Yacht Hiring in Malta: Reduction to a 12 percent VAT rate on pleasure yachts

VAT cost on the short-term hiring of “pleasure” boats have been reduced in Malta since 2024.

Starting from January 1st 2024, the value added tax for those clients, wanting to rent a small ship under 24 meters in length, used solely for the navigation within the territorial waters of Malta, was reduced to a Malta VAT rate of 12% for short-term boat hires (Legal Notice 231 of 2023).

What do you need to consider?

For short-term hiring (up to 90 days) the place of supply is considered to be the place where the pleasure boat is made available to the customer, in this case Malta.

Here’s the point: If you’re hiring a boat for any period or part of a period that doesn’t go over five weeks, stipulated as equivalent to 35 days, you’ll only be charged the 12% VAT rate.

How do you know if you’ve hit that five-week mark?

We look together with you back at the past 12 months and see if the same boat, or a similar one, was rented by the same person. If not, and your current hire doesn’t exceed five weeks, you are there – 12% VAT applies! If it does go over the five weeks, no worries, the 12% VAT still applies to the first five weeks; thereafter the standard 18% VAT is chargeable.

Example: A pleasure boat was hired for 3 weeks in July, then hired again by the same person for another 3 weeks in October, bringing the total to 6 weeks: the VAT reduction would apply to the first 5 weeks, while the final week would be subject to the default 18% VAT.

Thus, if the boat was rented to the same person in the past 12 months, and those five weeks were not up yet, you will still enjoy the 12% VAT rate for the remaining time until they do lapse.

Whereas in cases, in which those five weeks were already up in the previous rental period, then the standard 18% VAT rate kicks in for your current hire.

So, this rule makes short-term boat hires in Malta a bit lighter on the pocketbook of our clients who are maritime enthusiasts.

Purchasing and registering your own yacht

Are you ready to purchase your own yacht in the future?

We will be your partner of trust for everything considering your future yacht registration under Maltese flag and enjoying the considerable VAT advantages in relation to the Malta operational yacht leasing scheme;
https://www.kresse-law.com/home-en-en/yacht-registration-in-malta