Superyacht Charters in Malta to Apply Proportional VAT

The Maltese government has issued guidelines clarifying the application of VAT on short-term yacht charters. ‘Guidelines for the VAT treatment of short-term yacht hiring’ is applicable to yacht charters undertaken for a period less than 90 days that have been commenced in Maltese waters.

Such charters will continue to be subject to a rate of 18% on the cost of the charter. Significantly however, this will only be applied proportionally, based on the amount of time the charter is in EU waters. As Maltese-based law firm Fenech & Fenech’s Alison Vassallo explained, the country’s proximity to destinations such as Tunisia means that a superyacht charter could be undertaken where a significant portion of the time was spent beyond the realms of the EU, and therefore, outside the parameters for the tax’s application.

“By way of example, a yacht with a length of over 24 meters would be taxed at the full rate of 18% on 30% of the hire, on the basis of the estimate that the said yacht would be spending 30% of its time in European waters and 70% of its time in international waters”, Vassallo explained. “The above is a further manifestation of the efforts being made by the Maltese government, working hand in hand with us industry players, of placing Malta firmly on the map as a yachting hub”, she added.

According to Vassallo, the guidelines will come into force with immediate effect.