On the 12th March 2020, the Commissioner for Inland Revenue published revised Guidelines regarding the place of supply of the hiring of pleasure yachts. The Guidelines establish the manner in which the use and enjoyment of such pleasure yachts is to be treated for VAT purposes.
While the general principle is that full taxation in Malta is applicable where the place of supply of the service is determined to be Malta, the Guidelines provide for a method of adjustment based on the actual effective use and enjoyment of a pleasure yacht within and outside EU waters. The revised Guidelines establish that this is to be calculated by reference to the period of time when the pleasure yacht is used and enjoyed outside EU territorial waters.
For the purpose of applying the Guidelines, the Lessee is to provide the Lessor with documentary and/or technological date to determine the actual effective use and enjoyment by the Lessee of the pleasure yacht within and outside EU territorial waters during the lease period.
We would be able to advise owners on the practical application of the Guidelines and their incorporation in Operating Lease arrangements set up in terms of Maltese law.