With effect from 1 January 2024, the short-term hiring of a pleasure boat in Malta for any term or part of a term that does not exceed 5 weeks attracts 12% VAT.
To determine whether the 5-week term has lapsed, one needs to consider whether the same pleasure boat or a pleasure boat of the same kind was made available to the same person during the previous 12-month period, ending on the date of the beginning of the existing hiring ('a previous term'). As a result,
- If the pleasure boat was not made available to the same person in the previous term, and the current term does not exceed 5 weeks, the 12% VAT rate applies to the current term.
- If the pleasure boat was not made available to the same person in the previous term, and the current term exceeds 5 weeks, the 12% VAT rate applies to the first 5 weeks of the current term.
- If the same pleasure boat or a pleasure boat of the same kind was made available to the same person in the previous term, and the 5 weeks did not lapse in the previous term, the 12% VAT applies to the remaining period within the current term until the 5 weeks lapse.
- If the same pleasure boat or a pleasure boat of the same kind was made available to the same person in the previous term, and the 5 weeks lapsed in the previous term, the 12% VAT rate cannot be applied in the current term. The standard 18% VAT rate applies instead.
This rule therefore reduces the VAT cost on short-term hires that take place in Malta.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
