Malta Yacht Leasing: Guidelines Regarding Vat Treatment of Yacht Leasing

June 24, 2016

Malta offers yacht owners looking to buy a new boat attractive savings on VAT. This scheme is recognised by the EU (since Malta is a full EU member state) and vessels will be ‘EU VAT PAID’ and free to navigate in EU waters without any restrictions.

A leasing agreement of a pleasure boat is an agreement whereby the lessor (the owner of a boat) contracts the use of the boat to the lessee (the person who leases the boat) in return for a consideration. In addition, at the end of the lease period, the lessee may opt to purchase the boat at a percentage of the original price. The final purchase is strictly an option which may be exercised at the end of the lease for a separate consideration.

For the purpose of VAT, the lease of the boat is a supply of services with the right of deduction of input VAT by the lessor, where the right of input VAT applies. This supply of services is taxable according to the use of the boat, attributed within the territorial waters of the European Union (EU), provided that the lessor is a Maltese company which is leasing the boat to any Maltese or non-Maltese person or company.

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