Special 12% VAT Rate for Yacht Charters in Malta – Introduction
Malta has introduced a special 12% VAT rate for yacht charters commencing in the region as of January 1, 2024, significantly lower than the standard 18% VAT rate.
This strategic move, detailed in Legal Notice 231 of 2023 under the Value Added Tax Act (Amendment of Eight Schedule) Regulations, 2023, aims to bolster the local superyacht industry.
Guidelines and Regulatory Framework
The Malta tax authorities have published guidelines to facilitate the industry’s understanding and application of these new regulations.
Additionally, Transport Malta issued a Port Notice emphasizing exemptions for visiting yachts from the Commercial Vessels Regulations, provided they are registered for commercial use and comply with their flag state requirements.
Conditions for VAT Rate Eligibility
To qualify for the reduced 12% VAT rate, several conditions must be met:
- The yacht must be available for charter in Malta at the commencement of the charter period.
- The charter must be under a specific charter party agreement for a set term.
- The total charter duration for the specified yacht (or similar types) must not exceed 35 days within the preceding 12 months from the start of the current charter.
Composite Supply and VAT Application
The guidelines also address the concept of composite supplies in VAT applications.
If a taxable person offers mixed supplies of goods and services, these might be considered a single composite supply for VAT purposes if they are primarily related to the yacht charter.
Thus, the special 12% VAT rate applies to such composite supplies provided they are integral to the charter service.
Special 12% VAT Rate for Yacht Charters in Malta – Conclusion
This reduced VAT rate is expected to enhance Malta’s attractiveness as a premier yachting destination, encouraging more high-value tourism and reinforcing its maritime services sector.
Yacht charter businesses should review these conditions and guidelines to ensure compliance and optimize their operations under this new fiscal framework.
Final thoughts
If you have any queries about the Special 12% VAT Rate for Yacht Charters in Malta then please get in touch.