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With a booming yachting industry in Malta, the VAT department has issued updated rules and guidelines on the VAT treatment incurred when leasing pleasure boats, which guidelines are still based on Article 59a of the EU VAT Directive. Malta always strives to remain one of the main shipping and yachting jurisdictions in the world and thus the new guidelines reflect the best market practices in the industry.
The VAT paid shall be based on the use of the vessel in EU territorial waters and therefore, should a vessel not be used in EU territorial waters, the VAT paid shall be reduced. Therefore, in terms of the VAT guidelines, no VAT is due on the use and enjoyment of a vessel if the vessel is being used outside EU waters. The rules go into further detail on how the effective use of the vessel is calculated.
The rules also make a distinction between short term and long-term leasing of Yachts. A short-term lease is deemed to be one which is not more than 90 continuous days of possession and use, while a long-term lease is deemed to be one which exceeds the 90-day period.
To be able to benefit from the scheme, the below considerations must be satisfied:
Additionally, there are further requirements for long term leases: