Malta Vat Yacht Leasing Scheme
- A financial leasing agreement of a pleasure craft is an agreement whereby the lessor (the owner of a craft) contracts the use of the craft to the lessee (the person who leases the craft) in return for a consideration. In addition, at the end of the lease period, the lessee may opt to purchase the craft at a percentage of the original price.
- For the purpose of VAT, the lease of the craft is a supply of services with the right of deduction of input VAT by the lessor, where such right applies. This supply of services is taxable according to the use of the craft, attributed within the territorial waters of the European Union (EU), provided that the lessor is a Maltese company (including a commercial bank) which is leasing the craft to any Maltese or non-Maltese person or company.
- It is very difficult to trail the movements of pleasure crafts in order to determine the period that the craft spends within the territorial waters of the EU and the time it spends outside the EU.
|TYPE OF CRAFT||
% of lease subject to VAT
Effective rate of VAT
|Sailing boats or motor boats over 24 metres in length||30%||5.40%|
|Sailing boats between 20.01 to 24 metres in length||40%||7.20%|
|Motor boats between 16.01 to 24 metres in length||40%||7.20%|
|Sailing boats between 10.01 to 20 metres in length||50%||9.00%|
|Motor boats between 12.01 to 16 metres in length||50%||9.00%|
|Sailing boats up to 10 metres in length||60%||10.80%|
|Motor boats between 7.51 to 12 metres in length *||60%||10.80%|
|Motor boats up to 7.5 metres in length*||90%||16.20%|
|Craft permitted to sail in protected waters only||100%||18.00%|
- The boat must come to Malta, possibly at the beginning of the lease agreement.
- The financial leasing agreement shall be between a Maltese company and any Maltese or foreign person or company.
- Prior approval shall be sought in writing from the Commissioner of VAT who is to confirm the rate applicable according to the use in EU territorial waters (depending on the size and propulsion of the craft), as well as the acceptability of the value of the craft as declared. For this purpose a valuation certificate of the craft shall be submitted with the application for approval.
- An initial contribution shall be paid by the lessee to the lessor amounting to 50% of the value of the craft.
- The Lease instalments shall be payable every month and the lease agreement shall not exceed 36 months.
- The lessor shall be expected to make a profit from the leasing agreement over and above the value of the boat.
- Any purchase value at the end of the lease agreement shall not be less than 1% of the original value of the craft, and this will be subject to the standard rate of VAT at 18%.
- If the lessee opts to purchase the craft at the end of the lease, a VAT paid certificate will be issued to the lessee provided that all VAT due has been paid.