Malta yachting industry questions EU Commission's discriminatory approach

The Malta Maritime Law Association, the Malta Maritime Forum, the Yachting Services Trade Section within the Malta Chamber of Commerce, Enterprise and Industry, the Institute of Financial Services Practitioners and the Super Yacht Industry Network Malta have denounced the recent Notice sent to Malta by the EU Commissioner in connection with the Maltese VAT rules for pleasure yachts.

In light of the fact that the Maltese system is fully in line with EU law and no similar notice was sent to other member states which apply the same principle under the EU’s VAT Directive, the Maltese yachting industry questioned why such a notice has been sent at all and why this discriminatory approach was being adopted by the Commissioner.  

Finance Minister Edward Scicluna was quite blunt two days ago, when reacting to the Commission’s decision: “European politics is what it is. The big countries try to lay the blame on the smaller ones.”

The Association noted that the manner in which Malta had applied the option granted by Article 59a of the European Union’s VAT Directive was exactly the same as  that adopted by Italy.

“Indeed, Malta’s rules on effective use and enjoyment of pleasure yachts within and outside EU territorial waters mirror those adopted by Italy through Circular No 49 of 7 June, 2002 issued by the Agenzia delle Entrate (Italian Revenue authorities).,” it said in a statement.

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The actual percentages of deemed use of yachts within EU territorial waters adopted by Malta are identical to those which Italy had drafted in the said circular.

“Malta has certainly not re-invented the wheel, but has rather based itself on a similar interpretation given by Italy which the Italian tax authorities confirmed in October 2010 through a “Vademecum del Leasing Nautico” issued with the collaboration of the Italian tax authorities.”

The Association said that, since 2005, France had acknowledged how difficult it was for yacht owners to establish exactly how much a leased yacht is used within EU waters. French legislation allows yacht lessors to apply a 50% reduction on the total lease amount, irrespective of the category of the yacht, meaning only 50% of French VAT is in fact payable as a result of the rule. 

Malta’s system does not exempt yachts from payment of VAT but rather provides guidelines – as allowed for by the EU Directive – regarding deemed use outside and within EU territorial waters so that yachts using such guidelines will always pay VAT at varying degrees.

“We believe that both the Italian and French systems do not infringe the EU VAT laws. Therefore we cannot understand why Malta’s system should be singled out,” the association said. “We appeal to the President of the European Commission, Jean Claude Juncker, to intervene in this matter so as to ensure that there is no discrimination against smaller EU States like Malta.”

The association said it is in the EU’s collective interest that the Commission protects the European yachting sector be protected in line with the EU’s Integrated Maritime Policy to ensure Europe does not lose out to competition in the maritime sector by non-EU countries.  

It also appealed to to all political parties and stakeholders in Malta to come together to protect Malta’s yachting industry.