The Malta Commissioner for Revenue has just published the guidelines that are to be used to determine the place of supply for the hiring of pleasure boats. These will be applicable, retrospectively, for all leases commencing on or after 1 November 2018.
These new guidelines are based on the fundamental VAT principle of 'use and enjoyment' and provide the mechanism to determine the amount of VAT to be paid on the lease of a pleasure boat.
The lessor (the party leasing the asset) needs to obtain from the lessee (the party paying for use of the asset), reasonable documentation and/or technical data to determine the effective use and enjoyment of the pleasure vessel both within and outside EU territorial waters.
By using a 'Preliminary Ratio' and an 'Actual Ratio' the lessor will be able to apply VAT to the proportion of the lease relating to effective use and enjoyment, within EU territorial waters.
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