The amendment to the Eighth Schedule of the VAT Act (Chapter 406, Laws of Malta), effective from 1st of January 2024, reduced the VAT Rate for pleasure boat rentals from 18% to 12%. To clarify these amendments and the way in which they are to be applied, the Commissioner for Tax and Customs has released detailed guidelines on the newly introduced regulations, as stipulated in Legal Notice 231 of 2023.
As from the 1st of January 2024, to qualify for the reduced 12% VAT rate, the following key conditions are required;
- An agreement between the lessor and the lessee
- The duration of the agreement, when combined with any prior charters by the same lessee, within the preceding 12 months, must not surpass 5 weeks. According to the guidelines, 5 weeks shall equate to a total of 35 days.
- The pleasure boat must be physically obtained by the lessee in Malta.
This means that if a pleasure boat is rented out to the same individual for a continuous period of more than five weeks, the reduced rate of 12% would be applicable for the first 5 weeks, whilst the default rate of 18% will be applicable to the remaining period.
Further information on the Guidelines may be found through the following link;
Guidelines – 12 percent VAT on pleasure boats.pdf (gov.mt)
This article is not intended to constitute legal advice and neither does it exhaust all relevant aspects of the topic.
