In July 2013, Malta's VAT Department published guidelines
clarifying the VAT treatment of short-term yacht charter activity
commencing in Malta.
The guidelines specifically apply to third party holiday type
yacht charters whereby the charter is of a short-term duration not
exceeding 90 days. These guidelines to a large extent follow the
interpretation which at the moment is being applied to long-term
yacht leases.
For VAT purposes, before the guidelines were issued, the
short-term charter of a yacht to be used for leisure purposes was
seen as a supply of services which typically would be taxed at the
standard rate of VAT, being 18%.
As a result of the VAT Department's interpretation however
this has now changed. The new guidelines state that where the
short-term charter of a yacht commences in Malta the application of
VAT will only apply to the portion of the charter taking place
within the territorial waters of the European Union (EU).
