Understanding VAT

The standard rate is 18% and this applies to most goods and services, however there are also some reduced rates. Businesses and self-employed individuals must register for VAT under one of three Articles:

Article 10 (Standard Registration)

Anyone who registers for VAT under Article 10 gets a VAT number with the MT prefix. To register for Article 10 the business’ annual turnover must exceed the threshold of €35,000 for services, €28,000 for goods, and €14,000 for small undertakings. Under this Article the business must charge VAT on the taxable supplies of services or goods and can claim back VAT refunds on their expenses. Under this Article VAT returns are done quarterly and must be submitted to the VAT Department within the Commissioner for Revenue in Malta within 6 weeks following the end of the VAT quarter. Any late submission could result into penalties. Businesses under Article 10 may also require to periodically submit a VAT recapitulative statement containing intra-community sales. Such statements are applicable when one supplies services or goods to taxable persons in the EU holding a VAT number, with the place of supply being where the customer is established.

Article 11 (Exempt Registration)

To register for Article 11, the annual turnover must not exceed the threshold of €30,000 for other economic services and €35,000 for economic activities consisting principally in the supply of goods. Under this Article, the business does not charge VAT for the supplies of services or goods and will not be able to claim back any VAT on their expenses. For this Article the taxable person or business will need to file a VAT declaration once a year, with the deadline being 15th March following the end of the calendar year. A late submission could result into penalties. However, those registered under Article 11 but intend to make intra-community purchases, these need to also register under Article 12 to obtain a valid identification number.

Article 12 (Intra-Community Acquisitions)

Businesses who acquire intra-community goods with a value of more than €10,000 annually should register for VAT under Article 12. This Article also requires one to pay VAT every time they purchase these intra-community goods. For this Article the taxable person or business will need to file a VAT declaration once a year, with the deadline being 15th February following the end of the calendar year. A late submission could result into penalties.

VAT Returns are typically filed quarterly but can be monthly for larger businesses and any VAT due must be paid when filing the return. Late submissions or incorrect filings may result in fines and interest charges.

For any assistance with VAT registration, VAT returns, and any other Malta VAT related issues, please contact Conrad Meli on cmeli@accountingservice.com.mt or view our web page for a full list of VAT services we offer: https://fairwindsmanagement.net/services/accountancy-services/vat-compliance.

Fairwinds Management Limited is a MFSA licensed firm offering Business Solutions in Malta. As part of our services, we offer Accounting, Administration, Corporate and Legal solutions.  Fairwinds Management also manages the brand Accounting Services. More information about us and our key services please visit our website. You may reach Fairwinds Management on +356 2704 0903 or info@fairwindsmanagement.net.

Article written by Ms Charlene Sciberras, B.A. (Hons), guest writer, a marketing and business administration specialist with a special focus on corporate, accounting, and legal matters.