The Maltese VAT Act is based on the VAT Directives of the European Union. VAT is levied on the supply of goods and services in Malta. Every taxable person, i.e. a person engaged in an economic activity, is obliged to register for VAT and charge VAT where applicable.

Non-residents are subject to VAT in the same manner as residents if they carry out any taxable transactions in Malta.

VAT Rates

The standard VAT rate is 18%. A reduced rate of 5% applies to certain supplies such as confectionary items, medical accessories and items for the exclusive use of the disabled. As from 1^st January 2011, a 7% rate is applicable to the supply of specific types of accommodation. Other supplies such as international transport of goods and services, gold, food for human consumption and pharmaceuticals are zero rated.

Taxable Value and Thresholds

The taxable value is the total consideration payable for the goods and services supplied, excluding the VAT itself.

Taxable persons who do not exceed the turnover threshold of Eur7,000 per annum are not obliged to register for VAT.

Taxable persons whose total yearly turnover does not exceed the following thresholds, may opt out of the refund system and thus would neither charge VAT on their supplies nor claim any input VAT suffered:

1. Eur35,000 for activities consisting principally in the supply of goods
2. Euro 24,000 for activities consisting principally in the supply of services
3. Euro 14,000 for other activities.