YACHT LEASING IN MALTA
The Maltese Government published Guidelines on the VAT treatment of Maltese finance leasing of yachts in Malta.
The advantages of Yacht Leasing in Malta structure are:
- Clear Guidelines establishing the conditions applicable in the event of a yacht leasing agreement entered into in Malta
- An objective method of taxation allowing for a transparent procedurefor Maltese leasing
- The issue a VAT Paid Certificate at the end of the yacht lease in Malta
- A structure allowing various finance optionsfor Yacht leasing in Malta
The Method of Taxation
Where a leased yacht is used partly in EU waters, only the portion of the lease payment corresponding to the use in the EU is subject to VAT. In view of the objective difficulty to establish the extent of the use of the yacht within EU and non-EU waters at the moment of purchase of the yacht, or its importation within EU waters, the Guidelines published by the Maltese Government objectively provide for the percentage of the VAT to be charged by the Maltese Government.
The Guidelines distinguish between vessels in terms of their size and propulsion, as indicated in the table below:
|
Type of vessel |
Deemed EU use |
Effective VAT rate |
VAT saving |
|
Motor yachts and sailing yachts exceeding 24 metres in length |
30% |
5.4% |
12.6% |
|
Sailing yachts between 20 and 24 metres long Motor yachts between 16 and 24 metres long |
40% |
7.2% |
10.8% |
|
Sailing yachts between 10 and 20 metres long Motor yachts between 12 and 16 metres long |
50% |
9% |
9% |
|
Sailing yachts up to 10 metres long Motor yachts between 7.5 and 12 metres long, and registered in the commercial register |
60% |
10.8% |
7.2% |
The Guidelines
Upon being satisfied the conditions established by Maltese law and the Guidelines were adhered to, and ascertaining that VAT due is paid, the Maltese Government will issue a VAT Paid Certificate confirming VAT was paid in Malta.
Maltese law and the Guidelines reagrding Yacht Leasing in Malta prescribe a set of conditions, including:
- Each Maltese leasing agreement must obtain prior approval of the Authority
- Proof of the value of the Maltese leased yacht must be furnished to the Authority
- The leased yacht is required to enter Maltese waters, possibly at the beginning of the Malta lease agreement
- The Malta Yacht Leasing must be for a minimum of 1 year period and not exceeding 3 years
- Payments must be made in terms of the malta yacht leasing agreement, otherwise penalties will apply
The procedure is commenced by means of a letter addressed to the Maltese VAT Department informing them of the Malta yacht leasing agreement and providing supporting documentation. The VAT Department will reply by means of a letter confirming that a Malta yacht leasing agreement is in place, possibly imposing conditions in relation to the method of payment of VAT. After the first payment is effected, a second letter will be issued by the VAT Department, confirming that VAT is being accounted for in Malta.
At the end of the Malta yacht lease the lessee may exercise a purchase option in the Malta yacht lease agreement - the price of which must not be less than 1% of the value of the yacht. The purchase will be subject to VAT at the normal rate. Upon exercising the purchase option, and fulfilling the other prescribed conditions, the lessee will be given a VAT Paid Certificate.
Example for Yacht Leasing in Malta (Maltese Leasing)
A Yacht with a length of 25 m having a value of € 1,000,000 (deemed EU use 30%) payment over 3 year period
Standard VAT due: VAT due
€ 1,000,000 @ 18% = € 180,000
Down payment: (40% of total value)
€ 400,000 x 18% x 30% = € 21,600
Installments:
Euros 600,000 + (profit from lease) Euros 100,000
Euros 700,000 x 18% x 30% = € 37,800
Redemption:
1% value of yacht = 10,000
VAT @ 18% due on Euros 10,000 = € 1,800
Total VAT due € 61,200
Total VAT saving € 118,800
A proper administration of the structure is the key to a successful completion of a Maltese Yacht Leasing structure. DF Marine has the know-how, experience and capacity to ensure that our clients set-up and administer a Maltese Yacht Leasing structure, but moreover are able to take a back seat and enjoy their Malta leased yacht.
