Malta: Time Is Running Out: Malta Yacht Registration With 5% VAT

Under Regulation 384 of 2003 of the Value Added Tax Act of Malta it is possible to register yachts under the Maltese flag with the added bonus of paying VAT at only 5%. Yacht owners who register their yachts in Malta prior to this date and pay VAT at 5% to the Malta government will be considered to be VAT-paid on Malta’s accession to the E.U. on May 1, 2004.

The offer is valid until 31st March 2004 and therefore interested yacht owners must take immediate action to have their yacht registered in Malta and have it VAT-paid before that date.

There are two procedures to choose from, depending on whether the yacht can be physically brought to Malta before the time limit of 31 March 2004.

If the yacht can be brought into Malta before 31 March 2004, a Maltese shipping company is created and the yacht is registered under the Malta flag. The company submits an application to the Customs Department together with sales invoice from the present owner to the Maltese shipping company, bill of sale, builder’s certificate and a valuation prepared by our valuers in Malta, who are recognized by Malta Customs as official valuers. There is no need to bring the boat to Malta for the valuation to be carried out. The Customs Dept. will issue an SAD (Single Administrative Document) and the procedure is complete.

If the yacht cannot be brought to Malta before 31^st March 2004, a Maltese shipping company (Company A) is created and the yacht is registered under the Malta flag. Company A registers as a VAT payer in Malta and the boat is valued by an official valuer without the need to bring the boat to Malta. Company A then sells the boat to a second company (B) to create a VAT transaction. Company A issues a tax invoice on deferred terms to Company B for the price of the sale (being the price of the valuation) plus 5% VAT. Company B pays the 5% VAT and then the yacht is brought to Malta any time after the 1^st May 2004. There is no limitation as to when the importation must take place. On importation the VAT department issues a certificate confirming that VAT has been paid.

The second option is naturally more expensive since it involves the creation of two corporate structures but the savings made on VAT will amply justify the expense involved.