There are various forms of indirect taxes. The most common are the Value added tax (VAT), import duty, excise duty and stamp duty.
VAT (Value added TAX)
Value added tax is charged on supplies of goods and services made in Malta, on intra-Community acquisitions of goods made in Malta and on the importation of goods into Malta.
Supplies of goods and services in Malta are typically subject to VAT at the standard rate of 18%. However, certain supplies may be subject to a reduced VAT rate, such as 7% on eligible accommodation and on entrance to sporting facilities, and 5% on other supplies like the supply of electricity, the importation of works of art, collector’s items and antiques, certain confectionery items, certain medical accessories, certain printed matter (including electronic publications), and certain items for exclusive use by persons with a disability. The reduced rate of 5% was extended to also include protective face masks and visors (but excluding diving equipment).
- Registration under Article 11 applies to businesses considered to be small undertakings. Businesses registered under Article 11 receive a VAT identification number without an “MT” prefix Article 11 VAT registration. When a taxable person registers for VAT under article 11, he does not charge VAT on his supplies. Also, it will not be possible to claim back the VAT that you incur while undertaking your economic activity. Persons registered under article 11 would submit a declaration (simplified tax return) at the end of each calendar year which must be submitted by the 15th of March of the following year.
Small undertakings should be lower than the following thresholds (Amended as announced in the Budget 2021)
| Category | Entry threshold | Exit threshold |
| Economic activities – supply of goods | 35,000 | 28,000 |
| Other economic activities | 30,000 | 24,000 |
- Article 12 Registration:
This type of registration applies to entities or individuals intending to make intra-Community acquisitions in Malta that are:
- If you make intra-community acquisitions of goods in Malta the value of which exceed €10,000 since the start of the year, then you are liable to register for VAT under article 12 and pay VAT in Malta each time you make such intra-community acquisitions.
- If you are registered under article 11 as an exempt taxable person and you intend to make Intra-Community Acquisitions and pay VAT thereon in Malta, then you need to register also under Article 12 to obtain a valid identification number for this purpose and qualify for such an arrangement.
Persons registering under Article 12 receive a VAT identification number with an “MT” prefix.
- Article 10 Registration:
This is the most common type of registration. Businesses with annual turnover exceeding the applicable thresholds for taxable supplies must register under this Article. Article 10 registration also applies to sellers from other EU member states making distance sales to non-taxable customers in Malta. Businesses registered under Article 10 are given a VAT identification number with an “MT” prefix. If you are registered under article 10 you need to;
- Issue fiscal receipts or tax invoices on all supplies made.
- VAT Return submissions normally need to be submitted for a tax period of three months by not later than 6 weeks after the end of the tax period, or as directed by the Commissioner.
If you supply goods or services and the annual turnover does not exceed the established entry threshold, you may register for VAT as exempt under article 11. However, you may instead opt to register for VAT under article 10 to charge VAT and claim a deduction of the VAT incurred in the normal way. If you decide to opt for the latter option, then you are required to remain under article 10 for a minimum of thirty-six months. It is only after that period that you would be able to register under article 11 and provided that the exit threshold is not exceeded.
Import Duty
Imports from outside the EU are also subject to import duty. Customs duty is calculated as a percentage of the customs value of the goods. The percentage or rate varies depending on the type of goods. The tariff applicable shall be verified in the TARIC database. The customs value is made up of the price paid for the goods, the insurance cost, and the shipping cost. The law provides for several exemptions, including exemptions on temporary Importations.
Excise Duty
Excise duty is charged on excise goods produced in or imported into Malta and released for consumption in Malta. Excise Duty is a national tax, imposed by the Excise Duty Act – Chapter 382 of the Laws of Malta, on certain goods and commodities which are consumed or made use of, as in the case of a service, in Malta.
Duty on Documents and Transfers
A duty on documents and transfers (stamp duty) is levied on documents relating to transfers of property, contracts of exchange, auction sales relating to immovable property, marketable securities (including shares) and insurance policies. There are various rates of Duty on documents such as:
- The default rate of duty applicable to the transfer of any immovable property or any real right over an immovable property, is of €5 for every €100 the higher of consideration for the transfer or market value.
- When the person acquiring the property or any real right over such property for the purpose of establishing therein or constructing thereon his sole ordinary residence, the duty charged is reduced to €3.50 per every €100 or part thereof on the first €150,000 paid. The value in excess of the first €150,000 is subject to the default duty rate of €5 for every €100 or part thereof.
- Marketable securities (2% or 5% in the case of transfers of shares in property companies)
Duty exemptions also apply, such as duty on Spouse’s consequent to a consensual or judicial separation between spouses, death of spouse , partition of property held in common between spouses, transfers of immovable between companies forming part of the same group, transfers of shares upon certain restructuring of holdings within a group of companies, transfer of immovable property by a company to its shareholder (Shareholder is an individual or his spouse who owns or own, directly or indirectly, not less than 95% of the share capital and voting rights of the said company) in the course of winding up or in the course of a distribution of assets pursuant to a scheme of distribution, subject to certain conditions and a reduced rate of duty on the acquisition of property to be used as one’s ordinary residence. Other exemptions apply.
