On 30 October 2020, the European Commission decided to close a number of infringement procedures initiated against Member States for not complying with the provisions of the Council Directive 2006/112/EC (“VAT Directive”). The VAT treatment of yacht leasing in Malta had been among the procedures undergoing examination.
In this regard, the Guidelines regarding item 12, Part Two, Third Schedule to the VAT Act issued on 12 March 2020 by the Office of the Commissioner for Revenue (“CfR”), regulating the application of the ‘use and enjoyment’ provisions as prescribed by Article 59a of the VAT Directive and Item 12 of Part Two of the Third Schedule to the Malta VAT Act (Chapter 406 of the Laws of Malta), will be applicable.
Changes to Malta VAT Yacht Leasing: Key Takeaways
The CfR recognises that the lessor of pleasure boats cannot assess, at the date of each chargeable event, the extent to which the pleasure boat is effectively used and enjoyed within and beyond the EU territorial waters. As a result, this regime is initially estimated on the basis of a provisional ratio which is eventually revised on the basis of actual use.
To calculate the time the pleasure boat spends within the EU Territorial waters, the lessor shall ask the lessee to provide tangible proof such as:
- logs retained by the master of the pleasure boat;
- GPS/AIS data;
- other documentary proof that would show the actual whereabouts of the pleasure boat during the lease.
Malta VAT Yacht Leasing Advice
Should you be interested in the latest local and EU regulations in yachting, feel free to contact us for expert VAT advice.