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Would it be news if we had to tell you that you are able to reclaim back input tax incurred locally on costs used in the furtherance of your business? 

If you are a person who carries on or intends to carry on an economic activity within the scope of VAT and you are identified or opt to be identified for VAT purposes under Article 10 of the Malta VAT Act (Chapter 406 of the Laws of Malta)(‘VATA’), you may be allowed to claim back input tax in accordance with the limitations and conditions laid down in the same Act. To the extent that you are aware of such limitations and conditions, then, we assume your answer to the above question would be “no, its not really news for us”. 

But, what if you incurred VAT in a Member State other than where you have established your business? 

Any EU foreign VAT incurred cannot be reclaimed back through the Malta VAT return that is normally submitted by Article 10 registered persons. However, this would not essentially make it a business cost. 

This applies since taxable persons not established in the Member States in which goods and services are purchased and on which foreign VAT is charged,, shall be entitled to obtain a refund of that VAT insofar as they met the conditions and abide with the rules laid down in Council Directive 2008/9/EC (the ‘Refund Directive’). 

Therefore, if you are running a business and had incurred a substantial amount of foreign VAT during the preceding year, as a result of your business activities and you wish to seek assistance in a possibility of reclaiming that VAT, our VAT Specialists are here to help you. 

Get in touch with Christabel Spiteri or Matthew Zampa for a free consultation to determine whether you may be eligible for such a refund.