Malta: Malta and EU-VAT Registered Yachts: Import a Yacht into the E.U. at Only 5% VAT Using Malta’s Open Shipping Registry

The Maltese Government has just published Regulation 384 of 2003 under the Value Added Tax Act whereby it will temporarily allow the registration of yachts under the Maltese flag with the added bonus of paying VAT at only 5%.  

Up to the present date, yachts registered under the Maltese flag were exempt from paying VAT with the consequence that such yachts could only be used in E.U. territorial waters for eighteen months out of twenty four months (and in the case of a few E.U. countries for six months out of twelve).  When the time was up, the yacht would have to be taken out of E.U. territorial waters for six months or else pay VAT within the E.U. VAT system.

The new legislation leaves this option in place but it now offers yacht owners the possibility of registering their vessel as having been imported into Malta and paying a VAT rate of 5%.  Such VAT-paid yachts will be considered to be E.U.-VAT-paid once Malta joins the E.U. in May 2004 thus enabling the yachts to be kept indefinitely in E.U. territorial waters.  The obvious advantage of having paid only 5% in VAT on the value of the boat at the time of registration in Malta is too good to pass by.

There are three situations which will undoubtedly benefit yacht owners.  

a) yacht owners who have their yachts registered in a non-E.U. flag jurisdiction and who consequently have limited rights to say within E.U. waters, might wish to register their vessels in Malta; the "importation" into Malta with payment of 5% VAT will make the yacht E.U.-VAT compliant and the boat can then be kept within E.U. territorial waters indefinitely.

b) yacht owners who already have their boats registered in Malta but have limited right to access within E.U. territorial waters might wish to pay VAT in Malta

c) persons intending to acquire yachts within an E.U. member state  prior to 1st April 2004 will avoid paying VAT in the country where they buy the yacht on the basis that the yacht is being exported to Malta (still a non-E.U. country); they can then register in Malta, pay 5% VAT and become E.U. compliant on the  1st May 2004.

The offer is valid until 31st March 2004 and therefore interested yacht owners must take immediate action to have their yacht registered in Malta and have it VAT-paid before that date.  From 1st April 2004 the VAT rate will rise to 18%.  It is not necessary to physically bring the yacht to Malta for inspection; VAT is calculated at 5% on a valuation carried out by a valuer approved of by the Maltese authorities. On payment of the VAT, the owner of the yacht is issued with a joint declaration from the Malta Customs and the VAT department certifying that VAT has been paid in Malta.

For further information, costs and other details, please contact us.