VAT Department issues new 2019 Guidelines on Yacht Leasing
Yachting is an ever-growing industry in Malta. By virtue of guidelines issued by the Office of the Commissioner for Revenue, the overall VAT incidence incurred on the leasing of a yacht can be reduced substantially depending on the use made by the yacht.
Back in 2005, the VAT Department issued guidelines on the VAT treatment of the leasing of yachts by a Malta company (the “Guidelines”). In 2019, on the basis of strength from experience and knowledge acquired in such industry, the VAT Department issued a new set of Guidelines on the matter. Whilst still based on Article 59A of the EU VAT Directive, the new Guidelines reflect recent EU developments and best market practices.
In terms of the Guidelines, Maltese VAT on a lease taking place in Malta will be charged on the portion of the lease covering effective use and enjoyment of the yacht within EU waters. No VAT will be charged on the portion of the lease covering effective use and enjoyment of the yacht within non-EU or international waters.
In order to benefit from the Yacht Leasing Guidelines the following conditions must be satisfied, a distinction is made between long-term leases and other leases:
Conditions for Long-Term Leases
In addition to the above listed conditions, long-term leases must abide by the below conditions:
The 2019 Yacht Leasing Guidelines lay down the conditions for the Commissioner to exercise his discretion and approve that the lessor levies VAT only on the portion of the lease covering effective use and enjoyment within the EU.
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