Malta yacht leasing and VAT

Following the accession of Malta to the EU we have been extensively involved with our colleagues in Valletta in developing, what is now known as, the Malta Yacht Leasing Scheme.

In conjunction with the Maltese VAT department guidelines were published on 24th November 2005 on how VAT would be treated in respect of leased yachts.

Our lawyers in Malta have had extensive discussions with all concerned and we have collectively drafted lease documentation and a structure which complies with the guidelines and which provides our clients with substantial financial benefits.

The VAT rate in Malta is 18%. The Maltese Government has ruled, under the VAT on Yacht Leasing regulations 2006, that only a percentage of the lease value should be subject to VAT. Depending on the size of the yacht concerned the effective rate of VAT will vary between 5.4% to 9% of the lease value. The variation is by reference to length overall and the type of yacht.

This is a highly beneficial scheme with a sensible fee structure. With the demise of the Isle of Man as a beneficial VAT jurisdiction the Maltese Government’s scheme remains the preferred option for VAT mitigation.

The boat remains VAT paid and VAT is substantially mitigated.