Cruising through VAT: Malta’s Yacht Importation Procedures
Malta has for many years offered an efficient importation procedure for the importation of yachts in the European Union in order to enable yacht owners to carry out charters or use the yacht for pleasure purposes in European waters.
General Principle
In principle, the importation of a yacht in the European Union through Malta necessitates the immediate payment of VAT at 18%, payable to the Malta Tax & Customs Administration (‘MTCA’) for the yacht to be cleared by the MTCA.
Furthermore, when the imported yacht is intended to be used for pleasure purposes by the owner (and therefore not operated commercially), the 18% VAT payment would not be recoverable. It is pertinent to note that if import VAT is not paid, the yacht would not be in free circulation and thus cannot be navigated legally in European waters.
Importation Procedures for yachts intended for Commercial Use
In instances where the imported yacht is intended to be leased out or operated commercially, the import VAT can be generally recovered back by the importer through the Malta VAT Return. This would however require an initial cash outflow which can be substantial amounts given that yachts are typically high value assets.
1. VAT Deferment
As a result, Malta also offers an attractive VAT deferment procedure which is beneficial from a cash flow perspective since it replaces the need to pay the import VAT and subsequently recover such import VAT through the VAT Return.
To the extent that certain conditions are met, importers who are VAT-registered may request in writing to the MTCA for a VAT deferment of the import VAT due.
If the VAT-registered person is a company incorporated in Malta, currently there is no need to set a bank guarantee. On the other hand, if the VAT-registered person is not a company incorporated in Malta, the MTCA requires a bank guarantee equivalent to 0.75% of the value of the yacht (capped to €1 million). An EU incorporated company also has an option to appoint a VAT representative in terms of the Malta VAT Act instead of the bank guarantee.
2. Temporary Importation
As an alternative to the general importation of a yacht in Malta, one can also avail from the ‘Temporary Admission’ procedure. This customs procedure is particularly common in instances where the yacht owners need to sail into the European Union for maintenance works or to attend a yachting event which is by nature, on a temporary basis. For such procedure to apply, the following conditions must be met:
- The yacht must be owned by a non-EU person and must have a non-EU flag;
- The yacht remains within EU territorial waters for a period up to 18 months.
If the above conditions are met, the yacht owner would be authorized to sail freely in EU territorial waters without the need to pay import VAT in Malta.
Should you need more information, do not hesitate to contact us on info@zencopartners.com
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