Amendments to VAT Legislation

MEDIA ROOM

Prior to the 2013 amendments to the VAT Act, the place of supply of a long-term lease (lease longer than 90 days) to a non-taxable person was the place where the supplier (lessor) was established if the customer was a non-taxable person acting as such.

With effect from 1 January 2013 the place of supply of a long-term hire to a non-taxable person shall be the place where the customer is established, except for pleasure boats where the place of supply will be where the vessel is put at the disposal of the customer if the supplier has an establishment there.

Even though service providers in Malta have advised that it would be preferable for the yacht to be present in Malta at the commencement of the lease, prior to the 2013 amendments, in implementing the yacht leasing structure, there was the possibility of the yacht coming to Malta during the term of the lease or at the time when the lessee exercises his purchase option in terms of the lease agreement rather than at the commencement of the lease.

With the 2013 amendments this possibility may no longer be considered and in order for Maltese VAT Rules to apply the yacht must necessarily be brought into Malta when the yacht is put at the disposal of the lessee and therefore at the commencement of the lease. If the yacht is put at the disposal of the lessee in a jurisdiction other than Malta, the VAT rules of such jurisdiction may be applicable resulting in the payment of VAT at a higher rate than the Maltese VAT rate.