VAT in Malta
Malta VAT of 18% for goods and services
Being an EU Member State, Vat in Malta is regulated by the EU VAT system, whose principal piece of legislation is Directive 2006/112/EC. The VAT Directive is effectively a recast of the Sixth VAT Directive of 1977 as amended over the years.
Although the VAT Directive brings about a minimum level of harmonization across the EU, this harmonization is not complete . This is why VAT rates vary across the EU and, for example, VAT in Malta is not the same as VAT in the UK.
VAT is a general tax that applies, in principle, to all commercial activities involving the production and distribution of goods and the provision of services. This general rule is, however, subject to a number of exceptions. Certain activities may or must be exempted by the Member State in question. VAT is also a consumption tax because it is ultimately borne by the final consumer. In other words, it should not be a charge on business which actually collects the tax on behalf of the authorities of the Member State in question
VAT in Malta is regulated by the Value Added Tax Act of 1999 (as amended) and various subsidiary legislation. In Malta VAT is subject to a standard rate of 18%. A reduced rate of VAT of 5% applies in certain cases.
Malta has also sought to avail itself of various opportunities available in the VAT Directive in order to attract foreign investment to its shores. A case in point is the Malta yacht VAT lease arrangement applicable for pleasure yachts. This arrangement, supported and approved by the Malta VAT department, may reduce the effective VAT in Malta on a pleasure yacht to a minimum of 5.4%.