Change in Place of Supply Rules Affects the Maltese Leasing Structure
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The 2013 amendments to the VAT legislation brought about changes to the place of supply rules in relation to long-term leases of yachts (leases for more than 90 days) to a non-taxable person.
Prior to the 2013 amendments the place of supply of a long-term lease to a non-taxable person was the place where the supplier (lessor) was established if the customer was a non-taxable person acting as such.
With effect from 1 January 2013 the place of supply of a long-term hire to a non-taxable person shall be the place where the customer is established, except for pleasure boats where the place of supply will be where the vessel is put at the disposal of the customer if the supplier has an establishment there.
In implementing the yacht leasing structure, prior to the 2013 amendments there was the possibility of the yacht coming to Malta to put into place the importation formalities either at the beginning of the lease or at the time when the lessee exercises his purchase option in terms of the lease agreement.
With the 2013 amendments this option may no longer be availed of and in order for Maltese VAT Rules to apply it is important that the yacht comes to Malta at the commencement of the lease when the yacht is put at the disposal of the lessee. If the yacht is put at the disposal of the lessee in another jurisdiction, the VAT rules of such jurisdiction may be applicable resulting in the payment of VAT at a higher rate from that which would be applied in Malta.
ABOUT THE AUTHOR: Dr. Doran Magri Demajo
Doran was conferred her Doctorate of Laws at the University of Malta in 2001 after defending her thesis entitled “The Open Registry Controversy- The Legal Debate”. In 2000 she undertook an apprenticeship with a leading Financial Services and Tax Consultancy firm. Following the successful completion of her law degree, she was offered a position with the same firm as a Corporate Lawyer, gaining extensive experience in Ship Finance, Ship Registration, Corporate Services, Contract Law and International Commercial Transactions, which position which she occupied until 2004. In 2007 she brought her legal experience to CSB Advocates, where she is currently responsible for Ship and Yacht Registration and Finance transactions, Corporate and Trust Law, Employment Law and Residence and Work Permit issues.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
With effect from 1 January 2013 the place of supply of a long-term hire to a non-taxable person shall be the place where the customer is established, except for pleasure boats where the place of supply will be where the vessel is put at the disposal of the customer if the supplier has an establishment there.
In implementing the yacht leasing structure, prior to the 2013 amendments there was the possibility of the yacht coming to Malta to put into place the importation formalities either at the beginning of the lease or at the time when the lessee exercises his purchase option in terms of the lease agreement.
With the 2013 amendments this option may no longer be availed of and in order for Maltese VAT Rules to apply it is important that the yacht comes to Malta at the commencement of the lease when the yacht is put at the disposal of the lessee. If the yacht is put at the disposal of the lessee in another jurisdiction, the VAT rules of such jurisdiction may be applicable resulting in the payment of VAT at a higher rate from that which would be applied in Malta.
ABOUT THE AUTHOR: Dr. Doran Magri Demajo
Doran was conferred her Doctorate of Laws at the University of Malta in 2001 after defending her thesis entitled “The Open Registry Controversy- The Legal Debate”. In 2000 she undertook an apprenticeship with a leading Financial Services and Tax Consultancy firm. Following the successful completion of her law degree, she was offered a position with the same firm as a Corporate Lawyer, gaining extensive experience in Ship Finance, Ship Registration, Corporate Services, Contract Law and International Commercial Transactions, which position which she occupied until 2004. In 2007 she brought her legal experience to CSB Advocates, where she is currently responsible for Ship and Yacht Registration and Finance transactions, Corporate and Trust Law, Employment Law and Residence and Work Permit issues.
Copyright CSB Advocates
More information about CSB Advocates
View all articles published by CSB Advocates
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
