Accounting for Shipping Companies in Malta

Malta has a tradition in the shipping industry, as it is one of the most important economic sectors of this country. Various types of vessels are used for numerous activities, among which fishing and leisure. With respect to the latter, registering a yacht in Malta comes with various advantages, among which some are related to taxation.

Below, our accountants in Malta explain the main tax regulations applicable in the shipping industry. We offer tailored support to those who operate in this sector and need assistance in preparing the necessary accounting papers.

The main tax regulations applicable to Maltese shipping companies

The Income Tax Act is the main law applicable to natural persons and companies operating in Malta, however, when it comes to shipping businesses, these fall under specific rules gathered by the Merchant Shipping Regulations which were last updated in 2020.

One of the most important changes refers to the obligation of these companies to file audited financial statements with the Companies Register.

Our seasoned auditors in Malta can guide foreign investors who have opened shipping companies here and need accounting and audit services.

If you are interested in audit services in Malta, the procedure begins with collecting the required information from our clients. Then we can offer a quotation based on the specific requirements and type of company the service is sought for. Do not hesitate to inquire in order to obtain a personalized offer.

Taxes paid by shipping companies in Malta

When it comes to the taxation of Maltese shipping companies, it should be noted that these are exempt from the corporate tax compared to businesses in other industries. However, this levy is replaced by the tonnage tax, however, under specific circumstances, exemptions apply.

In order to establish tax liability and the taxes that need to be paid by a shipping company, it should be noted that it must define the activities such a business carries out. These are:

1. international carriage of goods by sea;
2. international carriage of passengers by sea;
3. chartering activities carried out by these companies;
4. operations of ships engaged in all the activities presented above.

The tonnage tax consists of a levy paid on annual basis and a registration fee that must be paid with the Malta Shipping Registry. The levy is calculated based on the tonnage of the vessel.

The European Commission approved Malta’s tonnage tax regulation for a period of 10 years starting with 2018.

Our accountants in Malta can explain how the tonnage tax applies. They can also help with the financial documents that need to be prepared by those operating such companies.

We also offer other services related to hiring employees in your shipping company.

In terms of compliance, monthly payroll in Malta requires submitting an FS5 form to the Commissioner for Tax and Customs, which registers the income, taxes, social security contributions (SSC), and maternity leave fund payments. However, the year’s end makes the mandatory regulatory administration more difficult. A company must file an FS3 form for each employee and an FS7 form for the business each year.

Financial documents that need to be filed by Maltese shipping companies

As mentioned earlier, a new regulation requires shipping companies to file audited financial statements starting with the financial year 2020.  The submission of the documents must be made no later than 42 days after the financial year has ended in order to avoid penalties.

Exceptions from this rule apply in the case of new companies, as well as in the case of shipping companies whose first accounting period has exceeded the 12 months period from the incorporation date, case in which their annual accounts have been approved in a shareholders’ meeting.

According to the Companies Law, the directors’ report associated with the audited financial statements exemption applies in the case of small shipping companies, where these must meet at least two of the following requirements:

• their balance sheets do not exceed 5 million euros (threshold applicable to all companies registered according to the Companies Law);
• their turnovers do not exceed 10 million euros (threshold applicable to all businesses falling under the provisions of the Companies Law);
• they do not have more than 50 employees.

For businesses to accurately and fairly portray their financial status in compliance with accounting rules, auditing is essential. This is also important as financial statements must be filed with the tax authorities and the Malta Business Registry for verification. For complete information on the purpose of this action, please contact our auditors in Malta.

Successful companies depend on stable employee-employer relationships. The performance of workers is assessed by the HR department which decides how they are rewarded. If financial compensation is provided, the payroll department will handle it. If you want to outsource payroll in Malta, however, our accountants can help you.

Taxation of employees in the maritime sector

When having a shipping company in Malta, it is essential to note that employees are taxed under different conditions than workers in other industries. Also, when referring to this sector of activity, it should be noted that the tax rules apply to:

• workers in the maritime industry;
• employees in the offshore oil and gas sector.

Their taxation implies a flat rate of 15% on the employee’s wage, provided he/she earns at least EUR 65,000 per year, fringe benefits excluded. Income above EUR 7 million is taxed at the standard rates.

Considering this tax is an incentive, it will apply for an initial period of 5 years under the Highly Skilled Individuals Rules in force since 2026. It is also possible to extend the scheme twice, by 5 years each time (up to 15 years in total).

Considering this also implies special computation of the wage, we recommend working with our local payroll specialists in Malta, who also have experience in the taxation of shipping companies.

Incentives for shipping companies in Malta

Setting up a shipping company in Malta comes with many advantages, some of which are granted in the form of tax incentives. For this purpose, one also needs to register a ship or even a yacht under the Maltese flag.

Here are some of the incentives available:

• a full tax exemption for private yachts and ships over 1,000 gross tons;
• an effective tax of 5% for the chartering of commercial yachts;
• a VAT exemption is also available for the same type of vessels;
• no tax restrictions upon the share sale or transfer of a shipping company registered under the Maltese flag;
• no tax restrictions on the sale or mortgage of Maltese ships.

Also, in certain ports, Maltese ships benefit from no trading restrictions and preferential treatment. The low registration fees for ships in Malta should also be included in these benefits.

Our Maltese accountants can also offer assistance in filing for the Yacht Leasing Scheme, if you have a yacht registered under this country’s flag.  We can also review the documents required by the Tax and Customs Administration when filing for any of these incentives.

You don’t need to worry about the preparation of the financial statements for your shipping company, as our accountants in Malta can take care of this aspect. We also invite you to watch our video:

Tailored accounting services for Maltese shipping businesses

In light of the current changes in the legislation, if you need accounting services, our Maltese specialists are at your service, so you don’t need to worry about having to comply with new regulations.
We have extensive experience in helping small and large companies in various industries, including tourism.

Considering that the maritime sector is one of the oldest and most important industries in Malta and that the country’s Ship Register is the largest registry in Europe and the 6^th largest in the world, no wonder there are many foreign-operated vessels here.

Our accounting firm in Malta is at the service of both local and foreign businesspersons who operate merchant or leisure ships and can also explain how the VAT on leasing activities applies. For example, a reduced VAT rate of 12% is available for short-term hire (up to 5 weeks) of pleasure boats.

We are also at the service of shipping businesses with tailored audit solutions in Malta, especially since they are subject to special taxation regulations. We invite you to select from our accounting services in Malta and set up the package that works best for you.

Do not hesitate to contact us for personalized accounting and tax filing services for your Maltese shipping company.