The VAT treatment for yacht leasing in Malta was adopted in 1995, when the VAT Department established the conditions under which leased or purchased yachts are taxed. In order to benefit from the VAT treatment, a Maltese International Trading Company (ITC) is required to sign a financial leasing agreement through which the company leases the boat to a third party with an option for the lessee to buy the yacht at the end of the agreement. The Maltese VAT Department establishes this way that a Maltese company purchasing a yacht may lease it to third parties and thus pay the 18% VAT on the portion of the leasing agreement as long as the yacht is in the EU waters.
The standard VAT rate in Malta is 18% and is applied on the percentage of the lease agreement based on the use of the boat while in the EU waters. According to the type of boat, the percentages apply as it follows:
Yachts sailing in protected waters only benefit from 100% on the percentage of lease in EU waters.
In order to qualify for the VAT on yacht leasing, a company must respect the following criteria:
For complete information about boat registration and VAT treatment, please contact our law firm in Malta.
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