The Malta VAT Department issued new guidance on 28 February 2019 in relation to the VAT treatment of long-term yacht leasing.

The new rules can substantially reduce the amount of VAT due and payable on lease amounts charged by the Lessor, depending on the extent that a yacht is used and enjoyed in EU territorial waters.

However, it is important to note that long term yacht leasing is considered to be a leasing arrangement for more than 30 continuous days and there are specific criteria for applying this methodology, including:

  • the requirement to obtain pre-approval from the VAT Department;
  • the provision of evidence which confirms that amount of time the yacht has spent in EU/International waters;
  • an annual declaration showing the VAT accounting adjustments made by the Lessor Company in respect of apportionment of time the yacht has spent inside/outside EU water;
  • the Lessee, in such arrangements, must be a non-taxable person (i.e. not able to register for VAT) but can be EU or non-EU;
  • the yacht must be in Malta at the start of the lease;
  • a formal lease agreement must be in place between the Lessor and Lessee and this must be provided to the VAT Department, and;
  • the Lessor must be established in Malta and registered for VAT in Malta.

Buying a Yacht Exclusively for a Business Purpose

The VAT treatment of the purchase of the yacht by the Lessor, will, on the basis that the yacht is purchased exclusively for a business purpose, be VAT neutral.

There will be varying administrative arrangements applicable depending on whether the yacht is purchased via importation in the EU, purchased from another EU country or purchased from a seller in Malta.

Selling the Yacht

The application of VAT on the sale of the yacht by the Lessor will depend on whether the yacht is being sold in Malta, in another EU member state or outside the EU.

If you would like more information on the new Yacht Leasing Rules in Malta or have specific requirements you wish to discuss, please contact info@sentientinternational.com or telephone Samantha Snow on +356 2099 1531.

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