VAT in Malta is applicable to all products and services made in Malta and those imported to the country.
Most transactions in Malta are subject to value added tax (VAT). The standard rate for most products and services is 18% but reduced rates are in place for certain economic activities. Most financial services are not subject to VAT and economic activities outside the EU, VAT does not apply.
Malta’s VAT legislation is harmonized with the EUR’s Council Directive after it became a EU member state. VAT in Malta is applicable to all products and services made in Malta and those imported to the country. Taxable goods and services also extend to leasing or hiring and attributing or rendering a right. Malta has a large network of double taxation treaties to avoid double taxation on goods and services.
You are considered taxable if you are performing an economic activity, whatever the scope or result of that activity. You are required to register for VAT in Malta under article 10, but if your annual turnover does not exceed the threshold, you can opt for registering as exempt under article 11.
Limited Liability Companies need to present the I.D. card or passport of the authorised representative, vested with a legal representation, together with a copy of the Memorandum and Articles of Association.Alternatively, a registered practitioner acting on behalf of the company can submit the application as well.
We connect you with the most reputable and licensed service providers in Malta.
If your annual turnover exceeds the exempt threshold, you must register for VAT under article 10. This is the most common which makes you liable to charge VAT on your supplies and can claim back VAT incurred for business purposes under certain conditions.
If registered under article 10 you would:
If your annual turnover does not exceed the threshold, you may register for VAT as exempt under article 11. You will not charge VAT on your supplies and will neither be able to claim anything back.
You can also register for article 10 in order to be able to claim a deduction of VAT during the initial stages, and later change the registration under article 11, however this can only be done after a period of 36 months.
If registered under article 11 you would:
It is important to note that you are duty bound to inform the Commissioner of Revenue as soon as it becomes evident that you will exceed the threshold, or within 30 days of the occurrence. VAT has to be collected immediately after the change of tax status.
If you are non-taxable or taxable but not registered under article 10, and make inta-community acquisition of goods in Malta where the value exceeds €10,000, then you are liable to register for VAT under article 12. In this case you are liable to pay VAT in Malta each time you make intra-community acquisitions.
If you are registered under article 11 as exempt and intend to make intra-community acquisitions liable for VAT in Malta, you also need to register under article 12 in order to obtain a valid VAT identification number.
The entry thresholds refer to the amount of turnover per annum under which one could register as exempt under article 11. The threshold depends if you are supplying goods or services with high value added or services with low value added.
The exit threshold is applied when you are registered under article 10 and would change the registration to being exempt under article 11.
Low value-added services are those services where the value of the service includes goods. For example, an electrician or catering services. High value services are those that contain a low value of goods incorporated into the service, for example an accountant or lawyer.
In case of being registered under article 11 providing both goods and services, the applicable threshold would be determined in accordance with the nature of supply, taking into account the total value of all the supplies.
The turnover of a business is determined by the total value of sales excluding:
The general tax rate in Malta for the supply of goods and services is 18%. However, there are certain goods and services having a reduced rate of 7%, 5% or 0% (exempt with credit).
The supplies that are taxed at 0% are also referred to as supplies exempt with credit or supplies exempt without credit. This means that no VAT is charged on the sale of the supplies, but in case of supplies exempt with credit, you are entitled to claim back input VAT incurred on the provision of that supply.
The following supplies are exempt without credit. No VAT is charged on the value of the supply, and no input VAT can be claimed on the VAT incurred in the provision of that supply. In case of providing supplies which are exempt without credit, there is no need to register with the VAT Department.
The VAT declaration, also referred to as the VAT return, can be submitted electronically which takes approximately 15 minutes to complete. The process of vetting and processing the VAT return takes maximum 90 days.
The electronic process applying for a VAT return take approximately 20 minutes to complete. The vetting process of the refund takes maximum 4 months.
Malta operates a self-assessment tax system where taxpayers are required to declare their income and calculate tax. This includes taking into account advance payments and other tax credits.
For companies, the deadline is 9 months after the financial year-end (10 months if the tax return is filed electronically). The VAT return must be accompanied by an auditor’s certificate.
Limited Liability companies can transfer the VAT registration in case of change of directors or shareholders. This has to be done via the Malta Financial Service Authority, whereby the VAT Department will be advised and receive a certified copy of the Memorandum and Articles of Association.
In order to de-register from VAT in Malta, you are required to contact the VAT department. The application to de-register can only be accepted if all returns and payments are up to date.
Input tax is the VAT paid by the business needed to operate the supply of goods or services. Output tax is the VAT charged when the supply of goods or services is taking place.
Input tax incurred on supplies made outside Malta may be claimed back if they had been classified as taxable supplies in Malta. In that case, the tax return would state this amount under the exempt with credit supplies.
If there is no right to claim back the input VAT, the value has to be indicated on the VAT return under exempt without credit supplies.
Those registered under article 10, i.e. not VAT exempt, can claim a refund of the output tax total consisting of taxable supplies, exempt with credit and supplies made outside Malta which are classified as taxable in Malta as well.
In case of the economic activity consisting of a mixture between taxable, exempt with credit supplies and exempt without credit supplies, the input VAT has to be apportioned. This can be done by using the direct method or partial attribution. The Commissioner is empowered to decide the percentage of attribution should the methods not provide a fair result.
Under the provisions of legislation, certain input VAT incurred is blocked and cannot be claimed back even when the expenses are incurred in relation to the economic activity.
Also supplies which fall under the exempt without credit and those registered as exempt, are not able to claim input VAT incurred on supplies purchased related to running their business.
The following supplies also fall under the blocking of input VAT and cannot be claimed back even if they are purchased in relation to the economic activity:
Certain documents and records must be kept on file and you are obliged to keep these for six years in case of the Department requesting an inspection.
Contact us via telephone or fill out the form below to be connected with the best service provider for your company tax in Malta.
Notice: Welcome Center Malta is not licensed by the Malta Financial Services Authority (MFSA). We connect you with reputable and licensed service providers in Malta.