EU warns Malta over incorrect VAT on yacht leases

The European Commission (EC) has sent another letter of formal notice to Malta whose authorities it accuses of not levying the correct amount of the value-added tax (VAT) on the lease of yachts. Brussels claims that Valletta failed to properly modify its tax system in response to earlier requests by the EC.

The EC stated, “Following an initial letter of formal notice on 8 March 2018, Malta modified its legislation in order to align it with the necessary requirements under EU law. These new national rules are, however, still not completely in line with EU law.”

According to Brussels, Malta’s legislation uses a distance-based system to calculate the effective use of a yacht outside of the EU, but the bloc’s use does not allow such a method to be used for this purpose. Instead, a time-based process is to be applied.

“The Commission is now sending a complementary letter of formal notice to Malta in order to ensure full compliance with EU law. Without a satisfactory response within two months, the Commission may decide to address a reasoned opinion to Malta,” the EC said.

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Source: IBI