Since the Maltese VAT Department issued its guidelines on the Malta Super Yacht VAT Registration Programme, Malta has become an attractive jurisdiction for yacht owners or those thinking of purchasing a super yacht. The VAT department in Malta established that it is very difficult to track the movements of pleasure yachts and especially difficult to track the amount of time the super yacht spends in EU waters and outside EU waters. As a result of this the Malta Super Yacht VAT Registration Programme establishes an estimated percentage of time the yacht spends in EU waters and this is based on a number of factors such as the length of the yacht and the means of propulsion. By classifying the yacht this way the Maltese VAT department has established sailing yacht and motor yachts VAT rates and as a result of this process the effective rate of VAT can be lowered from the standard rate of 18% to a possible 5.4% and is an effective tool for super yacht tax planning for those seeking to bring their yachts into EU waters.
The Malta Super Yacht VAT Registration Programme outlines specific luxury yacht VAT registration rules and conditions but in principle the programme involves a Malta company purchasing the yacht for the full value of the yacht and lease purchasing it to third parties whom can be Maltese, non-Maltese or even a company. The supply of services would be deemed to be supplied in Malta and thus VAT would be due. The lease agreement will state that the lessor after contracting the use of the super yacht for a consideration will also give an option to the lessee to purchase the super yacht at a percentage of the original price. One of the requirements is that the company should also make a profit which is usually in the area of 8 to 10%.
The taxable supply to the value of 50% of the yacht value would be a taxable supply in the first VAT period less purchase tax on any associated costs such as maintenance costs and professional fees. The reduced value of VAT would be applied rather than the standard rate of 18%. The super yacht must arrive in Maltese waters at the beginning of the lease and on payment of the first VAT liability after the VAT registration process, the Malta VAT department will issue a VAT paid certificate allowing the super yacht to freely sail within EU waters. The taxable supply of the remaining 50% would be then spread over a period of between 12 and 36 months and on completion all relevant super yacht value added tax would be settled.
Depending on the location of the yacht prior to arrival in Malta, a temporary importation permit maybe needed from another EU member in order to pass through their national waters before sailing to Malta and taking advantage of the Malta Super Yacht VAT Registration Programme.
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Malta Superyacht & Luxury Yacht VAT Registrations Rules & Conditions
Malta Superyacht VAT Registration – Sailing Yacht and Motor Yacht VAT Rates