On 12th March 2020, the Office of the Commissioner for Revenue (“CfR”) published new guidelines (the “Guidelines”) in connection with the leasing of pleasure yachts and the corresponding treatment of such leases for VAT purposes, which guidelines are essentially based on Article 59a of the EU VAT Directive.
A snap shot of the various Residence Programmes currently accommodated by Malta’s strategic legislative framework.
Malta’s investment services legislation was enacted back in 1994 as part of the jurisdiction’s initiative to bolster its legal and regulatory framework in anticipation of its application for EU membership. Indeed the island’s accession to the European Union in May, 2004 proved to be the primary catalyst for the exponential growth of its financial services industry, thrusting the jurisdiction onto the world map by coupling an ‘onshore’ robust and comprehensive regulatory and legislative framework which inspires confidence with a Europe-wide ‘passporting’ system and effectively crystallising Malta’s role as a European hub for financial services.
Consistent with the Maltese legislator’s ongoing drive to bolster the island’s profile as an intellectual property holding jurisdiction and to motivate further investment in research and development by enterprises whilst encouraging and supporting the exploitation of intellectual property, Malta’s income tax legislation provides for an outright exemption on royalty income derived from eligible patents, in respect of qualifying inventions.
The dreaded VAT question which is invariably asked by a yacht owner, is whether to charge VAT on the supply of services consisting in making the said yacht available for charter. The main concern here is naturally the necessity to retain competitive charter rates, whilst remaining above board from a VAT perspective.
A Snapshot of the Salient Features of the Malta Commercial Yacht Code
A yacht qualifies as a “commercial” yacht when it is more than 15 metres in length and does not carry cargo or passengers exceeding 12 in number. Moreover, a commercial yacht is operated by its owner (whether an individual or corporate entity) for commercial activities, such as, chartering to third parties.