Malta Yacht Leasing – A guide

By Nathalie Langmead

Yacht’s owned by EU residents or corporate bodies and operating within the EU are subject to VAT.  Therefore in recent years, yacht leasing structures have proved popular in reducing the amount of VAT payable.  Italy and France offer similar leasing programs to Malta, however with a VAT base rate of just 18%, Malta has become an attractive location for super yacht owners.

A Malta Leasing Structure works in this way:-

  • A yacht owning company is set up in Malta through a Maltese corporate service provider and the company is registered with the Maltese VAT department.  Each case is looked into individually and if the lease is approved the commissioner of VAT will issue a letter of approval.
  • The Maltese company (the Lessor) purchases and registers the yacht in a suitable EU flag state.
  • The Maltese company leases the yacht to the client as an individual or company (the Lessee).  The lease must be for a minimum of one year and a maximum of 3 years.
  • The loan is charged at a rate slightly greater than the value of the yacht, as the lessor will be expected to make a profit from the leasing agreement.
  • An initial contribution amounting to 50% of the value of the yacht is paid by the Lessee to the Lessor.
  • VAT is taxable according to the length of time the yacht spends within EU waters. Since it is difficult to track the movements of a pleasure yacht, this is estimated with reference to the overall length of the yacht.  Smaller vessels are thought to spend more time in EU waters than larger ones.

Length of yacht

% of lease subject to VAT

Effective rate of VAT

Motor & Sail over 24 metres

30%

5.4%

Motor between 16.01 & 24 metres

Sail between 20.01 & 24 metres

40%

7.2%

Motor between 12.01 & 16 metres

Sail between 10.01 & 20 metres

50%

9%
  • The yacht must be brought to Malta at the beginning of the lease.
  • At the end of the lease the Lessee will be given the option to purchase the yacht for 1% of its initial value plus 18% VAT.
  • A VAT paid certificate will then be issued by the Maltese VAT department, and the yacht will be free to cruise anywhere in the EU. 

 

Example of total VAT paid on a 25 meter motor yacht worth €3,000,000

VAT over lease period:

30% of €3,000,000 = €900,000

5.4% of €900,000 = €48,600

VAT on purchase price:

1% of €3,000,000 = €30,000

18% of €30,000 = €5,400

Total VAT paid on the yacht

= €54,000

If you would like any further information on yacht leasing in Malta please contact Nathalie Langmead on telephone: 00 44 1481 731162

or by email: nathalie.langmead@bachmanngroup.com

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