Indirect Taxation

Ppersons or entities carrying out an economic activity are required to apply to be registered for VAT purposes in Malta.

Following registration, businesses are typically allocated a three-month VAT reporting period; however, in cases where a business is constantly in a refund position, it may (subject to the approval of the Maltese VAT department) request to be granted a shorter VAT period, for example monthly. Conversely, in cases where a business does not exceed a minimum amount of turnover, it may apply for a longer VAT period for the purposes of alleviating the administrative burden brought about by the submission of VAT returns on a quarterly basis.

Standard VAT rates in Malta

The standard VAT rate in Malta is 18%, with a reduced rate of 7% applicable to supplies of accommodation, generally to tourists and a 5% rate applicable to a number of supplies such as to the supply of electricity, confectionery items, medical accessories, the supply of printed matter among others.

Exemptions available in Malta

In terms of the local VAT Act, a number of supplies are exempt from VAT, with the supplier retaining the possibility to deduct VAT on purchases. Such supplies include: exports of goods, intra-Community supplies of goods, international transport of persons, supplies of vessels, food, pharmaceutical goods and certain scheduled transport.

There are also a number of supplies which are exempt from VAT, however in relation to which the supplier does not have the right to deduct VAT on related purchases. These include: the letting of immovable property situated in Malta, insurance services credit banking and other services, supplies related to gambling, health and welfare services, and supply of water by the public authority and education services.

These exemptions are subject to certain conditions being satisfied.