VAT Returns in Malta: A Complete Guide

Any person (individual or company) who carries on an economic activity, other than a VAT exempt without credit supply, is considered a taxable person and is required by the VAT Act to register for VAT within 30 days from commencement of the economic activity. Failure to register in time will result in hefty administrative penalties. Companies which do not carry on an economic activity (such as pure holding companies) are not required to be VAT registered.

Important things to keep in mind when registering for VAT

The VAT Act allows for three different types of registrations for VAT, as follows:

Article 10

When the annual turnover exceeds the entry thresholds (€30,000), Article 10 VAT registration is required. Under this registration, taxable persons must charge VAT on their taxable supplies of goods or services and may claim back VAT refunds on their expenses. Taxable persons need to file a VAT return form quarterly.

Article 11

When the annual turnover does not exceed the entry thresholds (€30,000), Article 11 VAT registration may be opted for (the taxable person may still opt for Article 10 registration). Under this registration, taxable persons do not charge VAT on their taxable supplies of goods or services, and will not be able to claim back VAT refunds on their expenses. Taxable persons need to file a VAT declaration annually.

Article 12

A taxable person not registered for VAT or taxable persons registered under Article 11 making intra-community acquisitions of goods exceeding €10,000 in value (over a calendar year) or intra-community services (of any amount) must register under Article 12 and pay VAT on these transactions. Taxable persons need to submit Notices of Payment of VAT whenever they receive any services from the EU or whenever they make intra-community acquisitions of goods. Taxable persons also need file a VAT declaration annually.

VAT Documentation

VAT Returns for Article 10 registered taxable persons (together with payment, if any) must be submitted to the Commissioner for Revenue in Malta (the Malta VAT department) within 6 weeks following the end of each VAT quarter. Late submissions will result in a monthly administrative penalty equal to the higher of €20 and 1% of the VAT amount due, thought it could be capped in certain cases.

Taxable persons registered under Article 10 may also be required to periodically (monthly or quarterly) submit VAT Recapitulative Statements summarising the intra-community sales directly to the EU’s VAT Information Exchange System. These statements are applicable when a taxable person supplies goods or services to taxable persons in the EU with a valid VAT number, with the place of supply being where the customer is established. If this submission is required by a company, this statement is to be submitted by the 15th day of the month following the relative calendar month or quarter, whichever the case.

VAT Declarations for Article 11 and 12 registered taxable persons must be submitted by 15th March and 15th February respectively following the end of the calendar year. Late submissions will result in a monthly administrative penalty equal to €10, capped at €120 per declaration.

Notices of payment of VAT for Article 12 registered taxable persons together with payment shall be submitted by not later than the 15th day of the second month following either the date of the invoice or of the month during which the service is received, whichever is the earlier.

Declaring VAT electronically in Malta

In recent years, the submission of all VAT documentation highlighted above has been facilitated through an online portal on the Commissioner for Revenue’s website, allowing taxable persons to submit VAT returns online, as well as VAT declarations, recapitulative statements and notices of payment of VAT. In certain cases, when VAT related submissions are done electronically through the portal, a seven-day extension is granted to the respective deadlines provided the payment of VAT (if any) is also made within this timeline.

What to do if you need to change your VAT status

The process of changing a taxable person’s VAT status (that is, changing the VAT registration type from Article 10 to 11 or vice versa), provided this is in line with the relevant thresholds, is also facilitated through the online portal on the Commissioner for Revenue’s website. One must note, however, that once registered under Article 10 a taxable person must remain registered under this article for a minimum of 24 months. Taxable persons registered under Article 11 are obliged to change their VAT registration to Article 10 once they exceed the €30,000 threshold in any given period of twelve calendar months.

De-registering VAT

VAT registered taxable persons who have ceased their economic activity indefinitely, and hence will not be using their active VAT number for any trade or business should de-register from VAT and closed their VAT number. This process is also facilitated through the online portal on the Commissioner for Revenue’s website, and will take effect once all pending VAT returns or declarations have been submitted.