Authorities Launch Guidelines On Tax Treatment Of Charters

Following similar announcements recently made by France and Italy, on July 29 2013 the Maltese authorities published the Guidelines for the Value Added Tax (VAT) Treatment of Short-Term Yacht Chartering. The guidelines address situations in which a short-term charter of a yacht with a crew (or on a bareboat charter basis) is entered into between the owner or operator and the charterer for a consideration.

In terms of Article 56(1) of EC Directive 2006/112 on the common system of VAT, the place of short-term hiring of a means of transport is deemed to be the place where the means of transport is actually put at the disposal of the customer. Article 56(2) provides that in the case of vessels, 'short-term' shall mean the continuous possession or use of the means of transport throughout a period of not more than 90 days.