Yacht Leasing In Malta - A Guide (Updated March 2019)

Introduction

In light of the recent release of the new guidelines for the leasing of yachts by the Government of Malta Oceanskies has produced a timeline of events in order to assist potential clients in understanding the current position.

2007

Government of Malta published official guidelines concerning the leasing of private yachts which enabled the owners of private yachts to achieve a VAT paid vessel at a reduced rate through the creation of a leasing structure in Malta.

2007 - 2018

These guidelines provided the basis for one of the most popular methods for the payment of VAT on private yachts in the EU.

2018

On 8th March the EU Tax Commission announced that they had written letters of formal notice to open infringement proceedings against Malta (along with Cyprus and Greece) to investigate the incorrect levying of VAT on yachts.

At the time of the public announcement of this initiative Pierre Moscovici, the Commissioner for Economic and Financial Affairs, Taxation and Customs Union, said:

“In order to achieve fair taxation we need to take action wherever necessary to combat VAT evasion. We cannot allow this type of favourable tax treatment granted to private boats, which also distorts competition in the maritime sector. Such practices violate EU law and must come to an end."

The Government of Malta withdrew their leasing guidelines during the summer of 2018.

2019

On 28th February, 2019 the Malta Department of VAT issued new guidelines concerning the leasing of yachts which enable the owners of private yachts to achieve a VAT paid vessel at a reduced rate through the creation of a leasing structure in Malta.

On 20th March, 2019 referring to the letters of formal notice to open infringement proceedings issued on 8th March, the Malta Finance Minister Edward Scicluna publicly announced that following the publication of the new guidelines “the Commission has dropped its case”.

As at the date of writing the EU website continues to list the infringement proceedings against Malta as open.

Additional Reading

• EU VAT & Yachts – Frequently Asked Questions

• European Commission - Press release - Value-added tax on yachts: Commission opens infringement procedures against Cyprus, Greece and Malta - Brussels, 8 March 2018

• European Commission - Press release -Paradise Papers: Commission follows up on illegal tax breaks for yachts and aircraft - Brussels, 8 November 2018

• VAT Department of Malta - Guidelines Regarding Item 12 Of Part Two Of The Third Schedule To The Value Added Tax Act

For further information please do not hesitate to contact us.

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