29 Jan 2021

VAT registration in Malta - How does it work?

Like other countries, Malta has a value added tax (VAT) on the sale of goods, provision of services, imports, and transactions inside the European Union (EU). However, unlike other countries, VAT registration in Malta is neither obligatory, nor automatically ensuing from registering a business.

VAT in Malta

VAT registration is, nevertheless, obligatory for any company registered in Malta that undertakes an operation subject to taxation; or for foreign companies not registered in Malta providing taxable supplies in Maltese territory. This means that your company is subject to VAT taxation in Malta if it:

goods or provides services to consumers in Maltese territory.
goods or services from a company in an EU member state.
goods or provides services to another company which is liable for the tax on an EU member state.
Imports goods from outside the EU to Malta
Holds goods in rented Maltese warehouses as part of a consignment deal.
Sells goods online to Maltese customers.

Your company will not be subject to VAT taxation if it only sells goods or provides services to other companies outside of EU jurisdiction.

The standard VAT rate for Malta is 18%. There is a reduced tax rate of 5% for some goods and services (supply of electricity, medicine, clothing, and others), while hotel accommodation is taxed at a rate of 7%.

VAT registration types

There are three types of VAT registrations in Malta: Article 10, Article 11, and Article 12. These different types of registration depend on several factors, such as your company’s core business, fixed establishment, and others. For more detailed information on what type of registration best suits your company contact us.

The VAT returns, along with their payments, must be submitted quarterly. Under certain circumstances returns may be delivered annually (Article 11) or monthly (Article 10/12). Failure to comply with the established deadlines will lead to penalties. You should always keep detailed accounts of your company’s VAT information.

How to register for VAT purposes in Malta?

VAT registration in Malta is done via the Commissioner for Revenue online web portal.Taxable persons who are obliged to register for VAT under Article 10, must do so within thirty days from the commencement of the economic activity. The VAT application includes information about the company and its planned activities, and it must be accompanied by some documents to process the application. Such documents include a copy of the company’s certificate of registration, passport or ID card copy of the director and a copy of the company’s Memorandum & Articles of Association. Another document which may be required is a declaration from the director of the company confirming that the effective management and control of the company is in Malta. The VAT department may require evidence of such statement, for example by checking if the company has a unique business address in Malta, or requesting a personal interview with the directors, or looking at the number of employees’ resident in Malta.

Once the registration is submitted and all the required information and/or clarifications have been provided, a VAT number is issued. Amongst other obligations, this will imply that the taxable person would going forward be obliged to submit VAT returns and pay or recover any input VAT as applicable.

NEWCO assists its clients in their VAT registration in Malta both with the formalities and documentation to be submitted as well as with the physical set-up of the company (finding dedicated office space for the company’s unique business address, hiring personnel, relocating directors and families or any other assistance the company may need when investing in Malta).

Learn more about VAT in Malta here.