New ‘Guidelines on the VAT Treatment of Short-Term Yacht Chartering’
On 29 July 2013 the Malta VAT department published new Guidelines on the VAT Treatment of Short-Term Yacht Chartering. The guidelines address situations whereby a yacht owner/operator contracts the use of his yacht for a consideration with a crew or on a bare boat basis for no more than 90 days.
Pursuant to Article 59a of EC Directive 2006/112, the short term charter of a yacht may be taxed in accordance to the portion of the yacht's use within the territorial waters of the European Union, rather than the standard rate of 18 percent.
Based on the reasoning that it is difficult to determine the period that a sailboat spends within and outside territorial waters of the European Union, the Commissioner of VAT deems that an acceptable measure would be the length of the yacht and its method of propulsion. As a result, no VAT will be levied on that part of a charter commencing in Maltese waters that is consumed outside the EU. The table below indicates the applicable established percentage proportions:
The aim of the guidelines is to strengthen Malta's position in the yacht chartering industry and to encourage more super yacht charters to start from Malta.
