Malta VAT Rules

E-learning activities:

The following educational related supplies are exempt from Maltese VAT:

• The provision of education or educational research, vocational training or retraining, including distance learning, by a government school or institution, by the University of Malta, by a school or institution registered under the Education Act, or by any establishment recognised for this purpose by the Minister responsible for education. 
• The provision of education or educational research, including distance learning, of a kind provided by a school or university, or of religious instruction, by a non-profit making institution recognised as such by the Commissioner.
• Tuition given privately by teachers acting in an independent capacity in subjects which are normally taught in the course of education provided by a school or university but excluding tuition in recreational, physical or sporting activities or disciplines.
• Any training in the arts which is provided by an organisation accredited by the Register for the Accreditation in the Training of the Arts.
• The supply of goods and services where the said supply is connected with and essential for the supply of services referred to in paragraphs (1), (2), (3) and (4) by the school, institution, univeristy, teacher or organisation, as the case may be, supplying the said services, or supplied by any other organisation recognised by the Commissioner as an organisation which has similar objectives.

E-learning services are also subject to these exemptions provided that they satisfy the conditions listed above.

Reference to above may be found in item 12 of part two of the Fifth Schedule to the Maltese VAT Act Cap. 406 of the Laws of Malta.

Gambling activities:

Certain specific services related to gambling (including bets and lotteries) provided by gaming operators are VAT exempt in Malta. 

In terms of the VAT Act, exempt supplies related to gambling include the provision of any facilities for the placing of bets and wagers (excluding casino-type table games such as blackjack, poker and roulette, and any games of chance, the outcome of which is determined by a random generator), the granting of rights to participate in lottery-type games, the granting of rights to participate in a bingo game, the provision to players of devices or equipment (being game tables, machines and other similar objects which are phycially located in such premises or location including a studio, licensed or otherwise recognised by the Malta Gaming Authority, whether accessed by the player physically or remotely) for the playing of casino-type games of chance, the outcome of which is determined by a random generator, including tables for the playing of roulette, blackjack, baccarat, poker when played against the house, and slot machines. 

General:

In relation to telecommunications, broadcasting and electronically supplied services, other exemptions include the activities of public radio and television bodies other than those of a commercial nature are exempt from VAT in terms of item 14 of Part Two of the Fifth Schedule to the VAT Act.

Invoicing:

No

Invoicing comment:

Refer to Item 2A of the Thirteenth Schedule of the Maltese VAT Act (Cap. 406 Laws of Malta) - Persons supplying services under MOSS shall not be required to issue fiscal receipts.

As a Member State of consumption, do you require an additional claim before making a reimbursement?:

No further claims required. 

Reimbursement threshold as Member State of consumption:

Not applicable.

Release from payment of insignificant amounts of VAT:

Not applicable.

Failure to register and late registration:

The penalty applicable for late registration is the higher of:

• 1% of the VAT due for the first tax period following the registration; and
• EUR 20 for every month or part thereof from the date on which the application should have been made and the earlier of when the registration application is submitted to the Commissioner for Revenue and the date when that person is registered by the Commissioner for Revenue.

If the VAT due for the first period following the registration is EUR 2,000 or less, the penalty shall not exceed EUR 250 and where the VAT due for the first period following the registration is more than EUR 2,000 the penalty shall not exceed 20% of the VAT due.

Reference to the above may be found in Article 39 of the Maltese VAT Act Cap. 406 of the Laws of Malta.

Incomplete and incorrect VAT returns:

With respect to VAT returns, the following penalties are applicable:

Penalty in an amount equivalent to 20% of the total of:

• the understated output VAT; and
• the overstated input VAT.

Where an understatement in output VAT or overstatement in input VAT is corrected by the taxable person before a provisional assessment is served by the Commissioner for Revenue, the penalty will be reduced to 10% of the above.

Reference made to the term VAT Returns applies equally to any VAT Returns submitted in terms of the MOSS scheme. Penalties applicable for incomplete/incorrect domestic VAT returns may be applied mutatis mutandis.

Reference to the above may be found in Article 37 of the Maltese VAT Act Cap. 406 of the Laws of Malta.

Non-compliance with invoicing and accounting obligations:

Criminal fines range from EUR 700 to EUR 10,000. The fines will depend on the type of offence committed and may include imprisonment (depending on the seriousness of the case).

In addition, depending on the type of offence committed, a person may be subject to a further fine where tax amounting to more than EUR 100 is endangered. Such fine shall be equal to two times the endangered tax and/or to imprisonment of not more than 6 months. The two times fine for endangered tax shall in no case be less than EUR1,000.

In addition, an offender, upon request by the prosecution to the court, could be liable to the payment of a further fine of EUR 5 for each day until the relevant corrections are made.

Further fines are applicable to persons who are recurrent offenders. 

A compromise/agreement may however be concluded with the Commissioner for Revenue in Malta granting an opportunity to the offender to extinguish any criminal charges arising in this respect.

Reference to the above may be found in Articles 76, 77 & 84 of the Maltese VAT Act Cap. 406 of the Laws of Malta.

Non-payment and late payment of VAT:

Currently, interest is due for non-payment/late payment of Malta VAT at 0.33% with effect from 1 January 2020, for each month or part thereof during which the VAT due remains unpaid.

Reference to the above may be found in Article 21 (4) of the Maltese VAT Act Cap. 406 of the Laws of Malta and Subsidiary Legislation 406.19.

Non-submission and late submission of VAT returns:

With respect to domestic VAT returns, a penalty is applicable in an amount equivalent to the higher of:

• 1% of the excess, if any, of the VAT due (disregarding any excess credits brought forward from a previous tax period); and
• EUR 20 for every month or part thereof that elapses from the date by which the tax return should have been filed and the date when it is filed to the Commissioner for Revenue.

The penalty shall not exceed EUR 250 per late return. Furthermore if the VAT due is less than EUR 250, the penalty shall not exceed the higher of the total VAT due or EUR 50.

To date, there are no specific provisions imposing penalties to MOSS registered, foreign based suppliers for failure to (timely) report in a MOSS return taxable B2C supplies of broadcasting, telecommunications and e-services made to non-taxable persons located in Malta however penalties applicable for non-submission/late submission of a domestic Malta VAT return may be applied mutatis mutandis.

Reference to the above penalty may be found in Article 38 of the Maltese VAT Act Cap. 406 of the Laws of Malta.

VAT Registration Process:

Persons are required to register for VAT purposes electronically through the official Commissioner for Revenue website. An applicant must file (or appoint a tax representative to file on his behalf) the respective electronic registration form together with certain due diligence documentation. The procedure for registration for the MOSS under the Union Scheme requires persons to be readily VAT registered - consequent to which a MOSS registration application may be filed through the person's VAT account. A seperate online applciation is to be filed by persons applying under the non-EU scheme. 

In Malta, a MOSS registration application may only be made electronically. The Commissioner for Revenue may - at its discretion - request additional information. The registration process normally takes 5 - 8 working days.

Appointment of a VAT Agent:

Although not common practice in Malta, it is possible to appoint a VAT representative subject to certain conditions and subject to such representative being designated by the Commissioner by means of a notice in writing in accordance with Article 66 of the  VAT Act.

Deferment and Cash Accounting Scheme:

In terms of item 2 to the Fourth Schedule of the VAT Act, the date a chargeable event in the case of supplies of services takes place on the date when the services are performed. Tax becomes chargeable on supplies on the earlier of two dates being (i) the date when the chargeable event takes place (i.e. when the services are performed); or (ii) the date when a payment is made for the supply. However, where a tax invoice is issued by the 15th day of the following month, tax becomes chargeable on the date of the invoice. 

Cash accounting is only applicable in respect of persons engaged in the supply of professional services whose annual turnover does not exceed €2,000,000. It therefore does not apply to the sector of telecommunications, broadcasting or electronically supplied services.

Continuous supplies:

In terms of item 2(2) of the Fourth Schedule to the VAT Act, the date continuous supplies become chargeable is the date when a statement of account is issued up to the last day of each period to which such statement refers. Where continuous supplies do not give rise to statements of account or payment during a year, such supplies shall be regarded as being completed at least at intervals of one year. 

Additional obligations deemed necessary for collecting VAT and preventing evasion (anti-avoidance measures):

Not applicable. 

Bad Debt relief:

Bad debt relief may be granted following a final Court judgment showing beyond doubt and to the Satisfaction of the Commissioner that the respective debt can never be recovered. The claim must for bad debt relief must be filed within 12 months from the date of the final judgement. Several other conditions apply.

Reference to the above may be found in item 10 of the Tenth Schedule to the Maltese VAT Act and Guidelines for Bad Debt Relief Claims issued on 30 November 2014.

Re-valuation of services at open market value:

Not applicable. 

Use and Enjoyment:

Not applicable. 

VAT Treatment of vouchers:

Further to Legal Notice 348 of 2017, new regulations in relation to vouchers came into force in Malta effective 1 January 2019 in line with the provisions of articles 30a, 30b and 73a of the EU VAT Directive.

Vouchers are classified as either "single-purpose vouchers" or "multi-purpose vouchers".

A Single-purpose voucher is characterised by a certainty regarding its value and subsequent VAT charge, i.e. the VAT charge on the good/service upon redemption of the voucher. Given the certainty in the nature of a single-purpose voucher, VAT is charged upon the issuance of such a voucher. The issuance of a single-purpose voucher is therefore equivalent to the sale of the good/service against which such voucher may be redeemed. 

A Multi-purpose voucher is by definition a voucher which is not a Single-purpose voucher. A Multi-purpose voucher entitles the holder to receive goods or services where such goods or services are not sufficiently identified or where the territory within which such goods or services are to be supplied and taxed is unkown. Since VAT cannot be determined with certainty at the time the voucher is issued, VAT shall be accounted for when the multi-purpose voucher is redeemed and therefore when the good/service to which the voucher relates, is supplied.

The transfer of a single-purpose voucher by a taxable person is a taxable event in itself (as if the goods/services to which the voucher relates have been transferred) whilst the transfer of a Multi-purpose voucher by a taxable person is only taxable in so far as any supply of services can be identified relating to the transfer; such as distribution or promotion services.

Reference in this regard can be made to Part 9 of the Fourteenth Schedule to the Maltese VAT Act.