Posted by:Maltese leasing is a leasing arrangement over a term of between 1 and 3 years whereby the owner of a yacht (Lessor) contracts the use of the craft to another party (Lessee) who leases the yacht in return for a consideration. The Lessor must be a Maltese company and the Lessee can either be a Maltese or foreign person or company.
This lease is a supply of services and as such is taxable for any of the time the yacht spends within EU territorial waters. Due to the difficulty in trailing the movements of yachts, an estimate of the time it spends inside and outside the EU is calculated on its size. Maltese VAT at 18% is only charged on the percentage of the lease deemed to relate to time spent in the EU resulting in a reduced effective annual rate, as shown overleaf.
For each application, prior approval will need to be sought from the Commissioner of VAT, who will also confirm the rate applicable as well as acceptability of the value of the craft as declared. For this purpose a valuation certificate shall be submitted with the application for approval. The yacht will need to go to Malta at the end of the lease period upon exercise of the purchase option. For yachts delivered after 1 January 2013 it will be necessary for the yacht to go to Malta at both the start and finish of the lease period to comply with the place of supply rules due to be enforced from that date.
An initial contribution of 50% is paid by the Lessee to the Lessor and the lease instalments shall be payable monthly with the agreement not exceeding the term of 36 months. The Lessor shall also be expected to make a profit from the leasing agreement over and above the value of the yacht.
Being an EU structure it is important that an EU port of registry is selected for the yacht. This EU flag will also protect the VAT paid status of the yacht if the option to purchase is taken up at the end of the term. The yacht can be registered at any qualifying port under Maltese ownership including London and Valletta.
At the end of the term the Lessee can exercise their right to purchase the yacht for a sum equal to at least 1% of the value of the yacht. This amount will be subject to VAT at the current Maltese rate of 18%. A VAT paid certificate will be issued by the Maltese authorities to the Lessee providing that all VAT due has been paid.
| Category of Yacht | % of lease subject to VAT | Effective rate of VAT |
| Sailing or Motor Yachts over 24 metres in length | 30% | 5.4% |
| Sailing Yachts between 20.01 and 24 metres in length | 40% | 7.2% |
| Motor Yachts between 16.01 and 24 metres in length | 40% | 7.2% |
| Sailing Yachts between 10.01 and 20 metres in length | 50% | 9% |
| Motor Yachts between 12.01 and 16 metres in length | 50% | 9% |
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