To make sense of the new Superyacht VAT Registration guidelines, the most effective way to reduce the VAT on a Superyacht involves a Maltese company purchasing the Yacht for the full value and leasing it to a third party. Third parties can be Maltese or non-Maltese, or even a company.
The new guidelines, issued by the Commissioner for Revenue, on the leasing of pleasure yachts and the overall VAT incurred that have brought into line with EU taxation laws. The new guidelines highlight the use of the Yacht when supplied by a Lessor to a Lessee in Malta.
The new directive bases VAT on the “extent to which the pleasure boat is effectively used and enjoyed by the lessee within and outside EU territorial waters”. In summary, this calculates the “preliminary ratio”.
Once a company purchases the Yacht and leases it to the individual/company, we need to determine the Preliminary Ratio. This ratio is taken using reasonable documentary/technological data to determine the actual effective use and enjoyment by the ‘lessee’ of the Yacht within and outside EU waters during the tax periods.
This ratio is used to determine the portion of the lease payments. For example:
Value of the Yacht = €50 million
Malta’s VAT rate = 18%
Standard VAT payment = €9 million
However, this has not taken into account the ratio. For instance, if the owner of the Yacht spends 50% of their time in Malta (inside EU waters) and 50% of their time in Miami (outside EU waters), the Preliminary Ratio is 0.5.
Therefore €9 million X 0.5 = €4.5 million VAT.
The Lessor must keep sufficient records, (documentary/technological data) to determine the actual effective use and enjoyment of the pleasure yacht by the Lessee within and outside EU territorial waters.
If you would like a consultation or further information on how you can reduce your VAT while also structuring a business to handle this, contact us directly via email email@example.com or call us +356 2258 2000.
You can access the new Guidelines through the Commissioner for Revenue website or click here.