Fiscal and Other Incentives

Value Added Tax

VAT in Malta is levied upon the importation of goods into Malta, on intra-Community acquisitions into Malta and on the supply of goods and services made in Malta for a consideration in the course of business. The standard rate is 18% but reduced rates of 7% and 5% is charged in respect of certain supplies. The Commissioner for VAT is vested with its administration.

A person established in Malta is obliged to register for VAT within 30 days from the date of making a taxable or exempt with credit supply. Businesses established outside Malta are required to register if they make taxable supplies in Malta and for which they become liable for the payment of VAT in Malta. Other persons (non private individuals) are required to register for Maltese VAT purposes when they make intra-Community acquisitions with a value exceeding EUR10,000 per annum. Persons who are not established in another EU state and who make distance sales to Malta with a value exceeding EUR35,000 per annum are obliged to register for Maltese VAT purposes.

VAT on imports is collected by the Comptroller of Customs on behalf of the Commissioner of VAT at the time when the goods are released. Duty on importations may also be payable in certain circumstances. A number of importations are exempt from VAT.

VAT is payable when a registered person makes an intra-Community acquisition in Malta unless the goods are exempt from VAT. VAT is also charged on the taxable value of goods and services supplied in Malta other than exempt and zero-rated supplies.

In respect of the supply of services, the service is treated as taking place in Malta if the supplier is established in Malta. From 1 January 2010, the general rule relative to the place of supply of services is (subject to certain conditions and exceptions) being shifted to the country in which the customer is established. There are special rules applicable to certain types of services, such as advertising, consultancy, banking and financial services and intellectual services which are treated to have taken place in the country where the customer is established.

Input VAT on imports, intra-Community acquisitions and local purchases is recoverable by means of a credit against output VAT. Input VAT is recoverable to the extent that such inputs are used for supplies made or to be made in the course of business. However, VAT is not available as a credit if it is ‘blocked’, incurred in activities that are exempt without credit or if it is incurred in the case of exempt small businesses. Supplies made outside Malta are not subject to VAT.

Exempt importations include:

  • goods that are intended to be placed under a customs duty suspension regime
  • re-imported goods which are re-imported unaltered

Exempt intra-Community acquisitions include:

  • acquisitions of goods whose supply or importation is exempt
  • acquisitions that are part of certain triangular transactions

Exempt without credit supplies include:

  • the transfer and the letting of immovable property (excluding inter alia
  • commercial letting and hotel accommodation)
  • insurance services
  • credit, banking and certain investment services
  • lotto and lotteries including remote gaming
  • health and welfare
  • cultural services
  • education.

Businesses whose annual turnover is less than the statutory thresholds are entitled to be registered as an ‘exempt person’. An exempt person does not charge VAT but is not to deduct input VAT