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If you’re dreaming of owning a yacht or pleasure boat, Malta might just be your perfect port of call. Why? Because Malta offers a VAT program for yachts that can save you a boatload of money! Here’s how it works and how you can set sail with some serious savings.
A Bit of History: Malta’s Special Yacht Holding Companies
In the past, Malta was also known for its special tax regime for pleasure boat and yacht holding companies. These companies enjoyed unique tax benefits, making them an attractive option for yacht owners. For example, one of our clients had his yacht registered under such a company in Malta. Now, he’s merging his Malta company (which we administer) with his yacht holding company, streamlining his operations while still enjoying the benefits of the Maltese system.
The Magic of Malta’s VAT Program
Imagine cruising through the Mediterranean on your luxury yacht, knowing you’ve only paid a fraction of the usual VAT rate. Sounds too good to be true? Not in Malta! Thanks to a special VAT program, you could end up paying just one-third of the standard VAT rate on your yacht. That’s a huge reduction, and it’s one of the reasons why Malta is a top choice for yacht owners around the world.
How Does the VAT Scheme Work?
To take advantage of Malta’s VAT program, you’ll need to have your yacht registered in Malta. But there’s more to it than just waving a Maltese flag on your boat. You’ll also need a Maltese company, or possibly a branch or permanent establishment of a foreign company, to hold the VAT registration number. Don’t worry, though setting this up is smoother than a calm sea, especially when you have the right team on board. We are here to help!
If you’re considering buying a pleasure yacht through a Maltese company and leasing it out, this scheme could be just what you need to make VAT payments more manageable and help your yacht sail smoothly through EU waters.
Here’s a breakdown of the main features:
- Starting Up: First, we’d set up a Maltese company, which will become the official owner of your yacht and get a VAT number in Malta. This company will also act as the lessor in a lease agreement.
- Leasing the Yacht: Your Maltese company will lease the yacht to another individual or company, whether based in Malta or abroad.
- The Lease Agreement: The lease agreement, also known as a lease- purchase, involves the lessor (the yacht owner) renting out the yacht to the lessee (the person leasing it). At the end of the lease, the lessee can buy the yacht for a percentage of the original price. This final purchase amount won’t be less than 1% of the yacht’s original value, and will be subject to the standard VAT rate of 18%.
- VAT Scenarios: When buying the yacht, the initial VAT payable might not always apply. Here are the three scenarios that could lead to no VAT or refundable VAT on your yacht purchase:
- Locally Purchased Yacht.
- Yacht Purchased from Another EU Member State.
- Yacht Imported into the EU.
- VAT on Leasing: VAT will be due on the leasing services provided. The VAT rate depends on how much time the yacht spends in EU waters. The VAT rates for leasing range from 5.4% to 18%, depending on the type and size of the yacht.
VAT Rates by Yacht Size
The VAT department has set up a helpful schedule based on the yacht’s size and type.
Here’s a quick look:
- Sailing Boats or Motor Boats Over 24 meters: 5.4%
- Sailing Boats 20.01 to 24 meters: 7.2%
- Motor Boats 16.01 to 24 meters: 7.2%
- Sailing Boats 10.01 to 20 meters: 9.0%
- Motor Boats 12.01 to 16 meters: 9.0%
- Sailing Boats Up to 10 meters: 10.8%
- Motor Boats 7.51 to 12 meters (if registered commercially): 10.8%
- Motor Boats Up to 7.5 meters (if registered commercially): 16.2%
- Craft Permitted to Sail in Protected Waters Only: 18.0%
What You Need to Do
- Approval: You’ll need to get approval from the VAT Commissioner. Provide us with details about the yacht to get the applicable VAT rate.
- Provisional Certificate: Once approved, the VAT department will issue a provisional certificate confirming VAT applicability in Malta. This certificate can be shown at various ports if needed.
- Initial Contribution: At the start of the lease, the lessee will make an initial payment (50% of the yacht’s value) to the lessor. For example, on a yacht worth £6,510,000, the initial contribution would be £3,255,000, with VAT at 5.4% on this amount.
- Monthly Installments: The remaining balance is divided into equal monthly payments, not exceeding 36 months. VAT on these payments is at the applicable rate (e.g., 5.4%).
- End of Lease: At the end of the lease, the lessee can purchase the yacht for at least 1% of the original value. VAT of 18% will apply to this final purchase amount.
- VAT Paid Certificate: Once the final VAT is paid, the VAT department will issue a certificate showing that VAT has been fully paid.
This scheme aims to make VAT on pleasure yachts more appealing and easier to manage, ensuring yachts are ready for smooth sailing throughout the EU. If you have any questions or need more details, don’t hesitate to get in touch with us!
Ready to Set Sail? We’ve Got You Covered!
If you’re considering registering your yacht in Malta and taking advantage of the VAT scheme, we’re ready to help. From setting up the necessary corporate structures to managing the ongoing compliance and accounting work, we’ve got all the expertise you need. And if you’re looking to merge your existing companies or explore additional tax benefits, we’re here for that too.
Owning a yacht is about freedom and luxury. Let us help you enjoy that experience to the fullest, with more savings and less hassle. Malta’s VAT program is just one of the many ways we can make your dream of yacht ownership a reality. Ready to drop anchor in Malta? Let’s get started!
Contact us now!
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