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Malta VAT law amendment: Management of investment schemes

Deloitte Malta Tax Alert

Extension of the Malta VAT exemption

On 22 November 2016, Legal Notice No. 383 of 2016 was published, amending the VAT exemption of investment scheme management services as provided by item 3(6), Part Two of the Fifth Schedule to the Malta VAT Act.

Prior to the amendment, the said provision only allowed the exemption to be applied for management services provided to collective investment schemes and retirement schemes. Following the change, the provision will also cover such services where provided to:

  • Securitisation vehicles as defined under the Securitisation Act, and
  • Authorised reinsurance special purpose vehicles as defined in the Re-Insurance Special Purpose Vehicle Regulations.

As a result of this amendment, the scope of the VAT exemption has been significantly extended.

Impact

The amendment will be welcome news to securitisation vehicles and authorised reinsurance special purpose vehicles established in Malta which acquire management services. Prior to the amendment, such services were not covered by the VAT exemption, thus often resulting in an irrecoverable VAT cost for such vehicles.

Managers providing their services to securitisation vehicles or to authorised reinsurance special purpose vehicles will likely be impacted as well. Since their services will now classify as VAT exempt (without credit), their right to recover VAT incurred on their expenses will be significantly curtailed.

How can Deloitte help?

Should you have any questions with respect to the classification of any of your activities for VAT purposes, the correct VAT treatment thereof, what VAT rate to apply (if any), what the related VAT compliance/reporting obligations are (if any) or should you have any other VAT related questions, please do not hesitate to contact Mark Grech or your usual Deloitte Malta contact.

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