Landmark VAT case in Malta paves the way for change

An incorrect or late submission of your Malta VAT return could have previously resulted in a summons from both the Court of First Instance and the Criminal Court. Following on from a landmark case which applied the ne bis in idem rule, where no person can be tried for the same case, saw the preceding judgements to be a breach of fundamental rights.

The previous penalty for an error in submission would have taken the course of an administrative fine being applied, followed by a submission to the Criminal Court for an application of a custodial sentence should the defendant default. As these can be classed as two separate cases being held in two separate courts, the defendant is effectively being tried for the same case twice; a confliction of ne bis in idem rule.

In the case of Robert Farrugia who had submitted late VAT return and consequently incurred court appointed administrative fines and daily penalties, which the Registrar of Courts applied to have converted to a penal punishment. Should there have been a failure to meet court appointed deadlines, Mr Farrugia would have been subject to a possible prison sentence. Mr Farrugia’s lawyer filed a case within the Constitutional Court which reviewed the previous judgements made by the Court of First Instance and the Criminal Court, and declared that the original judgement be annulled in respect of the ne bis in idem rule. The Constitutional Court determined that what had previously been deemed as reasonable penalties had gone beyond what was seen as proportionate for the individual, and that disproportionate encumbrance had been placed on the Maltese tax payer due to the double binding legalities. In addition, the Maltese Prime Minister, who was named as part of the prosecution was declared by the Constitutional Court to be ‘non-suited’; not liable, and not party to the proceedings.

This judgement will, as a consequence, pave the way for Maltese VAT legislation to fall in line with current VAT legislation in other jurisdictions within the EU.


Abacus comment

Tax and VAT matters have become increasingly complex in many jurisdictions and what might previously have been viewed as seemingly straightforward can now give rise to heightened consequences and risks. The most important issue is how these risks are managed or rather prevent.

At Abacus, we keep pace with the changes and ever more sophisticated VAT/tax issues to support the needs of our clients, which are critical to sustaining growth. We have a dedicated team of tax professionals who stay abreast of VAT/tax developments and who are able to react effectively and efficiently to the implications of changes for the structures that we manage.

If you have concerns that yourself or your service provider are not well prepared for the constant changes and new challenges ahead, why not contact us. It will cost nothing, except a small amount of time and effort, to see if another provider, such as Abacus, can deliver that much needed confidence and peace of mind. If you would like to know more about the services we provide or speak to a member of our team, please visit our website at

Written by Heather McNamara, Client Services