VAT Treatment of Taxi Operators Using Online Ride-Hailing Platforms – Explanatory Notes

On 25 January 2026, the Malta Tax and Customs Administration (MTCA) issued explanatory notes clarifying how Value Added Tax (VAT) applies to taxi operators who provide services via online ride‑hailing platforms. While not legally binding, these notes offer practical guidance on VAT obligations, input tax recovery, private‑use considerations, and the implications of switching VAT registration statuses.

This article summarises the most important points taxi operators need to be aware of.

1. Purpose of the MTCA Notes

The MTCA’s explanatory notes aim to simplify and clarify the VAT implications that arise when taxi operators use digital platforms—such as ride‑hailing apps—to provide transport services. They outline how to handle VAT on taxi fares, platform commissions, vehicle‑related expenses, transfers of taxis, and registration changes.

However, operators should note that these notes do not replace the law, nor do they constitute formal guidance under Article 75 of the VAT Act. For complex scenarios, operators should refer directly to the VAT Act or seek specialized tax advice.

2. VAT on Taxi Services Through Ride‑Hailing Platforms

When a taxi service is booked via a digital intermediary, it is still the taxi operator—not the platform—who is responsible for charging VAT, as long as the platform acts in the name and on behalf of the operator.

Charging VAT on the full fare

Taxi operators must account for VAT on the full amount paid by the passenger, even if the platform deducts a commission before remitting payment.

For example, if a customer pays €10 and the platform deducts a €2 commission, the operator must still declare VAT on the full €10.

Treatment of platform commissions

A platform’s commission is considered a separate supply of facilitation (intermediary) services to the operator.

• If the platform is established outside Malta, and the operator is not exempt:
  • The operator must self‑charge 18% VAT under the reverse‑charge mechanism.
• If the operator is VAT‑exempt (Article 11):
  • The operator must still register under Article 12 and self‑charge VAT on the commission.
  • This VAT cannot be recovered.

If the platform incorrectly charges VAT

Even if a foreign platform charges VAT via the OSS in error, Article 11 operators must still self‑charge VAT under Article 12, and incorrect platform VAT must be reversed.

3. Practical Scenarios Explained

The MTCA provides illustrative examples:

Scenario 1 – Article 10 operator using an EU‑based platform

• Taxi fare (€10) → taxable at 18% VAT.
• Platform commission (€2) → operator must self‑charge VAT (€0.36) and may recover it (if fully entitled).

Scenario 2 – Article 11 (exempt SME) operator using an EU‑based platform

• Taxi fare → VAT‑exempt (recorded in Article 11 return).
• Commission (€2) → operator must register under Article 12 and self‑charge 18% VAT (non‑recoverable).

Scenario 3 – Article 11 operator using a Malta‑established platform

• Taxi fare → VAT‑exempt.
• Platform commission includes 18% VAT → operator cannot deduct it.

4. Selling or Transferring a Taxi: Is VAT Due?

Yes—if the taxi forms part of the operator’s economic activity and the operator is not under Article 11.

• Disposal of the vehicle constitutes a taxable supply, and VAT at 18% must be charged.
• Article 11 operators are exempt from charging VAT on such transfers.

5. Claiming Input VAT on Vehicle‑Related Costs

Taxi operators may claim input VAT on fuel, repairs, maintenance, and operating costs only if the vehicle is used wholly for passenger transport for consideration.

This is a special exception: ordinarily, input VAT on motor vehicles is restricted.

Operators should ensure:

• The taxi is strictly used for business purposes.
• Adequate documentation supports the right to deduct input VAT.

6. Private Use of a Taxi

Under Maltese regulations, taxis generally cannot be used privately.
However, if private use occurs:

• If the vehicle falls under the Capital Goods Scheme, an input VAT adjustment is required.
• If not, and VAT was previously recovered, the operator must declare a deemed supply and self‑charge VAT on the private usage portion.

7. Cancelling Article 10 Registration: VAT Obligations

When a taxable person cancels their Article 10 registration—either by switching to Article 11 or fully deregistering—they must account for VAT on goods forming part of their economic activity at the time of cancellation, unless the value is below €250.

Example provided by the MTCA

• Taxi operator buys a vehicle for €20,000 + €3,600 VAT (fully recovered).
• After 3 years, the vehicle’s market value is €15,000.
• Upon switching to Article 11:
  • VAT due: €15,000 × 18% = €2,700
  • Reported in box 40 of the last Article 10 VAT return.

Conclusion

These notes from the MTCA provide much‑needed clarity for taxi operators navigating VAT obligations in the evolving ecosystem of digital ride‑hailing platforms. The key implications revolve around:

• Correctly charging VAT on taxi fares.
• Handling platform commissions through the reverse‑charge mechanism.
• Input VAT deductibility on taxi‑related expenses.
• VAT consequences when disposing of a taxi or changing VAT registration status.
• Avoiding unintended liabilities linked to private use or improper deregistration.