In an effort to attract more yachts to its shores, Malta is sweetening its appeal by lowering its VAT rate to 12% in certain instances. The standard VAT in Malta is 18%. The new ruling applies to short-term yacht charters that start in Malta. The new rate took effect on Jan. 1, 2024. 

This amendment to the Eighth Schedule of the VAT Act (Chapter 406, Laws of Malta) was introduced via Legal Notice 231 of 2023, and it has specific provisions to fulfill. 

The BWA Yachting office in Malta issued guidance: “This reduced VAT rate applies where the yacht is put at the disposal of the customer in Malta and has come into effect in respect of services which becamechargeable for VAT on or after 1st  January 2024.” 

To qualify for the reduced VAT rate, the vessel must have a formal charter agreement with the owner and charterer (or lessor and lessee), the charter must not exceed 35 charter days or five weeks with the same person (lessee) within the previous 12 months, and the charterer must physically take possession of the charter yacht in Malta.

“I think it will be a good benefit as instead of 18% VAT, there will be a 6% reduction if the charter starts in Malta, especially for high-value charters,” said Keith Spiteri, operations manager, BWA Yachting in Malta. 

The Tax and Customs Administration of Malta issued guidelines on the VAT application, laying out several hypothetical scenarios explaining how the VAT rate would be applied. Examples show that the reduced 12% VAT rate would increase to the default 18% VAT rate as soon as the charter exceeds 35 days and for the remaining period within the previous 12 months.

You can check out all the guidelines at www.cfr.gov.mt.

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