Over the years Malta has established itself as a leading jurisdiction for the maritime sector.
As a very well-respected flag state and access to many experienced professionals, Malta is now the go-to choice for yacht owners and their representatives.
The original Malta leasing Arrangement launched in November 2005 attracted a significant volume of business until its closure in 2018. Widely anticipated new guidelines were subsequently introduced in 2019 and on the 12th March 2020 the Maltese Government issued further new guidelines in respect of the hiring of pleasure yachts. The guidelines are still based on Article 59a of the EU VAT Directive (use and enjoyment) but now include additional measures to cover recent developments within the EU.
Prior to the issuing of the 2020 guidelines, VAT rates payable by Lessors were calculated based on the percentage use of the yacht in EU and Non EU waters during a specific time period the use was then used to calculate the VAT payable against the standard Maltese VAT rate of 18%.
Following the amendment, the 18% Maltese VAT rate still applies, however, the Use and Enjoyment provision must only be used to determine VAT payable based on the actual time within EU / non-EU waters. These changes affect all leases commencing on or after the 1st November 2018.
Where the yacht has been used outside of EU waters during a VAT period the lessor should claim a refund of the VAT paid on the VAT return directly following the period in which the yacht was used outside of the EU and documentary evidence must be used in order to calculate the use outside of the EU accurately (i.e. logbooks, GPS).
There are a few important points to note prior to commencing a lease using the new guidelines;
- Permission should be sought from the Malta VAT Office prior to the adjustment of VAT (normally obtained prior to the start of the lease);
- The lessor should retain all supporting documentation in relation to the use of the yacht for instances where the VAT office wish to inspect the files;
- The beginning and the end of the lease must occur in Malta;
- The Lessor must be a VAT registered Maltese Company;
- The Lessee can be an individual of a corporation;
- The yacht will remain VAT accounted for during the term of the lease but will not achieve a VAT paid status on termination of the lease.
Should you wish to discuss the new guidelines in further detail please contact the Affinity Group Team at firstname.lastname@example.org.