VAT leasing Scheme

Malta VAT chargeable solely on use in the EU

EU Member States may tax the use and enjoyment of services, which would, therefore, include the lease of a pleasure yacht, for the time that the service is effectively used and enjoyed within European territorial waters.

On a lease of a pleasure yacht taking place in Malta, Maltese VAT will be charged on the portion of the lease covering effective use and enjoyment of the pleasure yacht within EU territorial waters. No VAT will be chargeable on the portion of the lease which covers the use and enjoyment of the pleasure yacht within non-EU territorial waters or international waters.

It is important to note that during the lease period, the lessor must maintain adequate records, including documentary evidence and technological data, to determine the actual effective use and enjoyment of the pleasure yacht by the lessee within and outside EU territorial waters. In order to benefit from such scheme, this scheme must be applied within the context of setting up operating leases.

The 2019 Guidelines, issued by the Commissioner for Revenue, provides the Commissioner with the discretion to approve that the lessor applies VAT only on the portion of the lease which covers the effective use and enjoyment of the pleasure yacht within EU territorial waters.

Our experienced team regularly assists clients with yacht registration in Malta under the Malta flag, including the registration of companies and other entities which own, manage or administer such Malta registered yachts.

Country Highlights

  • Reputable and one of the largest flags in the world;
  • EU approved tonnage tax system;
  • Over 57 million Registry Gross Tonnage;
  • Over 11,000 Vessels Registered;
  • The VAT on pleasure yacht lease is levied limitedly on actual and effective use in the EU;
  • Fast Registration Services;
  • Over 11,000 Vessels Registered Accessibility;
  • Emergency 24 hours of registry services;
  • Maltese legislation allows for bareboat charter registration.

The overall VAT incidence incurred on the leasing of a yacht can be reduced substantially depending on the use made by the yacht. Maltese VAT on leases that are deemed to take place in Malta is calculated on the basis of the yacht’s effective use and enjoyment within EU territorial waters. This means that no VAT is chargeable on the portion of the lease attributable to effective use and enjoyment of the yacht within non-EU or international waters.

The Right to Claim Input Tax on Fuel and Other costs

The supplier of the yacht charter would be entitled to claim input VAT on the cost of fuel and any other provisions that were purchased – subject to such goods being sold to the client of the yacht charter under a separate contract or subject to being invoiced separately from the charter service. 

Such supplies would be charged to the client at the full standard rate of VAT.

Subject to the satisfaction of certain conditions, the supplier of the yacht charter would also be entitled to claim any input VAT incurred on the fuel purchased for the outward journey of the yacht to its next port of destination after the charter’s completion. Further refunds may also apply on maintenance costs.

Stephanie Galea

+356 2247 9014

Stephanie.galea@atomfs.com.mt