The Maltese VAT department has launched as
Scheme whereby a Maltese company purchases a
pleasure yacht and enters into a lease-sale
agreement of the yacht with a third party. The
aim of the scheme is to allow to pay VAT on
a yacht calculated on the percentage of the
time that the yacht is deemed to sail in EU
waters This will also result in a VAT paid certificate
at the termination of the scheme, thus allowing
the yacht free movement within the EU.
1. Scheme for payment of VAT on yachts
The main Characteristics of this scheme are
as follows:
1, A Maltese company is set up to own the
yacht. The company would also be registered
with a valid VAT number here in Malta. This
same company would later become a lessor of
the yacht under the lease agreement.
2. This Maltese company will lease the yacht
to another person, a Maltese, foreign person
or company - the Lessee.
3. A leasing agreement (lease-purchase) of
a pleasure yacht being an agreement whereby
the lessor (the owner of a yacht) contracts
the use of the yacht to the lessee in return
for a consideration is then entered into between
the lessor and the lessee. At the end of the
lease period, the lessee may opt to purchase
the yacht at a percentage of the original price.
4. The initial VAT payable at source by the
purchaser on the purchase price of the yacht
would in actual terms not be payable by the
lessor to the seller/supplier of the yacht.
In making this statement we are conscious of
three possible scenarios that may apply and
in any one of them the end result would be nil
VAT or refundable VAT on the purchase of the
yacht. These scenarios are:
A. The yacht is purchased locally.
B. The yacht is purchased from another Member
State.
C. The yacht is imported into the European Union.
Different criteria apply to each scenario mentioned
above, which we would be happy to discuss with
your specific yacht VAT Scenario (email: info@companyinmalta.com).
5. What would attract the payment of VAT is
the lease of the yacht as a supply of services.
The supply of services is taxable according
to the use of the yacht within the territorial
waters of the European Union.
The Yacht VAT scheme introduced by the Maltese
VAT authorities operates as follows:
1. It introduces a schedule of VAT rates which
would be payable by the lessee on the lease
services that are provided by the lessor based
on the percentage of the lease taking place
in EU waters which percentage depends on the
type of yacht involved e.g. sailing yacht, motor
yacht, and the length of the yacht concerned.
The raison d'etre of this scheme is that it
is anticipated that yachts of a certain length
spend only a part of their time in EU waters
and a far greater time outside same. The Yacht
VAT guidelines indicate that the VAT department
presumes that:
1. A yacht of 24 meters or above spends only
30% of its time in EU waters
2. A yacht of 22 meters spends 40%; and
3. A 13 mtr yacht 50% and so on and so forth)
and therefore VAT on the yacht , at 18% Should
be computed only on the amount of time the yacht
will spend in EU territorial waters.
i2. Approval must be sought from the Commissioner
of VAT. For this purpose the VAT department
would be provided with details necessary to
determine the value and size of the yacht which
details depend on whether the yacht is a second
hand or a new yacht.
3. The VAT department, once it has approved
the applicable rate, would upon request and
once certain requirements are satisfied issue
a provisional certificate at the beginning of
this lease scheme confirming that VAT on the
said yacht is applicable in Malta.
i4. The yacht must come to Malta, possibly
at the beginning of the lease agreement.
5. An initial contribution is to be paid by
the lessee to the lessor amounting to 50% of
the value of the craft at the beginning of the
lease period.
6. The balance on the lease of the yacht would
then be divided into equal monthly instalments
but shall not exceed 36 months. VAT would be
charged on each monthly installment at the applicable
VAT rate. However it is important to note that
the scheme expects the Lessor to make a profit
from the leasing agreement over and above the
value of the yacht, the amount of which is determinable
by the Lessor. VAT is also to be calculated
on the profit decided upon
7i. The lease agreement will grant the Lessee
the option to buy the yacht at the end of the
lease period at a price which must be not less
than 1% of the original value of the yacht.
8. At this stage, seeing the Lessee thus become
the owner of the yacht and VAT thereon has been
paid in full, the VAT Department will issue
a Yacht VAT paid certificate in the name of
the Lessee indicating that VAT has been paid
in full.
Contact us for more information as well as
for a quote. We will happily guide you through
the process and also advise you on the solutions
that would best suite your needs!. info@CompanyinMalta.com.
Or call +356 21 378 722
