VAT Treatment Of Taxi Operators Using Online Ride-Hailing Platforms

On 25 January 2026, the Malta Tax & Customs Administration (MTCA)  released Explanatory Notes addressing the  VAT implications for taxi operators who use online ride-hailing platforms to provide passenger transport services in Malta. These notes aim to clarify key VAT issues that arise in this sector, particularly in light of new digital platforms facilitating bookings and payments, and respond to common practical questions from the industry. 

The document is explicitly not legally binding, and does not constitute formal guidance under Article 75 of the VAT Act. Instead, it provides a structured overview of the main VAT considerations based on existing law and practice. It emphasises that professional advice should be sought for specific circumstances and that the legal provisions themselves remain authoritative. 

Key VAT Issues Covered 

1. VAT Treatment of Services Facilitated by Ride-Hailing Platforms 

A central theme of the Notes is how VAT should be treated where an  online ride-hailing platform  is used to facilitate bookings and payments for taxi services. 

• Principal taxation remains with the taxi operator. 

Regardless of the involvement of a digital platform, it is the operator of the taxi service who must account for VAT on the fare charged to the passenger where the platform acts in the name and for the account of the taxi operator. The full consideration received from the passenger is treated as the operator’s supply for VAT purposes. 

• Commissions are separate supplies.  

When the platform charges a commission or facilitation fee, this is treated as a separate supply made by the platform to the taxi operator. For VAT purposes, the place of supply of these services is generally Malta, where the operator is Malta-registered. If the platform is not VAT registered in Malta, the operator must self-charge 18 % VAT on the commission received under Maltese VAT rules. 

• Registration implications for VAT exempt SME (Article 11) operators. 

Taxi operators who benefit from the Article 11 VAT exemption for SMEs are still considered taxable persons for the purposes of commission supplies. This means that, where a platform established outside Malta provides facilitation services, the SME-exempt taxi operator must register under Article 12 of the VAT Act and self-charge VAT on the platform’s commission. 

• OSS and erroneously charged VAT. 

The Notes highlight the scenario where a platform might incorrectly charge VAT at source (for example via the EU One-Stop-Shop (OSS)) but emphasise that this does not relieve the taxi operator from their obligations under Maltese VAT law. Any incorrect VAT collected needs to be reversed by the platform and accounted for correctly by the taxi operator through the local VAT return. 

2. Practical Examples and Recording in VAT Returns 

The Notes provide illustrative examples showing how transactions should be reported in Maltese VAT returns: 

• Example of a standard Maltese operator (Article 10). 

The operator supplies taxi services to consumers and must account for VAT on the total fare. Additionally, fees paid to the platform are split out and self-charged with corresponding input claims, if entitled. 

• Example where the operator is an Article 11 exempt SME. 

The passenger journey may be exempt from VAT, but VAT still applies to the platform’s commission. The operator must account for this VAT and, in order to do so, may also need to register under Article 12 of the VAT Act if not already registered. 

• Example where the platform is itself Maltese VAT registered. 

When the platform is established and VAT registered in Malta, commission fees include VAT and are treated as standard B2B supplies, simplifying the VAT accounting for the operator. Operators registered under Article 11 of the VAT Act would not have the right of recovery of such local VAT charged by the platform. 

These examples underline the importance of distinguishing between the supply of taxi services and the supply of facilitation services in VAT accounting. 

3. Other VAT Considerations Addressed 

The Explanatory Notes also address several ancillary issues that are common in the taxi sector: 

• Transfer of taxi assets. 

When a taxi vehicle is transferred for consideration (for example, sold) by a taxable person, the disposal is generally treated as a supply of goods  subject to 18 % VAT, unless an exemption applies. 

• Input VAT recovery on vehicle costs. 

Input VAT may be claimed on fuel, repairs, and other vehicle costs to the extent that these assets and expenses are used exclusively for the economic activity of transporting passengers for consideration. This aligns with the general VAT rules on input tax deduction. 

• Private use of a taxi. 

Vehicles licensed for taxi services may not be used privately under local transport regulations. If private use does occur (in exceptional cases), VAT adjustments may be required, including capital goods scheme adjustments or self-charging VAT on deemed supplies. 

• Cancellation of VAT registration. 

If an operator cancels their Maltese VAT registration (e.g. switching from Article 10 to Article 11 or complete de-registration), any goods forming part of the taxable activity at the time are treated as a deemed supply of goods, triggering VAT liability on the goods’ market value. 

In Summary – The Practical Impact for Operators 

The MTCA Explanatory Notes highlight that: 

1. Taxi operators remain fully responsible for VAT on services they provide, even when marketed and booked through online platforms. 

2. Platform commissions are treated as separate supplies and may necessitate self-charging of VAT if the platform is not Maltese registered. 

3. VAT exempt SME operators must carefully consider their VAT status and potentially register under Article 12 where platform commissions are received. 

4. Input VAT recovery on taxi operational costs follows established VAT deductibility rules. 

These clarifications assist in aligning commercial arrangements with Maltese VAT compliance requirements and provide a solid reference on how digital platform involvement affects VAT accounting.  

How can BDO Malta help?

The importance of continuous monitoring of the VAT position and compliance obligations of taxable persons has significantly increased over the years. As part of our range of advisory and compliance services, the team can provide help with assessing registration obligations to ensure proper registrations and assist with the ongoing submission of VAT returns.  Get in touch with our team to discuss the challenges that your business is facing and the opportunities ahead.