Maltese Value added tax (VAT)

Value added tax is the tax that is charged progressively according to the increase in product value. It is important to note that all entities in Malta, partnerships included and natural persons are obliged to register with the VAT office in order to comply with the Maltese VAT legislation of 1998. 
In the case of a new business venture, it is requisite that you confirm with the VAT office if you need to register once again or not. This is applicable to everyone, even if you have previously registered for VAT. By rule, if the new business is put together with already existing activities, it may run under the existing registration number but, this must be put into writing to notify the office of the nature of the business.
In the event that the new business is under a new liability company altogether, it is necessary to register it separately. Once every four months, individuals or entities are entitled to produce a VAT return that includes total sales, purchases and VAT credit or payable amounts. This may be done electronically via online services. In Malta, there are three different rates of VAT as well as products or goods that are referred to as exempt (good that are exempted from the value added tax). These rates are:

  • 7% - accommodation like hotels, lodges etc and other licenced premises.
  • 5% - supply of electricity, works of art (to mention a few).
  • 0% - exports, intracommunity supplies, local and international transport.

The standard rate is 18% on all taxes. Immovable property, non-commercial rent, services by non-profit making organizations, insurance, banking, and investment services among other similar entities are treated as exempt from VAT. 
For purposes of book keeping, it is an obligation to retain the following books for possible inspection:

  • Copies of fiscal receipts received.
  • FCR readings
  • Import/export documentation.
  • Purchases and sales invoices.
  • Debit and credit notes.
  • Cash books and petty cash books.
  • Day purchases and sales ledger.
  • VAT account and annual VAT account.
  • Bank account connected with business.
  • Any other records and documents relevant to your economic activity.

As a general rule, these books should be kept for a minimum period of 6 years as the department of VAT can request their inspection any moment.
Entities who incur with value-added tax in connection with their business activities in a member of state in which they do not supply or render services are entitled to deduct the value added tax charged in that member of state. This deduction is a form of a refund from the respective member state. You should also know that any disgruntlement that can arise due to the decision taken by the revenue department may be appealed through a legal professional online.
Learn More!
To gain more insight into the Maltese VAT  system, reach out to SIGTAX. Our team of accountants, lawyers, and consultants stay au courant with the latest business trends and regulations in Malta. They can also help with legal counsel on how to set up a company in Malta including giving a profound understanding of the nations’ tax system. Thus, you can be confident that you will get relevant info which guides you to do everything the right way and in your favor.


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