All entities, including Partnerships, Companies or individuals must register with the VAT office to comply with the local Value Added Tax legislation of 1998.
If you are already VAT registered
Even though you may already be VAT registered it is important that you verify whether you need to register again for the purpose of any new business venture.
If the new business activity is in addition to other business activities carried out under an existing VAT number, the same number should be used for the new activity. However, the registered person must inform the Department of VAT in writing about the nature of the new business activity. If the new business activity will be carried out under a new Limited Liability Company, then a new registration is required.
Individuals or entities that are VAT registered have to regularly send in a VAT Return that would include the total sales, purchases and VAT credit or payable amounts. This declaration would normally have to be sent in every 4 months unless otherwise indicated by the VAT office. The VAT Return can be submitted electronically through the VAT Online Services
What is VAT taxable and what is exempt?
In Malta there are 3 different rates of VAT, as well as a group of products and services that are exempt, as shown in the table below:
Rate of VAT
Accommodation in Hotels and other licensed premises for tourists as specified in terms of the Malta Travel and Tourism Act
The supply of electricity, works of art, collector’s items and antiques, certain confectionery, medical accessories, printed matter, items for the exclusive use of the disabled, domestic care services, minor repairs of bicycles, shoes, leather goods, clothing and household linen, admission to Museums, art exhibitions, concerts and theatres
Exports, intra-community supplies, local and international transport, supply and repair of commercial aircraft and vessels, duty free supplies, food, pharmaceuticals, investment gold, goods under a customs duty suspension regime, and the supply of goods on board cruise liners
Immovable property, non-commercial rent, services by non profit making organisations, insurance, banking and investment services, sports, religious and cultural activities, lotteries and public postal services, health, welfare, education, public broadcasting and the supply of water by a public authority, letting of space for artistic and cultural activities
What kind of books and records do you need to keep and for how long?
You need to keep the following records and documents:
- Copies of fiscal receipts issued
- Fiscal Cash Register (FCR) readings
- All Customs import/export documentation
- Purchases and Sales Invoices
- Debit and Credit Notes
- Cash Books and Petty Cash Books
- Day Purchases and Sales Ledger
- Value Added Tax account and Annual VAT account
- Bank account connected with the business
- Any other records and documents relevant to your economic activity
You are obliged to retain these records and documents for six years as the Department may request them for inspection.
However in cases where the provisions for partial attribution on capital goods and on immovable property applies, the six years shall start to run from the end of the five year period or twenty years period as the case may be.
APPLYING FOR A VAT REFUND (8TH DIRECTIVE)
Taxable persons who incur VAT in connection with their business activities in a Member State in which they do not make supplies of goods or services are entitled to deduct the VAT charged in that Member State. This "deduction" is by means of a refund of VAT from the Member State in which the VAT was paid.
Online services related to the VAT Refund can be found here.
Any objections to the decision taken by the Inland Revenue Department may be appealed through a legal professional. The services for the legal professionals can be accessed here.
Links to related taxation pages