Malta Yacht Leasing

Introduction

The classic Malta yacht leasing guidelines introduced by the Government of Malta in 2007 became one of the most commonly found purchase mechanisms for yachts operating within the European Union (EU).

Although the classic guidelines are no longer available for the purchase of new yachts the purpose of this guide is to provide further information regarding the system and its ultimate withdrawal to new entrants in the summer of 2018 following pressure from the EU tax commission.

Background

The Republic of Malta has historically been a popular centre for the ownership and registration of ships and yachts.

Following the accession of Malta to the EU it was decided to enhance further the appeal of Malta to yacht owners as a centre of excellence for corporate yacht ownership and registration by introducing a leasing system that was based on a model already implemented by France and Italy.

An innovation of the French and Italian leasing model was the introduction of an automatic presumption of the time that a yacht might operate outside EU territorial waters during the course of the lease.

The automatic presumption was also adopted by Malta with the standard rate of VAT in Malta of 18% being applied to an established percentage of the lease deemed to correspond to the estimated use of the yacht in EU territorial waters.

The following tables illustrate the established percentage of lease according to the type (i.e. motor or sail) and length of yacht:

Motor Yachts

Length % of lease subject to VAT Effective rate of VAT
Over 24 metres in length 30% 5.4%
Between 16.01 and 24 metres in length 40% 7.2%
Between 12.01 and 16 metres in length 50% 9%

Sailing Yachts

Length % of lease subject to VAT Effective rate of VAT
Over 24 metres in length 30% 5.4%
Between 20.01 and 24 metres in length 40% 7.2%
Between 10.01 and 20 metres in length 50% 9%

EU Infringement Proceedings

On the 8th March, 2018 the European Commission formally opened infringement procedures against Cyprus, Greece and Malta in respect of their treatment of VAT due on yachts which included specific reference to the rules for the leasing of yachts in these jurisdictions.

Withdrawal of Leasing Guidelines

In the summer of 2018 the VAT Department of Malta withdrew the classic guidelines for the leasing of yachts meaning that no new yachts could take advantage of the system.

For further information please do not hesitate to contact us.For further information please do not hesitate to contact us.

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Floriana FRN 9011, Malta

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