A legal notice was recently issued by the Ministry of Finance in Malta to transpose paragraph 5 of Article 105a of Council Directive 2006/112EC on the common system of value added tax, as subsequently amended.
L.N.231 of 2023 has introduced a new reduced rate of value added tax on the hiring of pleasure boats to a person according to an agreement for any term or part of a term that, when added to the term of a previous hiring of the same goods or of other goods of the same kind to the same person during the previous 12 months ending on the date of the beginning of the existing hiring, does not exceed 5 weeks. The Vat rate which is applicable to this service is 12%.
These rules apply to short term charters or hirings of up to 5 weeks in a 12-month period, even if not enjoyed in one continuous five-week period but in several parts, provided the charter or hiring is in respect of the same pleasure boat and made to the same person. They come into force on the 1st January 2024 and will therefore apply to all pleasure yacht charters entered into with effect from the same date.