Malta Superyacht VAT Registration Process

When the Maltese VAT Department issued its guidelines to the Malta Superyacht VAT Registration Programme, Malta has become an attractive jurisdiction for yacht owners.

The Transport Department learned that it is difficult to track the movements of Yachts and the amount of time the Yacht spends inside and outside EU waters. Therefore, the VAT Registration Programme established a system based on the estimated percentage of time the Yacht spends in EU waters. The system includes factors such as the length of the Yacht and the means of propulsion.

The New Superyacht VAT Rules

By classifying the Yacht this way, the Maltese VAT department has established simple and practical VAT rates.

The effective rate of tax is now reduced from the standard rate of 18% to a possible 5.4%.

Certainly, this is a tax-effective tool for Superyacht tax planning and those looking to bring their yachts into EU waters. The Malta Superyacht VAT Registration Programme outlines specific Rules and Conditions that you can read here.

In principle, the programme 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 supply of services would be provided in Malta, and therefore VAT would be due at the effective rate. The lease agreement will state the following. ‘The lessor’ will give an option to ‘the lessee’ to purchase the Superyacht at a percentage of the original price. One of the conditions is that the company should also make a profit which is usually 8-10%.

Moreover, 50% of the Superyacht value would be taxable in the first VAT period, minus purchase tax on any associated costs (such as maintenance costs and professional fees). Therefore the reduced amount of VAT would be applied, rather than the standard rate of 18%.

So what is the process to reduce the VAT?

Firstly, the Superyacht must arrive in Maltese waters at the beginning of the lease. Secondly, the payment of the initial VAT amount is due after the application process to the VAT department. After that, the VAT department will issue a ‘paid certificate’ allowing the Superyacht to travel freely within EU waters. Finally, the remaining 50% of tax is spread over 12 to 36 months. On completion, all relevant Superyacht VAT would be settled.

IMPORTANT: Temporary Importation Permit

It is important to note that depending on the location of the Yacht before the arrival in Malta; you may need a temporary importation permit. But, this can be collected from another EU member and pass through their national waters before sailing to Malta. It is essential to seek professional guidance before commencing this programme to ensure that all of your bases are covered.

If you would like more information about the relevant stages and what you need to be more tax effective, kindly enquire below or call us directly on +356 2122 7553.

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