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Revamped rules concerning the importation of yachts used for commercial purpose

Dr Josef Cachia  -  7/December/2020

Malta has historically been one of the best shipping jurisdictions in terms of legal structure as well as fiscal advantages. The same holds true in the sphere of yachting. Recent amendments have made the VAT levied on commercial Yachts more attractive due to a new tax deferment procedure.

When a yacht is meant to be leased out or used commercially, the import VAT paid on the yacht may be reclaimed. New amendments in local rules, however, allow importers to defer the payment of import VAT and hence the importer would not need to actually pay the VAT due and eventually reclaiming it back from the tax department. This provides significant cash flow advantages.

In addition, certain requirements have also been relaxed, such as the need for Maltese entities to obtain a bank guarantee by the importer of the yacht, which has now been removed. In certain situations a bank guarantee may be required to obtain authorisation for deferral but which the requirements are now less demanding. The rules may request that either a bank guarantee of 0.75% of the yachts value up to one million (1,000,000) Euro is obtained or the appointment of a VAT representative in terms of the law.

The law now also allows for the temporary importation of commercial yachts through Malta, which would allow the use of the yacht in EU waters for up to eighteen months, and subject to certain formalities.

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