The Commissioner for Revenue has recently published an amended version of the Guidelines regarding the VAT treatment of Yacht Leasing in Malta.
The most noticeable modification from the previous Guidelines relates to the determination of the use of the yacht within and outside EU territorial waters during the lease period. The previous Guidelines acknowledged the difficulty in trailing the movements of a pleasure yacht in order to determine the period the yacht spends within EU territorial waters, and therefore established the estimated percentage portion of the lease spent within EU territorial waters on the length of the yacht and means of propulsion (power or sailing).
The new Guidelines have done away with the outright estimated percentage of usage of the yacht in EU territorial waters on the basis of length and propulsion of the yacht and have shifted the responsibility of calculating such percentage on the lessor (the owner of the yacht). Whilst the Commission of Revenue requires that such an assessment be corroborated by proof, which is obtained from the lessee upon request by the lessor, the new Guidelines recognise that the lessee may have difficulty in carrying out such an assessment due to circumstances beyond its control. In such circumstances, upon justification, the Commissioner of Revenue may consider accepting that the estimated percentage a yacht spends in EU waters during the lease period be based according to the published table: