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Malta - VAT on Yacht Charters (New Official Guidelines Issued)

30 July 2013

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 VATEffective rate of VAT
Over 24 metres in length30%5.4%
Between 16.01 and 24 metres in length40%7.2%
Between 12.01 and 16 metres in length50%9%

Sailing Yachts

Length% of charter subject to VATEffective rate of VAT
Over 24 metres in length30%5.4%
Between 20.01 and 24 metres in length40%7.2%
Between 10.01 and 20 metres in length50%9%

There are certain conditions to the above VAT treatment being granted, namely:

  • The supplier of the yacht charter shall be a person or company registered for VAT in Malta.
  • The yacht charter contract shall clearly indicate that the charter commences in Malta and shall clearly indicate the charter fee as well as including a statement that it is intended that the yacht shall sail outside EU waters.
  • The VAT Department of Malta reserves the right to request proof of any payment made in connection with the charter.
  • 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 the 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.
  • Approval must be sought in writing from the VAT Department of Malta and each application shall be considered on its own merits.

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.

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@oceanskiesltd

17 February 2020 at 15:14

Today we have been in Viareggio with @azimutbenetti for the survey of their latest @Azimut_Yachts Azimut 27 Metri undergoing red ensign registration - pls contact us for a registration proposal or go to oceanskies.com to use our flag selector #yachtregistration pic.twitter.com/Y6TZ47WbEp

@oceanskiesltd

13 February 2020 at 19:29

Today we have been in Bordeaux with a very busy @Lagooncats for the tonnage survey of latest Lagoon 52F undergoing red ensign registr by Oceanskies - pls do not hesitate to contact us for a proposal or go to oceanskies.com to use our flag selector #lagooncatamaran pic.twitter.com/Od4Jcs7khU

@oceanskiesltd

11 February 2020 at 20:13

Today we have been in La Rochelle, France with @NautitechCat for the tonnage survey of their latest Nautitech 46 Fly sailing catamaran undergoing red ensign registration by Oceanskies #Nautitech #yachtregistration #yachtregistry #yachtregister #tonnagesurvey #redensign pic.twitter.com/u4tev2MzJu