Who is liable to register for Vat?


If you are a person performing an economic activity, whatever the result or scope of that activity, then you are considered as a taxable person. Under normal circumstances, you are required to register for VAT under article 10. If your annual turnover does not exceed the established threshold (see below) then you may opt to register under article 11 as an exempt person.




 Vat registrations:


Maltese vat legislation allows 3 types of vat registrations as follows:


Article 10 registration: Applies to taxable persons supplying goods and services and which their annual turnover exceeds the established exempt thresholds. A taxable person registered under article 10 would charge vat on his supplies and claim back vat paid on his expenditure, although some expenditure is considered as being blocked and therefore is not claimable.



 A person registered under article 10 would:


  • Have a VAT number with the prefix MT.
  • Have to issue fiscal receipts or tax invoices, as the case may be, on all supplies made by him.
  • Normally submit a VAT return for a tax period of three months by the not later than 6 weeks after the end of the tax period, or as directed by the Commissioner.


Article 11 registration: Applies to taxable persons supplying goods and services and which their annual turnover does not exceed the established thresholds as mentioned here under. A taxable person registered under article 11 does not charge vat on his supplies and is also not able to recover any vat payable on expenditure incurred during the course of his economic activity.  


A person registered under article 11 would:

  • Have an identification number without the MT prefix.
  • Have to issue fiscal receipts or tax invoices, as the case may be, on all supplies made by him.
  • Submit a declaration (simplified tax return) at the end of each calendar year which must be submitted by the 15th March of the following year.


Article 12 registration: If you are a non-taxable legal person or a taxable person not registered under article 10, and you make intra-community acquisitions of goods in Malta the value of which exceed €10,000 since the start of the year, then you are liable to register for VAT under article 12 and pay VAT in Malta each time you make such intra-community acquisitions.
If you are registered under article 11 as an exempt taxable person and you intend to make Intra-Community Acquisitions and pay VAT thereon in Malta, then you need to register also under Article 12 to obtain a valid identification number for this purpose and qualify for such an arrangement.



Entry and Exit Thresholds:


The different thresholds are as follows:
Economic Activity                                                                                                              Entry Threshold                                Exit Threshold
Economic activity consisting mainly of supplies of goods                                                     €35,000                                             €28,000
Economic activity consisting mainly of supplies of services with low value added               €24,000                                             €19,000
Other economic activities                                                                                                      €17,000                                             €20,000


The turnover of a business is the total value of sales, excluding:

  • Exempt without credit supplies
  • The transfer of a business as a going concern
  • The sale of fixed assets
  • Supplies made to the business and deemed to be made by that business under the reverse charge provisions






Vat Schemes:



Vat Treatment on yacht leasing: Malta offers yacht owners looking to buy a new boat attractive savings on VAT. This scheme is recognised by the EU and vessels will be ‘EU VAT PAID’ and free to navigate in EU waters without any restrictions.


A lease of a pleasure boat or yacht occurs when the lessor grants the use of his pleasure boat or yacht  to a lessee. A contractual agreement is entered into which grants the lessee the use of the pleasure boat or yacht for an agreed time period and for pre determined lease payments.  


In the case of yacht leasing vat due is calculated on the basis of the time spent by the yacht to navigate in the territorial waters of the European Union, therefore the Vat amount, chargeable on the value of the consideration (lease payments) is not chargeable at the rate of 18%, instead the full vat rate of 18% is apportioned in accordance to the overall length and the means of propulsion of the yacht .


The table below indicates the apportionment values in accordance to LOA of yachts:




















In order to apply the above vat computations the following conditions must apply:


  • The leasing agreement shall be between a Maltese company and any Maltese or foreign person or company.
  •  The Lease installments shall be payable every month for a period of not more than 36 months.
     Prior approval shall be sought in writing from the Commissioner of VAT and each application will be considered on its own merits and certain conditions may be applied. 
  • If the lessee exercises an option to purchase the boat after the end of the lease, a VAT paid certificate will be issued to the lessee provided that all VAT due has been paid.






Vat Treatment of Short Term Chartering of Yachts: A short-term charter of a yacht is an agreement whereby the yacht owner/operator
contracts the use of the yacht for a consideration with a crew or on a bare boat basis.
The term of the charter cannot be more than 90 days.


For VAT purposes, the short-term charter of a yacht to be used for leisure purposes is a supply of a service which is taxable at the standard rate of VAT. The place of taxation is the place where the yacht would actually be placed at the disposal of the customer, in this case in Malta. Subject to certain conditions, the taxation of this supply would be limited to that portion of the use of the yacht within the territorial waters of the European Union.

Vat chargeable on the consideration received from the charter is apportioned in accordance to the overall length and means of propulsion of the yacht as set out in the below table:


















The VAT treatment of short-term yacht chartering as per above table would be applicable subject to the following conditions:

  • The supplier of the yacht charter shall be a person registered for VAT in Malta.
  • The yacht charter contract shall indicate the place where the charter commences (i.e. Malta), the charter price and a statement that the yacht shall sail outside EU waters. 
  • Upon application, the supplier of the charter has to produce sufficient documentation to identify the yacht with regards to hull number, port of registry, registration number, and any further documentation confirming the size and type of yacht.   
  • Following submission of these documents, and provided that the conditions are met to the satisfaction of the Director General (VAT), the applicant shall be informed in writing regarding the applicable portion of the charter fee which would be subject to VAT.




       

Value Added Tax