the certificate, as provided in the relevant provisions of EU or national law, as applicable.

Every holder of an AOC is also required to obtain an Air Operator’s Licence (“AOL”).

The aviation sector in Malta has in recent years experienced significant growth, with the Malta aircraft register listing over 500 aircrafts and the number of AOC holders approaching 70 in number. Some of the factors contributing to this recent growth in the aviation sector are listed hereunder.

Malta is an attractive option for air operators in the international carriage of passengers and goods for reward. The reasons for which commercial operators may opt for a Malta AOC are various:

Tax Incentives

Tax incentives are available to both companies and individuals. At a corporate level, all aircraft parts may be tax depreciated over an accelerated period of four years. No withholding tax is imposed on dividends, interest and royalties, including lease payments irrespective of the residence state of the lessor lessor. A special source rule deems income from international air transport as arising outside of Malta which therefore enables certain entities not to be subject to tax on such income. According to the Qualifying Employment in Aviation (Personal Tax) Rules (SL 123.168), a 15% personal tax rate applies to certain expats working in aviation provided that the income amounts to at least 45,000 euros (forty-five thousand euros) annually. The 15% tax rate applies for a consecutive period of five (5) years. Individual income from a qualifying contract of employment qualifies under these rules when it is received by a beneficiary in an eligible office (which include position of inter alia, CEO, COO, CFO etc.).

An individual may benefit from the 15% tax rate if the person satisfies all of the following conditions:

• The individual derives income subject to tax under article 4(1)(b) of the Act, being emoluments payable under a qualifying contract of employment, and received in respect of work or duties carried out in Malta, or in respect of any period spent outside Malta in connection with such work or duties, or on leave during the carrying out of such work or duties;
• The individual is protected as an employee under Maltese law, irrespective of the legal relationship, for the purpose of exercising genuine and effective work for, or under the direction of, someone else, is paid, and has the required adequate and specific competence, as proven to the satisfaction of the competent authority;
• The individual proves to the satisfaction of the competent authority that he is in possession of professional qualifications or experience;
• The individual fully discloses for tax purposes and declares emoluments received in respect of income from a qualifying contract of employment and all income received from a person related to his employer paying out income from a qualifying contract as chargeable to tax in Malta;
• The individual proves to the satisfaction of the competent authority that he performs activities of an eligible office; and
• The individual proves to the satisfaction of the competent authority that they are in receipt of stable and regular resources which are sufficient to maintain themselves and the members of their family without recourse to the social assistance system in Malta; they reside in accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in force in Malta; they are in possession of valid travel documentation; they are in possession of sickness insurance in respect of all risks normally covered for Maltese nationals for themselves and their family members. Furthermore, the individual must not be domiciled in Malta.

Ratification of the Cape Town Convention

The CTC established a centralised system for the registration of aircraft ownership, liens, leases and contracts, thus permitting financiers of Malta-registered aircraft ease of enforcement of their registered security rights in each jurisdiction signatory to the Convention. The CTC also establishes the right of owners of aircraft to grant an Irrevocable De-Registration and Export Request Authorisation (IDERA) to a secured party;

A Robust Aircraft Registration Act

The ARA introduced rules facilitating the registration of aircraft, and provides for a creditor-friendly body of laws meant to allow owners the possibility to grant mortgages and register international interests over aircrafts and engines (prevailing over Maltese-registered mortgages), Irrevocable De-Registration and Export Request Authorisations (IDERAs) to be filed, and for owner and lessor interests to be registered in the National Aircraft Register;

Costs for obtaining a Maltese AOC are competitive

Access to the Single Aviation Market

Malta being a member of the EU, Maltese AOC holders enjoy access to the single aviation market, as well as all open skies arrangements between the EU and others countries;

Timely Assistance

Obtaining a Maltese AOC is a structured process, split into well-defined stages. The Civil Aviation Directorate (CAD) maintains a 24-hour service, and an AOC can be obtained within approximately 3-6 months, provided all documentation is in order.

Maltese AOCs are issued in accordance with all EASA regulations and standards

Costs for acquiring premises as well as employing personnel in Malta, as may be required for the operation, are relatively low;

A portfolio of service providers 

There are various existing services providers and professional advisors to meet the need of air operators. Moreover, English is one of the official languages in Malta.