A Complete Guide on VAT Registration in Malta

Features of VAT in Malta

• It is an indirect tax paid by the end customer.
• VAT is collected at each stage of production and sales.
• Falls under the category of destination-based tax system.
• Malta VAT is not equivalent to Sales tax.
• Small businesses (turnover less than €35,000) are exempt from Malta VAT.

Know the Different VAT Rates in Malta

The VAT rates in Malta vary depending on the category and nature of the goods and services sold. Knowing these rates will help you to do effective tax planning and limit potential financial risks.

The different rates and categories of the Malta VAT system are briefly listed below:

Standard VAT Rate

The standard VAT rate in Malta is 18%. It is levied on most goods and services except for some specific categories. Significant goods and services that fall under the standard tax bracket are:

Electronic goods and services

Furniture

Restaurant & Catering Services

Hairdressing

Reduced VAT Rates

1. VAT Rate (5%) - This tax rate is applied to special goods and services such as electricity, specific food items, medical equipment for people with special needs, study materials (books).
2. VAT Rate (7%) - Applied to hotel accommodations, bicycle rentals and sporting facilities.

Special VAT Rate

The special VAT rate in Malta is 12%, introduced for a limited number of goods and services which include healthcare supplies, financial services and pleasure boat services.

Zero VAT Rate

The goods and services under this category falls under the 0% tax bracket. They are as follows:

Exported goods

Intra-EU supplies

Prescribed medicines

Hygiene products

Process of VAT Registration in Malta for businesses

The VAT Registration in Malta is mandatory for business entities earning more than €35,000. Your company can opt for online VAT registration for faster approval and operational ease. After the registration process, a unique VAT number will be provided by the tax authority which is essential for tax filing and commercial operations.

Below are the steps for successful Maltese VAT registration:

STEP 1 # Check if your business has exceeded the VAT threshold limit (€30,000- €35,000).

STEP 2 # Gather the essential documents that need to be submitted along with the VAT registration form.

STEP 3 # After successful form submission, the Commissioner for Revenue Department will diligently review the credentials provided.

STEP 4 # Once the review is completed, your company is officially eligible for collecting and paying Value Added Tax in Malta.

Documents Required for VAT Registration in Malta

Individuals and businesses registering for VAT in Malta must submit the following documents:

• Valid ID/ passport copies of the applicant
• Certificate of Incorporation (for companies)
• AoA and MoA (for companies)
• Business activity proof
• Certified Partnership declaration (for Partnership firms)

Compliance Considerations for VAT in Malta

Adhering to Maltese VAT regulations can protect your business from potential legal scrutiny and increase credibility. Some of the important compliance factors that need to be considered are as follows:

• Start your VAT registration within 30 days of conducting business supplies.
• Make sure to file the VAT returns in or before the due time period, i.e. quartely and annual filings. You can also conduct online VAT returns in Malta through the MTCA portal.
• Practice proper maintenance of VAT records including the invoice, financial statements, and legal filings.
• Avoid late VAT return filings to escape government penalties.
• Consider taking help from a corporate service provider.

Can Businesses in Malta Apply for a VAT Refund?

Yes, with company formation in Malta you can file for VAT refunds by using the EU VAT system. In the case of non-resident companies, they can directly claim a refund from the Malta Tax Authority.

Maltese VAT refund mainly takes place when input VAT exceeds the output VAT i.e. tax after sales.

A VAT refund can highly benefit a business entity in the following manner:

• Immediate refunding reduces tax burdens
• Limits operational expenses
• Effective wealth management

Final Thoughts

VAT registration in Malta is a mandatory requirement for businesses and individuals trading here. Hence having a clear idea about the VAT structure, recent tax rates, registration procedures and compliance factors can help your business make informed tax decisions.

However, tax filings and documentation collection can be overwhelming without expert support. So contact Gryffin Capitalist to fast-forward your Vat Registration in Malta!