Yachting

YACHT LEASING STRUCTURE

Malta offers yacht owners very attractive VAT rates on the purchase of privately used yachts which are imported from outside the EU or yachts built within the EU. Yachts sailing within EU territorial waters need to have an EU paid certificate in order for them to sail freely without any limitation and Malta’s yacht leasing structure may reduce the VAT payable upon the acquisition of the yacht as low as 5.4%.

The Malta VAT Department has published guidelines which outline the terms and conditions which can be applied to the leasing of pleasure yachts owned by Maltese companies which work on the deemed use and enjoyment rules. It is assumed that the larger the length of the yacht the less time it is deemed to spend in EU territorial waters and thus the lower the VAT rate applicable.
The yacht lease structure as outlined by the guidelines of the Malta VAT Department explain how the lessor who is the owner of the yacht (in this case a Malta limited liability company) enters into a lease agreement with a lessee, who could be either be another Maltese company or foreign holding company (which are not VAT registered) or to a private individual. At the end of the lease period, the lessee has an option to purchase the yacht in return for a consideration. During the lease agreement, the lease of the yacht is deemed to be a supply of service and is taxable according to the percentage deemed use of the yacht within EU territorial waters.

Since it is very difficult to trail the movements of a pleasure yacht, the VAT department has established the estimated percentage portion of the lease based on the time that the yacht is used within EU territorial waters. These percentages are set according to the length of the yacht and its means of propulsion (power or sailing).

 

Type of boat % of lease taking place in the EU Effective VAT Rate
Sailing boats or motor boats over 24 metres in length 30% 5.4%
Sailing boats between 20.01 to 24 metres in length 40% 7.2%
Motor boats between 16.01 to 24 metres in length 40% 7.2%
Sailing boats between 10.01 to 20 metres in length 50% 9%
Motor boats between 12.01 to 16 metres in length 50% 9%
Sailing boats up to 10 metres in length 60% 10.8%
Motor boats between 7.51 to 12 metres in length
(if registered in the commercial register)
60% 10.8%
Motor boats up to 7.5 metres in length
(if registered in the commercial register)
90% 16.2%
Boat permitted to sail in protected waters only 100% 18%

 
Other considerations:

  • Prior approval must be sought from the VAT Department in regards to the value of the yacht and the applicable percentage on which VAT is chargeable according to its use within EU waters.
  • The yacht must be physically in Malta at the beginning and at the end of the lease agreement.
  • A provisional VAT paid certificate will be issued by the department upon the submission and payment of the first VAT return to the VAT Department which may be placed on board and will allow the vessel to call other European ports.
  • At the end of the lease agreement, subject that all VAT obligations have been paid, a VAT paid certificate shall be issued by the department which will allow the yacht to sail freely within EU territorial waters.

For further enquiries or a quotation please contact Suzanne Brincat Dowdall on sdowdall@amlmalta.com