Malta introduces a "parking-rate" of 12% VAT on certain services.

The Maltese Government has just published a new Legal Notice 231/2023 amending the 8th Schedule to the VAT Act. This Legal Notice introduces a new reduced rate of 12% based on the so called "parking-rate" already applied in Ireland and Luxembourg.

This reduced rate will be applied to the following services:

  • Custodian services and the management of securities (where not supplied to a collective investment scheme);
  • Management of credit and credit guarantees by a person or body other than those who granted the credit (the management of credit by the person who grants it is already exempt without credit)
  • Hiring of a pleasure boat to a person according to an agreement for any term or part of a term that, when added to the term of a previous hiring, of the same goods or of other goods of the same kind, to the said person during the previous twelve (12) months ending on the date of the beginning of the existing hiring, does not exceed five (5) weeks.
  • Services consisting of the care of the human body required to be delivered by a person in the exercise of any profession regulated by the Health Care Professions Act (Cap.464), including services supplied in the course of a health studio business or similar business, but not including exempt supplies referred to in item 11 of Part Two of the Fifth Schedule.

This new reduced rate will enter into force as from 1st January 2024.

The reduced rate will ease the burden of the VAT on Custodian services and the management of securities by 6%, where these are not provided to a collective investment scheme as per item 3(6) of Part Two of the Fifth Schedule to the VAT Act. Today such services incur the standard rate of 18%.

It will also ease the burden of VAT on services of management of credit and of related guarantees provided by third parties who are not the same person granting the guarantees. Today these services also incur the standard rate of 18%.
The new rate will also be affecting positively the yachting industry, namely the short term letting of pleasure boats and goods related thereto, which does not exceed a total period of 5 weeks. It is expected that this provision will be clarified further by the tax authorities.

Finally, the new reduced rate will also apply to health care services which do not qualify for the exemption for medical services i.e. which are not for diagnostic or therapeutic purposes. This is a follow-up to the Notice issued by the tax authorities some weeks ago regarding the certification by licenced medical practitioners for services that are exempt without credit.

The new reduced rate is expected to reduce the burden on Health and beauty services which do not fall under the exemption for medical services such as cosmetic surgery which is not performed for "diagnostic and therapeutic purposes".

If you require further guidance or details in relation to this process, please do not hesitate to contact us so that we may assist you.

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