In the world of luxury assets with elegant yachts gracing the seas and awe-inspiring sights of aircraft soaring through the skies, a fascinating journey unfolds. However, in this world of lavishness, those involved are also dealing with less glamorous concerns including the intricate matter of Value Added Tax (“VAT”). This article delves into the influence of EU VAT on luxury yachts and aircrafts (hereinafter “Asset”), with a view of untangling the complex details for clearer understanding.
In a supply of goods or services the supplier is generally entrusted by the Commissioner for Tax and Customs (“CfTC”) to collect and pay the VAT charged on his supplies. Is this always the case? Can you provide us with some examples where the supplier is not liable for the payment of the VAT?
Correct. The liability for the payment of the VAT is generally shifted on to the customer where the customer is a taxable person and the place of supply of a particular transaction is not in the Member State of the supplier. By way of example if you have a business established in Spain supplying consultancy services to a business established and registered for VAT in Malta the place of supply would be Malta and the liability for payment of the VAT is shifted on to the Malta customer.
In this case, the Malta customer is liable for the payment of the VAT. What does he have to do?
Given that the Malta customer is liable to for the payment of the VAT in Malta, he should, to the extent not already registered in Malta apply with the Malta VAT authorities for a VAT number under either article 12 or 10 of the Malta VAT Act. Then, depending on the VAT number issued he should either report the transaction in his VAT return or else in a notice for payment.
Can the liability for payment of the VAT be shifted in the case of supplies of goods? Can you give an example?
Yes, however this is subject to the conditions and limitations imposed by the Member State where the transaction is deemed to take place. A typical example would be where a Maltese business is acquiring goods from an Italian supplier which goods are stored in a warehouse of the Italian supplier in Malta. In that case to the extent that the Italian supplier does not have a fixed establishment in Malta and is not identified for VAT in Malta and the customer is established and registered for VAT in Malta, the liability for the payment of the VAT is shifted on to the customer.
In this case where is the transaction reported by the Malta Customer in the VAT return?
In boxes 4 and 11 with the VAT element in box 7 and 15.
In the case of an importation, who is the person liable for the payment of the VAT? And what about an intra-Community acquisition?
For importations, the liability rests with the customer, that is the importer of record which VAT has to be paid to the customer. For Intra-Community acquisitions, the acquirer is the person who is liable for the payment of the VAT.
Matthew Zampa
Partner
