Guidelines for VAT purposes regarding the use and enjoyment of leased pleasure boats

John Huber & associates

The new Guidelines issued earlier in February 2019, are based on Article 59A of the VAT Directive and establish the manner in which the use and enjoyment of such leased pleasure boats is to be treated for VAT purposes. Article 59A of the VAT Directive allows Member States to tax the use and enjoyment of services, for the time that the discretion to approve that the Lessor applies Value Added Tax only on the portion of the lease which covers the effective use and enjoyment of the pleasure boat within EU territorial waters. Maltese VAT will be charged on the portion of the lease covering effective use and enjoyment of the pleasure yacht within EU territorial waters. No VAT will be chargeable on the portion of the lease which covers the use and enjoyment of pleasure boats within non-EU territorial waters or international waters.

The  Commissioner shall only consider the place of supply of the hiring of pleasure boats, if situated within Malta, as being situated outside EU territorial waters if the actual effective use and enjoyment of the services, in whole or in part, takes place outside EU territorial waters and as long as the conditions referred to in this Guideline are satisfied. This Guideline is the only guideline of the Commissioner which shall apply to leases commencing on or after the 1 November, 2018.

During the lease period, the Lessor must maintain adequate records, including technological data and documentary evidence, to determine the actual effective use and enjoyment of the pleasure boat  by the Lessee within and outside EU territorial waters

The guidelines  may be accessed through the Commissioner for Revenue website here.