Malta Yacht Leasing
The VAT on Yacht Leasing Regulations of January 2006 provide for the financial leasing of a yacht based on the geographical use of the said yacht. The aim is that of assisting yacht owners with the payment of VAT on their yachts, calculated on the percentage of the time that the yacht is deemed to sail in EU waters. Since it is difficult to establish the use within and outside of EU waters, the regulations provide for a fixed set of percentages, based on the specifications of the yacht in question, so that essentially VAT is only chargeable on the use of the yacht in EU waters. The value of a yacht on the Lease is therefore reduced (in accordance with a fixed set of criteria reproduced in the attached schedule) thereby also reducing the effective VAT payable on the purchase of the yacht. At a glance, the salient features of the Malta VAT on Yacht Leasing scenario are as follows:
VAT is charged in the supply of service in accordance with the use of the yacht within EU territorial waters, and in accordance with the guidelines issued by the Department of VAT in Malta (reproduced below).
- Lease agreement cannot exceed three (3) years.
- The initial contribution to be paid by the lessee to the lessor must amount to 30 % of the value of the yacht
- There is no obligation to opt for financing via banks or other financial institutions. Client reserves the right to do so should the need arise.
- Should the client resort to financing, security can be provided by a mortgage registered over the yacht, by a Deed of Covenants collateral thereto, as well as a pledge of shares in the owning company in favour of the bank or financial institution.
- Lessor must be a Maltese person, natural or juridical.
- Lessee may be a foreigner, natural or judicial.
- There is no obligation to register one's yacht under the Malta flag.
- The yacht may be new or used, and may be registered as pleasure craft or even a commercial yacht
The effective VAT rate is directly dependent on the type and length of the yacht. To this effect the VAT Department has issued guidelines illustrating the various VAT percentages set according to the length of the craft and its means of propulsion (power or sailing) which are being reproduced hereunder
Sailing boats or motor boats over 24 metres in length 30%
Sailing boats between 20.01 to 24 metres in length 40%
Motor boats between 16.01 to 24 metres in length 40%
Sailing boats between 10.01 to 20 metres in length 50%
Motor boats between 12.01 to 16 metres in length 50%
Sailing boats up to 10 metres in length 60%
Motor boats between 7.51 to 12 metres in length (if registered in the commercial register) 60%
Motor boats up to 7.5 metres in length (if registered in the commercial register) 90%
Boat permitted to sail in protected waters only 100%