Value Added Tax (VAT): A local perspective

While the fundamental structure of VAT systems is largely consistent across countries, there are notable variations. In the EU, VAT applies to most goods and services, with exemptions for items of significant public value. Non-EU countries often follow a similar framework but may have different rate classifications.

Malta’s VAT system is governed by the VAT Act (Chapter 406 of the Laws of Malta) and aligns with EU VAT Directives. VAT registration in Malta is processed through the Commissioner for Revenue, who issues a VAT Certificate with a unique VAT number. The standard VAT rate is 18%, however there are other reduced rates for certain goods and services. Regular submission of VAT returns and payments (where applicable) is mandatory, with penalties for non-compliance. This system reflects Malta’s commitment to aligning with EU standards while addressing its specific economic needs.

In Malta there are three categories of VAT registration: Articles 10, 11, and 12, each with distinct obligations.

Article 10: Standard VAT Registration

Article 10 registration is the standard VAT registration in Malta. Businesses must register under this article if their annual turnover exceeds €35,000 for goods or €30,000 for services. Key features include:

• MT prefix VAT number
• Obligation to charge VAT on taxable supplies
• Ability to claim VAT refunds on expenses
• Quarterly VAT returns due within 6 weeks of quarter-end
• Potential requirement to submit VAT recapitulative statements for intra-EU sales

Article 11: Small Business Registration

This registration applies to businesses with annual turnover below the Article 10 thresholds. Characteristics include:

• No VAT charging on supplies
• No VAT refunds on expenses
• Annual VAT declaration due by March 15th following the calendar year
• Requirement to register under Article 12 for intra-EU purchases

Article 12: Intra-Community Acquisitions

Businesses acquiring goods from other EU countries worth over €10,000 annually must register under Article 12. This registration:

• Requires VAT payment on intra-EU purchases
• Involves annual VAT declarations due by February 15th following the calendar year

All registration types are subject to penalties for late submissions. Businesses should carefully consider their activities and turnover to determine the most appropriate VAT registration for their needs.

If you require services related to VAT registration, VAT returns, VAT investigations and any other VAT related issues in Malta please contact us and view our web page for a full list of the services we offer on VAT compliance in Malta: https://fairwindsmanagement.net/services/accountancy-services/vat-compliance. You may reach out to Director, Mr Conrad Meli on cmeli@accountingservices.com.mt. 

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.