Why choose Malta?
Due to Malta’s geographical position in the centre of the Mediterranean Sea, Malta has always attracted maritime activity. For business or pleasure, yachts can be an excellent investment in your lifestyle.
One of the fundamental reasons for the success of Malta being attractive for personal aircraft is the collective service offering that Malta offers, which has been in place for several years. This includes enacting the Aircraft Registration Act, which expanded the registration possibilities, introduced the fractional ownership concept, and provided better protection for mortgagees. In addition, our accounting experts at GCS Malta discuss the leasing of yachts and Vat in this article.
Leasing of Yachts and VAT in Accounting
If the yacht is acquired by a company registered in Malta which would then lease the yacht/aircraft to the lessee, Maltese VAT of 18% should only be due on the part of the lease instalments that are deemed to take place in the EU in terms of the mentioned use and enjoyment principle. Malta’s rate is also one of the lowest VAT rates in Europe.
However, when the VAT Yacht Leasing Scheme is applied, the VAT rates charged are reduced significantly based on two determining factors:
- the size of the yacht; and
- the type of yacht
It is difficult to reflect the estimated time the yacht would be operating in waters other than the EU and so a mechanism was put in place by the Malta VAT department when it issued the below table that determines the percentage proportion of VAT to be charged depending on the length and type of yacht:
|
Type of Boat |
% of lease taking place in the EU |
Computation of VAT |
|
Sailing boats or motorboats over 24 metres in length |
30% | 30% of consideration*18%
|
|
Sailing boats between 20.01 and 24 metres in length |
40% | 40% of consideration*18% |
| Motorboats between 16.01 and 34 metres in length | 40% |
40% of consideration*18% |
|
Sailing boats between 10.01 and 20 metres in length |
50% | 50% of consideration*18% |
| Motorboats between 12.01 and 16 metres in length | 50% |
50% of consideration*18% |
|
Sailing boats up to 10 metres in length |
60% |
60% of consideration*18% |
|
Motorboats between 7.51 and 12 metres in length (if registered in the commercial register) |
60% |
60% of consideration*18% |
|
Motorboats up to 7.5 metres in length (if registered in the commercial register) |
90% |
90% of consideration*18% |
| Craft permitted to sail in the protected water only | 100% |
100% of consideration*18 |
Looking at the first type of boat, a sailing boat over 24 metres in length is presumed to sail 30% of its time during the lease in EU territorial waters. As mentioned, the lease will be charged at the normal VAT rate of 18%, but in this case, only 30% of the lease. This will leave us with a 5.4% VAT rate on the total value of the lease.
- A Maltese shipping organization would be set up as the owner of the yacht – the Lessor, who would lease the yacht to another entity – the lessee.
- The place of supply (POS) would be Malta
- General principles relating to intra-community supplies and importations at the time of acquisition of the yacht by the Lessor and place of supply rules at the time of the supply of the yacht to the lessee will apply.
- The lessee would pay VAT quarterly on the monthly lease instalments to the Lessor, having regard where applicable to the Updated Guidelines relating to the use and enjoyment of yachts.
- Subject to certain conditions being satisfied, the VAT department would, upon a request to that effect, issue a letter confirming that the Lessor has declared and is accounting for VAT on the lease of such yacht in Malta.
In addition, kindly note that Malta has one of the best taxation systems for non-residents. For example, profits would generally be subject to a 35% flat-rate corporate tax. However, non-Maltese residents can avail themselves of a tax refund, effectively reducing the tax rate to just 5%.
Why GCS Malta?
At GCS Malta, our accounting department offers a full range of accounting and support services such as yacht registration and the maintenance of a company’s accounting records. Contact us today for more information on our services.
