Top 5 VAT developments in Malta for the period January – June 2020

Entry into force of the ‘Quick Fixes’
In 1 January 2020 the amendments to the VAT implementing the so-called ‘quick fixes’  (Council Directive (EU) 2018/1910) entered into force.

Reduction of rate of interest charged under the VAT Act
With effect from 1 January 2020 the rate of interest that may be due under the VAT Act was reduced from 0.54% to 0.33%.

Use & Enjoyment Override for leasing of vessels
In March 2020 the Office of the Commissioner for Revenue published updated guidance on the manner in which the effective use and enjoyment of services relating to the lease of pleasure boats is to be computed for the purposes of determining the place of supply of hiring of vessels. The guidance requires VAT to be charged on the full consideration for the lease and permits a subsequent adjustment based on actual use and enjoyment outside EU waters.

Deferral of VAT payments
One of the financial measures introduced in March 2020 to address the economic impact of the COVID-19 pandemic was the deferral of VAT payments for eligible businesses. The deferment originally applied to March and April dues but was subsequently extended up to June 2020 and the repayment deadline is May 2021.

Transposition of the VAT e-commerce package
The legislation transposing Council Directives 2017/2455, 2009/132/EC and 2019/1995/EC amending Directive 2006/112/EC concerning the VAT e-commerce package were transposed into national legislation by Legal Notices published in June 2020. The date of entry into force has been postponed from 1 January 2021 to 1 July 2021 pursuant to the Further to the preliminary agreement reached on 24 June 2020.

Contribution by Sarah Cassar Torregiani, Chief Technical Officer of the Malta Institute of Taxation


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