Malta implements e-Commerce VAT package rules

Deloitte Malta Tax Alert

01 October 2018

Regulations implementing provisions of an EU directive (Council Directive 2455/2017) in Malta that aim to facilitate and simplify VAT compliance for businesses supplying telecommunications, broadcasting and electronic services (TBES), particularly small enterprises, were published on 20 September 2018 through Legal Notices 297-299. The regulations will apply as from 1 January 2019.

Place of supply of TBES to nontaxable persons

The place of supply of TBES to non-taxable persons (i.e. business-to-consumer (B2C) transactions) will be determined in accordance with the general place of supply rule (i.e. the place where the supplier is established), instead of applying the special rule that the place of supply is where the non-taxable person is established, has its permanent address or usually resides, where:

  • The supplier of such services is established in Malta, or has a permanent address or usual residence only in Malta;
  • The customers are nontaxable persons that are established or have their place of permanent address or usual residence in any EU member state other than Malta; and
  • The total value of such supplies (exclusive of VAT) does not exceed EUR 10,000 in the current calendar year and did not exceed this threshold during the preceding calendar year.

However, where, during a calendar year, the EUR 10,000 threshold is exceeded, the special rule for determining the place of supply of TBES to nontaxable persons will become applicable as of that time, and the supplier may opt to apply the Mini One-Stop Shop (MOSS) simplification scheme that allows suppliers of B2C to account for the VAT due on such supplies electronically, via a web-portal in the Member State in which they are identified, thus avoiding the need for said suppliers to have multiple VAT registrations in each Member State of consumption.

In addition, suppliers falling within the scope of this provision have the right to opt for the place of supply to be determined in accordance with the special rule mentioned above, and this election will apply for two calendar years. Exercise of this right will require written notice to be submitted to the Commissioner for Revenue specifying the date from which the election applies, which cannot be earlier than 30 days from the date on which it is submitted.

Simplified invoicing

The issuance of a tax invoice will be governed by the rules applicable in the EU member state where the supplier making use of one of the special schemes for TBES (i.e. the MOSS schemes for EU and non-EU persons) has chosen to be identified for MOSS purposes, rather than the rules applicable in the member state where the customer is located. In Malta, persons supplying TBES under the MOSS are exempt from the requirement to issue VAT fiscal receipts (i.e. B2C VAT invoices).

Non-EU MOSS scheme

For purposes of the scheme for non-EU taxable persons supplying TBES under the MOSS, a “taxable person not established within the Community" is defined as “a taxable person who has not established his business in the territory of the Community and who has no fixed establishment there.” Therefore, the additional condition under Malta’s existing domestic rules will be removed, under which, for a person to qualify as being established outside the EU, that person also should not be required to be identified for VAT purposes under Malta’s VAT Act.

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