Categories: EuropePublished On: 19.11.2017528 words2.6 min read

The guidelines issued by Malta’s VAT department regarding taxation on yacht leasing are based on the principle of effective use and enjoyment as found in Article 59A of the VAT directive, Malta’s maritime organisations have said.

This allows Member States to limit VAT payable on such services to only that portion which reflects use and enjoyment of the service inside the EU. No changes to the application of this principle had been undertaken since communications were made to the European Commission in 2009 on VAT treatment of long term hire pleasure yachts, they maintained.

The Malta Maritime Law Association, Malta Maritime Forum, The Yachting Trade Section within the Malta Chamber of Commerce, and the Super Yacht Industry Network Malta issued the joint communique in reaction to a communication by EU Commissioner Pierre Moscovici to finance minister Edward Scicluna earlier this week.

Moscovici, who is responsible economic and financial affairs, tax and customs, had asked Scicluna to clarify a scheme where yachts over 23 metres pay a reduced VAT rate of 5.4% in Malta. This special rate applied to such yachts if they are used for leasing purposes.

In their communique, the organisations also maintained that “Malta’s VAT treatment of the leasing of pleasure yachts on the basis of the effective use and enjoyment principles in the EU VAT Directive has been based on the similar application of this principle by other Member States, in particular France and Italy.”

“It is thanks to this that numerous yacht owners have been encouraged to bring their yachts within the EU and pay VAT on such yachts, rather than opt to not pay any VAT by retaining the hacts outside EU water. The presence of these yachts in the EU in turn means further increased maritime activity for all those throughout Europe involved in marine related services ranging from general supplier to yachts to technical services to wintering services,” they said.

“As practitioners we have over the past year assisted clients with the payment of VAT as provided for by Maltese and EU law. This in turn has assisted with the creation of a flourishing EU-based yachting industry, very much in line with the vision of the first Green Paper on an EU maritime policy as enunciated in 2006. This policy sought to encourage the development of marine related activities with a strong focus on the marine leisure industry, in order to ensure that Europe retains its prominence in the international maritime sector rather than see it dissipating outside the Union,” they added.

They also highlighted that the yachting industry is one of many other marine related activities in Malta, which include ship and yacht repair, tug and supply services, maritime flag, transhipment, and others.

Malta was an ideally positioned yachting destination, and had a large domestic and substantial international market. Such markets contributed significantly to the country’s and to Europe’s maritime dimension, they said, and it was vital that the EU authorities continued to recognise and encourage such a contribution, in line with the Union’s maritime policy.

The joint communique was disseminated to the media by outgoing PN executive council president Ann Fenech.

Source:, 17 November 2017