Duncan Swanson of Oceanskies reports from Malta that the VAT Department of Malta have just issued new official guidelines clarifying the VAT treatment of yacht charter activity commencing in Malta.
The guidelines specifically apply to third party holiday type yacht charters whereby the charter is of a short term duration not exceeding 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 is physically be placed at the disposal of the charter party.
The new guidelines issued by Malta state that where the short term charter of a yacht commences in Malta the application of VAT will only apply to the portion of the charter taking place within the territorial waters of the European Union (EU).
Furthermore the guidelines state that the standard rate of VAT in Malta of 18% will be applied to yacht charters based on a predetermined ratio of time spent inside and outside EU waters based on the type (i.e. motor or sail) and length of the yacht as follows:
Motor Yachts
Length | % of charter 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 charter 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% |
There are certain conditions to the above VAT treatment being granted, namely:
For further information regarding the application of VAT on the short term charter of yachts in Malta, VAT registration in Malta and commercial yacht registration in Malta please do not hesitate to contact us.