Malta: Reduced VAT rate on short-term hiring of “pleasure” boats
Short-term hiring of a “pleasure” boat in Malta for any term that does not exceed five weeks
Hiring of a “pleasure” boat in Malta for any term that does not exceed five weeks
The short-term hiring of a “pleasure” boat in Malta for any term or part of a term that does not exceed five weeks will be subject to a 12% value added tax (VAT) rate, effective from 1 January 2024.
To determine if the five-week term has been exceeded, it must be determined if the same pleasure boat, or a boat of the same kind, was made available to the same person during the previous 12-month period, ending on the date of the beginning of the current hiring term. As a result:
- If the pleasure boat was not made available to the same person in the previous term, and the current term does not exceed five weeks, the 12% VAT rate applies to the current term.
- If the pleasure boat was not made available to the same person in the previous term, and the current term exceeds five weeks, the 12% VAT rate applies to the first five weeks of the current term.
- If the same pleasure boat or a pleasure boat of the same kind was made available to the same person in the previous term, and the five weeks did not lapse in the previous term, the 12% VAT applies to the remaining period within the current term until the five weeks lapse.
- If the same pleasure boat or a pleasure boat of the same kind was made available to the same person in the previous term, and the five weeks lapsed in the previous term, the 12% VAT rate cannot be applied in the current term. The standard 18% VAT rate applies instead.
Therefore, this rule reduces the VAT cost on short-term hires that take place in Malta.
Read a January 2024 report prepared by the KPMG member firm in Malta
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