VAT Rates in Malta: Your Comprehensive Guide

VAT Rates in Malta: Your Comprehensive Guide

Welcome to our comprehensive guide on VAT rates in Malta. Whether you’re a business owner or a consumer, understanding the different VAT rates can help you navigate your transactions more effectively. This page will provide detailed information on the various VAT rates applicable in Malta, excluding the standard rate of 18%.

Understanding VAT Rates in Malta

Malta applies several reduced VAT rates for specific goods and services. Here’s a breakdown of when and where these rates apply.

12% VAT Rate (Effective 1 January 2024)

Following the adoption of the EU Council Directive 2022/542, a new reduced VAT rate of 12% will be applicable to specific services starting 1 January 2024:

Applicable For:

  • Custody and Management of Securities: Unless these services qualify as VAT-exempt.
  • Management of Credit and Credit Guarantees: Provided by entities other than those who granted the credit.
  • Hiring of Pleasure Boats: When the hiring term does not exceed five weeks within a 12-month period.
  • Human Body Care Services: Services provided by professionals regulated under the Health Care Professions Act (Cap. 464), including health studio businesses and similar business, but excluding exempt supplies mentioned in item 11 of Part Two of the Fifth Schedule.

Key Aspects of Article 11 Registration:

  • No VAT on Taxable Supplies: Unlike Article 10, businesses registered under Article 11 do not charge VAT on their taxable supplies of goods or services.
  • No VAT Reclaims: They are not permitted to claim back VAT incurred in the course of their taxable activities.
  • Annual VAT Declaration: Instead of quarterly VAT returns required under Article 10, Article 11 registrants need to file only an annual VAT declaration.
  • Issuance of Tax Invoices and Fiscal Receipts: Despite not charging VAT, businesses must still issue tax invoices or fiscal receipts for transactions, including all necessary details as stipulated in the VAT Act.

Opting for Article 11 registration can affect how businesses manage their tax liabilities and compliance. Understanding the nuances of this option helps ensure that businesses make informed decisions that align with their operational needs and compliance obligations.

7% VAT Rate

Applicable For:

  • Accommodation: This includes stays in hotels, guest houses, and licensed premises under the Malta Travel & Tourism Act.
  • Sporting Facilities: Use of facilities for sports activities.

5% VAT Rate

Applicable For:

  • Electricity: Supply of electricity.
  • Confectionery and Edible Items: Certain food products and other edible goods.
  • Medical Accessories: Specific medical items.
  • Printed Materials: Books, magazines, and similar printed materials.
  • Items for Disabled Individuals: Goods exclusively for use by disabled persons.
  • Minor Repair Services: Repair services for bicycles, shoes, leather goods, clothing, and household linen (including mending and alteration).

Responsibilities Under Article 12:

  • Registration Requirement: Entities must register under Article 12 if their intra-community acquisitions exceed the €10,000 threshold.
  • VAT on Acquisitions: VAT must be paid on these intra-community acquisitions of goods.
  • Submission of Notices of VAT Payment: Entities are required to submit Notices of Payment of VAT whenever they receive services from within or outside the EU, or make intra-community acquisitions.
  • Annual Declaration: An annual declaration must be filed to comply with VAT reporting requirements.
  • Domestic Care Services: Services such as home help and care of the young, elderly, sick, or disabled.
  • Cultural Events: Admission to museums, art exhibitions, concerts, and theatres.
  • COVID-19 Related Services: Services closely linked to COVID-19 diagnostic devices.

0% VAT Rate (Exempt with Credit)

Applicable For:

  • Food for Human Consumption: Essential food items.
  • Pharmaceutical Products: Medicines and health products.
  • Public Transport: Scheduled bus services and domestic inter-island sea passenger transport.
  • International Transport: Services related to international passenger transport.
  • Exports and Intra-community Supplies: Goods exported outside Malta or supplied within the EU.

Exempt without Credit

Applicable For:

  • Public Utilities: Supply of water by a public authority.
  • Property Transactions: Supply of buildings and building land.
  • Health and Welfare Services: Healthcare and welfare services.
  • Financial and Insurance Services: Financial and insurance services.
  • Property Rentals: Letting of immovable property (with certain exceptions where different VAT rates may apply).

Why Understanding VAT Rates is Important

Knowing which VAT rate to apply helps in accurate billing and compliance with Maltese tax laws. Businesses must ensure they apply the correct VAT rate to avoid penalties and ensure customer satisfaction.

Key Takeaways

  • Accommodation and Sporting Facilities: Apply 7% VAT.
  • Electricity and Essential Goods: Use 5% VAT.
  • Cultural and Domestic Care Services: Apply 5% VAT.
  • Exports and International Transport: Apply 0% VAT.

Contact Us

For more detailed information and specific cases, you can visit the official VAT Department website and refer to the Maltese VAT legislation.


By understanding and applying these VAT rates accurately, businesses can ensure compliance and avoid unnecessary complications.

Get in Touch

Contact Form
Auditing Services
Payroll Management
Malta Company Registration
Bookkeeping
Tax Planning
VAT Services
Financial Consultation

FAQ

ask us
anything

  • The standard VAT rate in Malta is 18%.
  • Certain food items, pharmaceutical products, and public transport services are exempt from VAT.