VAT and boat leasing, Malta denounces French practices

Yachts in the port of Valletta in Malta

Attacked by the European Commission for its VAT reductions on pleasure boats, the Maltese boating industry defends itself and points the finger at French and Italian legislation.

Infringement proceedings by the European Union

As we mentioned in these columns, the European Union has launched proceedings against Malta, Cyprus and Greece for non-compliance with VAT rules in the nautical sector. The infringement concerns the reduced VAT rate applied to leased vessels, based on theoretical navigation outside EU territorial waters.

Equivalent legislation in Italy and France

In a statement, Maltese boating professionals, represented by the Malta Maritime Law Association, the Malta Maritime Forum, the Yachting Services Trade Section of the Malta Chamber of Commerce and the Super Yacht Industry Network Malta, denounce the European procedure and point to similar legislation in Italy and France. "Malta certainly did not reinvent the wheel, but rather relied on the similar interpretation[of European rules] given by Italy, confirmed in October 2010 by the Italian tax authorities in a"vademecum of nautical leasing". "

The press release details the hexagonal example. "Moreover, it is stressed that France has recognised since 2005 the difficulty of establishing for recreational craft leasing providers the extent to which they are used in European waters. Article 13 of Administrative Instructions 3 A-1-05 published in the Bulletin Officiel des Impôts of 24 January 2005 recognises this difficulty and authorises leasing service providers to apply a 50% reduction on the total leasing amount, whatever the category of vessel

Malta's Finance Minister Edward Scicluna

Towards a procedure against France?

Maltese Finance Minister Edward Scicluna is concerned about Malta's unfair treatment of France and Italy at the Malta Today newspaper. "European policy is what it is. The big countries are trying to blame the little ones. After I made this unfair treatment public, Moscovici told me that the committee would also write to France and Italy. I don't know if these letters have been sent and if these countries will also face infringement proceedings."

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