VAT on Yachts in Malta

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September 08 13:14 2016 by The Editor Print This Article

The VAT on Yacht Leasing Regulations of January 2006, the VAT on Yachts rules in Malta, have made it possible to reduce the effective VAT payable on the purchase of Yachts to as low as 5.4% VAT and this by virtue of a Financial Leasing agreement made between a Malta Shipping Company acting as Lessor and any other third party (who does not necessarily have to be a Maltese national or a Malta Company) acting as Lessee. At a glance, the salient features of the Malta VAT on Yacht Leasing scenario are as follows:

Malta Yacht Leasing/VAT Incentives

  • Reduction in the value of the yacht on the lease agreement on which VAT is payable resulting in an effective rate of VAT payable as low as 5.4% (as opposed to the standard 18%)
  • Reduction in value of the yacht and consequent VAT rate payable directly dependent on the length and type of yacht being leased.
  • Lease agreement should last at least one (1) year and cannot exceed three (3) years. 
    No obligation to opt for financing via banks or other financial institutions. Client reserves the right to do so should the need arise.
  • Should the client resort to financing, security can be provided by a mortgage registered over the yacht (LINK - SUB 3), by a Deed of Covenants collateral thereto, as well as a pledge of shares in the owning company in favour of the bank or financial institution.
  • Yacht must be present in Malta on termination of the period Lease agreement when lessee exercises the purchase option thereby taking over the ownership of the yacht.
  • Upon expiry of the lease, once VAT on all instalments has been paid, the Malta VAT Department will issue an EU-wide VAT-paid certificate.
  • Lessor must be a Maltese person, natural or juridical.
  • Lessee may be a foreigner, natural or judicial.
  • No obligation to register one's yacht under the Malta flag.
  • The yacht may be new or used.
  • The yacht may still be chartered by the lessee throughout the lease period, should he elect to do so.
  • The effective VAT rate is directly dependent on the type and length of the yacht. To this effect the VAT Department has issued guidelines illustrating the various VAT percentages set according to the length of the craft and its means of propulsion (power or sailing). Please feel free to forward the details of your yacht so that we may advise you accordingly.

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