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


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