Update to Malta’s ‘Use & Enjoyment’ Rules for Yacht Leasing

Last year, the EU brought about infringement proceedings against Malta, Cyprus, Greece, France and Italy in respect of each countries yachting VAT regimes.

On the 1st March 2019, these proceedings against Malta were ended by the EU Commission, as the Maltese VAT Department issued new Guidelines tackling the place of supply of the hiring of pleasure yachts.

The previous Maltese lease, that has now been discontinued, was widely known about and popular for yacht owners owning vessels of all sizes. However, it should be stated at this point that the new Malta lease is quite different to the old, and therefore, when contemplating the new model, it should be done so with a fresh mindset.

Make way for the Operational Lease!

What is different?

The main difference with this lease is that there is no longer a pre-determined calculation of VAT chargeable. Previously, the VAT amount was based on the length of the yacht and the estimated percentage of its time spent in international waters. This percentage was set and was applied against the whole term of the lease.

The new lease aims to calculate that value more accurately.

So, how is the VAT calculated? *

VAT on the new model will be calculated by utilising the actual movement of the yacht and is therefore, changeable throughout the lease. When the yacht is used and enjoyed within EU territorial waters, VAT will be charged. When used and enjoyed within non-EU territorial waters or international waters, no VAT will be charged.

Therefore, the more times that the yacht travels and sails into international waters, during its’ “use and enjoyment,” the lower the percentage achieved.

With that in mind, it should be more closely considered by the owner where and how they plan to use their yacht over the course of the lease and their ownership.

How long is the lease?

There are no specific guidelines on the length of the lease and this should be discussed and determined between the lessor and the lessee.

There is now potential for greater flexibility and a model that suits you!

Why have a lease structure?

You can benefit by establishing a yacht leasing structure and deferring the payment of VAT on the purchase of the yacht.

This is achieved whilst also using and operating the yacht on a pleasure / private basis.

The more you use, enjoy and travel, the more you benefit!

How can we help?

We can assist with any complexities associated with the yacht leasing and purchase, ensuring that custody and management of such a prized vessel stays on an even keel. In addition to this, we can apply for the registration of the yacht, employment of the crew and coordination of any and all other parties required for the day to day operations of the yacht.

We can also provide simple ownership structures and administration and support services to pleasure and commercial yachts. Our ownership structures are tailored to the individual requirements and are essential to the effective ownership, planning and operation of a yacht.

If you have any questions or simply want to learn more about the new Maltese Yacht Lease, do please email our Malta Client Director, Alex Beetham, at alex.beetham@abacuslandmark.com or call on +356 2065 0500.


* Source: Malta Government 


The content of this publication is provided for information purposes only. Nothing herein constitutes any form of tax, legal or VAT advice; suitable and professional advice should always be obtained before entering into transactions of this kind. The contents are provided without any representation and without warranty of any kind whether express or implied. The AbacusLandmark group disclaims all liability in respect of the information contained herein.