New Guidelines on the hiring of pleasure yachts (Malta Leasing)

Following the demise of the previous Maltese leasing scheme, we are pleased to advise the Malta VAT Department has 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 instructions to ensure true commerciality.

In terms of the Guidelines, Maltese VAT on a lease taking place in Malta will be applicable on the portion of the lease covering effective use and enjoyment of the yacht within EU waters.  A great advantage of this is that no VAT will be charged on the portion of the lease covering effective use and enjoyment of the yacht when the yacht is sailing within non-EU waters.

The following conditions must be met in order to benefit from the new leasing guidelines:

General Conditions

• Prior approval must be sought from the Malta VAT Department in writing for the Lessor to apply Maltese VAT on the basis of effective use and enjoyment
• The Lessor must be a Maltese VAT registered company
• The Lessee does not need to be a Maltese company and must be classed as a ‘non-taxable person’
• The Lessor and Lessee must enter into a yacht leasing agreement, with no restriction on the ultimate beneficial owner being connected to both companies
• The beginning and end of the lease must be in Malta
• The Lessor must maintain adequate and appropriate records to demonstrate effective use and enjoyment when sailing both inside & out of EU waters
• An annual declaration must be filed with the Commissioner for Revenue within the prescribed timeframe

Whilst we welcome these new Guidelines as another suitable option for our clients, several uncertainties remain at this current time which must be taken in to account.

Should you wish to discuss the above in finer detail, please do not hesitate to Contact the Dominion Marine team in the usual manner: