It has become common practice to change the flags of ships. Reasons for this are often lower personnel costs, non-wage labour costs and operating costs which are mandatory in most countries. Especially commercial shipping companies often have a huge advantage when they change their flag. If there a cost reduction of 15-20% is possible, it can make the shipping company more competitive, and customers can benefit from lower prices. However, this does not mean that the state loses tax revenue. The shipping company will still pay their taxes in the country where the company is located. Changing the flag does not affect the tax liability.
An increase in reflagging of ships has been observed in many countries, such as Germany for example. The reasons are mainly a cost reduction of personnel, which are significantly lower in Italy or Malta.
Many fleets are under the Maltese flag. The reflagging to Malta procedure is generally not very bureaucratic. Since Malta is also part of the European Union, it will also not change the legal position of the company, or the freedom of movement within the EU. This means that a vessel that is registered under the Maltese flag, can be located in other countries in the EU without any problems. However, you can also moor your ship in Malta.
Flagging out can be worth it for individuals as well. The extent of what it is worth has to be evaluated on a case-by-case basis, as it depends on the type of the registered vessel and how it is used. You are welcome to contact the office of Dr. Werner & Partner for more information about reflagging to Malta. One of our areas of expertise is the reflagging and we are able to give you professional advice on the procedure.
