VAT in Malta

While VAT systems share a fundamental structure globally, variations exist. In the EU, VAT typically applies to most goods and services, with certain exemptions for items of significant public value. Outside the EU, VAT frameworks are similar across nations, albeit with differences in rate classifications.

In Malta, VAT is regulated by the VAT Act and its subsidiary legislation, Chapter 406 of the Law of Malta, and is in accordance with the EU VAT Directives. The standard VAT rate in Malta 18%. A reduced VAT rate of 5% applies for some supplies of goods and services and licensed letting and use of sporting facilities are subject to a VAT rate of 7%. VAT registration is done through the Commissioner for Revenue who would eventually issue a VAT Certificate holding the VAT number. VAT returns and VAT payments (if applicable) must be submitted on a regular basis and failure so do so will lead to penalties. Natural persons and legal entities involved in economic activities must apply for a VAT number unless exempt to do so. Depending on the business activity there are three categories of VAT registrations, being Article 10, 11 or 12 and each hold different obligations.

Article 10

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 €30,000 for other economic services and €35,000 for Economic activities consisting principally in the supply of goods. 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

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, need to also register under Article 12 to obtain a valid identification number.

Article 12

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.

For any assistance with VAT registration, VAT returns, VAT investigations and any other VAT related issues in Malta please contact Conrad Meli on cmeli@accountingservices.com.mt 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.

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.