VAT amendments: Introduction of a new reduced VAT rate of 12%

Deloitte Malta Tax Alert

10 October 2023

On 6 October 2023, the Minister for Finance – in exercise of the option provided to Member States pursuant to the adoption of Council Directive 2022/542 as regards rates of value added tax – published Legal Notice 231 of 2023 which amends the Eighth Schedule to the Value Added Tax Act (chapter 406 of the Laws of Malta) and introduces a new reduced VAT rate of 12% on certain services.

With effect from 1 January 2024, the new reduced VAT rate of 12% shall be applicable to the following supplies of services:

i. Custody and management of securities;

ii. Management of credit and credit guarantees by a person or body other than that which granted the credit;

iii. Short-term hiring of a pleasure boat which does not exceed a cumulative period of five (5) weeks over a running twelve (12) month period; and

iv. Services consisting of the care of the human body required to be delivered by a person in the exercise of any regulated health care profession, including services supplied in the course of a health studio or similar business, but not including exempt (without credit) supplies referred to in item 11 of Part Two of the Fifth Schedule to the Value Added Tax Act.

We understand that the Malta Tax and Customs Administration intends to publish guidance on this subject. Should you wish to learn more or discuss the potential impact of these amendments on your business, please do not hesitate to contact us.

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