Malta to apply VAT proportionally to superyacht charters
Malta's government has issued guidelines for the application of VAT on short-term superyacht charters. Whilst meeting EU requirements, the country's 18 per cent VAT rate will only be applied to the proportion of time the vessel spends in EU waters.…
The Maltese government has issued guidelines clarifying the application of VAT on short-term yacht charters. ‘Guidelines for the VAT treatment of short-term yacht hiring’ is applicable to charters undertaken for a period less than 90 days that have been commenced in Maltese waters.
Such charters will continue to be subject to a rate of 18 per cent on the cost of the charter. Significantly however, this will only be applied proportionally, based on the amount of time the charter is in EU waters. As Maltese-based law firm Fenech & Fenech’s Alison Vassallo explained, the country’s proximity to destinations such as Tunisia means that a superyacht charter could be undertaken where a significant portion of the time was spent beyond the realms of the EU, and therefore, outside the parameters for the tax’s application.
“By way of example, a yacht [with] a length of over 24 metres would be taxed at the full rate of 18 per cent on 30 per cent of the hire, on the basis of the estimate that the said yacht would be spending 30 per cent of its time in European waters and 70 per cent of its time in international waters”, Vassallo explained. “The above is a further manifestation of the efforts being made by the Maltese government, working hand in hand with us industry players, of placing Malta firmly on the map as a yachting hub”, she added.
According to Vassallo, the guidelines will come into force with immediate effect.
Such charters will continue to be subject to a rate of 18 per cent on the cost of the charter. Significantly however, this will only be applied proportionally, based on the amount of time the charter is in EU waters. As Maltese-based law firm Fenech & Fenech’s Alison Vassallo explained, the country’s proximity to destinations such as Tunisia means that a superyacht charter could be undertaken where a significant portion of the time was spent beyond the realms of the EU, and therefore, outside the parameters for the tax’s application.
“By way of example, a yacht [with] a length of over 24 metres would be taxed at the full rate of 18 per cent on 30 per cent of the hire, on the basis of the estimate that the said yacht would be spending 30 per cent of its time in European waters and 70 per cent of its time in international waters”, Vassallo explained. “The above is a further manifestation of the efforts being made by the Maltese government, working hand in hand with us industry players, of placing Malta firmly on the map as a yachting hub”, she added.
According to Vassallo, the guidelines will come into force with immediate effect.
Vessels embarking from Maltese ports such as Grand Harbour Marina will be charged VAT for the proportion of time they remain in EU waters.
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