VAT: Update on Yacht Leasing Guidelines

On 28th February 2019, the Commissioner for Revenue published new guidelines relating to the VAT treatment of pleasure yacht leasing. These guidelines are based on the principle of the effective use and enjoyment of the yacht as a result of which VAT optimization may be achieved, therefore retaining Malta’s position as an attractive jurisdiction for the yachting industry.

Upon approval by the VAT Department, Malta VAT is charged only on the portion of the lease covering the actual use and enjoyment of the yacht within EU waters, whereas no VAT is applied when the yacht is effectively used and enjoyed within non-EU or international waters. In order to apply such VAT treatment, a number of criteria need to be met, including:

  • Lessor must be registered for VAT purposes in Malta;
  • Written approval on the application of the effective use and enjoyment principle must be sought from the VAT Department;
  • Yacht must be in Malta at the beginning of the lease term;
  • Lessor must obtain from the lessee reasonable documentary and/or technological data to determine the actual use and enjoyment of the pleasure boat within and outside EU territorial waters.

Contact us now for further information on the application of such guidelines. Get in touch via or +356 2010 3020.

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