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Maltese VAT on Yacht Leasing

Maltese VAT on Yacht Leasing

Updated on Tuesday 19th April 2016

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Maltese-VAT-on-Yacht-LeasingThe 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.

Maltese VAT rates for yacht leasing

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:

  • - for yachts over 24 meters, the percentage is 30%,
  • - for yachts between 20 and 24 meters - 40%,
  • - for yachts between 16 and 24 meters - 40%,
  • - for boats between 10 and 20 meters - 50%,
  • - for boats between 12 and 16 meters - 50%,
  • - for yachts up to 10 meters - 60%,
  • - for yachts between 7.51 and 12 meters registered in the Maltese Commercial Register - 60%,
  • - for boats up to 7.5 meters registered in the Commercial Register - 90%.

Yachts sailing in protected waters only benefit from 100% on the percentage of lease in EU waters.

Eligibility criteria to benefit from the Maltese VAT treatment

In order to qualify for the VAT on yacht leasing, a company must respect the following criteria:

  • the boat must be in Malta at the beginning of the lease agreement,
  • - one of the parties concluding the lease agreement must be a Maltese company,
  • - the lessee must obtain approval and confirmation from the Commission of VAT with respect to the applicable rate,
  • - the lessee must pay an initial contribution worth 50% of the value of the yacht,
  • - the lease installments must be paid on a monthly basis for 36 months at most,
  • - the lessor must make a profit from leasing the boat worth more than the boat’s value.

For complete information about boat registration and VAT treatment, please contact our law firm in Malta.

 

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