VAT rate lowered for four new categories

Starting next year, a reduced VAT rate of 12% will be applied to four new categories, according to a new legal notice.

The notice states that the 12% rate will apply to the following items: custody of management of securities; management of credit and credit guarantees by a person or body other than those who granted the credit; short-term leasing of pleasure boats; and services consisting of the care of the human body.

The new rate will come into force on 1 January 2024.

The legal notice transposes an EU Council Directive, which allows member states to adopt a VAT rate of no less than 12% on certain services that other member states have derogations on.

For example, Ireland already applies a reduced rate of the short-term leasing of pleasure boats due to a derogation. This directive allows Malta to lower the VAT rate on the same category accordingly.

Member states were able to apply this reduced rate on specific categories by 7 October (tomorrow).