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VAT Grouping

Following the 2018 Government Budget Speech, Legal Notice 162 of 2018 has introduced the possibility of VAT grouping in Malta. Indeed, the Legal Notice establishes the Value Added Tax (Registration as a Single Taxable Person) Regulations, 2018, as subsidiary legislation to the Maltese Value Added Tax (VAT) Act, Chapter 406 of the Laws of Malta. VAT Grouping regulations were introduced in Malta with effect from 1st June 2018.

What is VAT Grouping?

As per Article 13(6), a number of persons regarded as a single taxable person in terms of article 5(6) shall be registered as one person. Article 5(6) gives the Minister the right to make regulations to regard as a single taxable person any persons established in Malta who, while legally independent, are closely bound to one another by financial, economic and organizational links.

Eligibility

Two or more legal persons established in Malta (including a fixed establishment e.g. a branch located outside Malta) can apply to be registered as a single taxable person.

Companies and other legal entities are allowed to form a VAT group if:

  • At least one person must be a taxable person licensed or recognised in terms of a specific list of financial and gaming laws.
  • All applicants must be VAT and income tax compliant unless there is a valid objection or appeal against an assessment issued to any of the applicants.
  • They must be closely bound to one another by financial, economic and organisational links.

Implications

The members of a VAT Group shall nominate from amongst themselves the Group Reporting Entity (GRE), which shall exercise any rights and discharge any obligations arising to the VAT Group. Any supply of goods or supply of services made by one member of a VAT Group to another member of that VAT Group shall be disregarded for VAT purposes.

Persons bound together by financial, economic and organizational links may only form part of the same VAT Group. No person may be a member of more than one VAT Group. Individual VAT numbers of VAT Group members (if any) will be cancelled if:

  • The provisions of item 14(2) of the Second Schedule are not triggered.
  • The capital goods scheme period will continue to run.

Each member of a VAT Group shall be jointly and severally liable for the payment of any tax, administrative penalties and interest. If VAT Group registration is cancelled no application for the same VAT Group can be submitted before the lapse of 24 months.

Application

Application for registration as a VAT Group will be available electronically. One must indicate the effective date and information on how the members are bound together by financial, economic and organizational links. An application for admission of an additional member to an existing VAT Group will also be available electronically.

For any assistance required please contact our team on [email protected] or call on +356 2557 2557.

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CSB Group
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+356 2557 2557