VAT in Malta: What Businesses Need to Know for 2025

Why VAT matters for your Malta-based business

In Malta, VAT is a key indirect tax that applies to most goods and services. For businesses, this means:

• If you’re providing taxable goods or services, you must register for VAT once you exceed the registration threshold.
• Proper VAT registration ensures your costs (input tax) can be recovered where eligible.
• Mistakes or delays in VAT compliance can lead to fines, interest and reputational issues.

Registration may also make sense if your business is engaging with clients in other EU countries, expects significant input tax and wants to recover it and wants a smoother image to suppliers and customers (some prefer working with VAT-registered entities).

What Fairwinds Management does for you

Our team takes a holistic approach:

• Registration and set-up: We handle your VAT registration process, including documentation, application and ensuring you meet all compliance requirements.
• Bookkeeping and management accounts: We maintain up-to-date records, submit VAT returns on time, and prepare management accounts to highlight cash-flow implications of VAT.
• Advisory and planning: VAT is more than box-ticking. We review your business model, supply chains and cross-border transactions to identify VAT-efficient strategies (where legal).
• Support for audits and queries: You can rest assured that if the tax authorities come knocking, we’re ready to work with you and your records are in order.

Common pitfalls and how to avoid them

Many businesses make avoidable mistakes when it comes to VAT. Here are a few we see frequently:

• Delaying registration: Waiting until a deadline or threshold is reached without proper planning can lead to unexpected liabilities.
• Incorrect classification of supplies: Some services or goods may be exempt, zero-rated or standard-rated—misclassification hurts cash-flow and compliance.
• Poor record keeping: Without robust bookkeeping, it becomes difficult to reclaim input tax or substantiate VAT returns.
• Cross-border mistakes: If you supply or receive goods/services from other EU countries, you might have additional obligations under the EU VAT regime.

To mitigate these risks, our specialised accountants act as dedicated accounts managers for each client, ensuring personalised service and proactive oversight.

Looking forward: VAT trends to watch

As Malta remains aligned with EU VAT directives, here are some emerging trends to keep on your radar:

• Digital services and e-commerce: VAT rules are evolving rapidly for online businesses and cross-border digital supplies – make sure you’re covered.
• Increased regulatory scrutiny: The tax authorities are focusing more on compliance, audit trails, and meaningful substance – so documentation and transparency matter.
• Input tax claims scrutiny: Especially for parts of the business not directly contributing to taxable supplies, VAT recovery is being carefully examined.
• Supply chain optimisation: Businesses are reorganising to optimise VAT efficiencies – especially those with holdings or multinational elements.

How to get started

If you’re a self-employed professional, a newly formed Malta-company, or an established business looking to review your VAT position, here’s how Fairwinds Management can help:

• Initial consultation: We’ll assess your operations, supplies and business objectives to determine whether VAT registration is needed, and what your ongoing obligations might be.
• Set-up or review engagement: We’ll assist in registration (or review existing compliance), deploy accounting infrastructure and train your team (if required).
• Ongoing support: We’ll maintain your VAT records, file returns, liaise with the authorities as needed, and help you detect opportunities for improvement or risk mitigation.

VAT may seem like just another regulatory burden but for businesses in Malta it can also be a strategic lever: good compliance reduces risk, boosts credibility and helps you reclaim costs. With Fairwinds Management by your side, you’re not just ticking boxes, you’re aligning your VAT position with your business objectives and growth ambitions. Want to talk to us about your VAT obligations or planning? Contact us at info@fairwindsmanagement.net or call +356 2704 0903 and let’s explore how we can support you.

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.