We have an extensive experience in ship management for Malta with excellent on-site representation and design individual concepts covering the private or commercial operation of a yacht under this flag.
For some years, the preference for a Maltese flag was for larger yachts. Not only because of the premium flag and the special services offered by this maritime nation, but also because of the value added tax advantages for owners who are looking for a solution for an EU-taxed yacht.
For over 10 years, Malta had flown under the EU's perceptual radar system with a VAT Lease Scheme allowed under its own law to reach the "VAT PAID Status" quickly and attractively - at best 5.4% after only a short charter time - and attracted many large yachts.
This "unique competitive advantage" that Malta has created is irretrievably over. The Malta Lease Scheme has been in force since August 2018 and will no longer be in force. Anyone who has received a confirmation of acceptance of his leasing application by that date from the Maltese Ministry of Finance, whose yacht is still being treated under the old conditions and will also receive the coveted "VAT PAID" in 2019. All others must consider what is the best alternative solution for them or await the announced new Malta lease offer, which, however, is in line with the old EU and will in most cases no longer be economically viable.
The old Malta Yacht Leasing Scheme has come to an end since August 2018, following an infringement by the European Commission.
1. We design an individual structure for an EU owner that meets all tax requirements under EU law, in particular its home country, and avoids tax repercussions.
NOTE: The structure, which is mostly practiced by Maltese providers, is based solely on Maltese law and is not so tax compliant in many EU countries!
2. We plan to optimize the use of the yacht within the legal limits: In addition to the fixed quota for the "use of the land" of the yacht, we are considering with the client and his captain the planning of the routes and the use of the vehicle, because only the journeys in the EU are subject to full VAT.
3. In the first and/or second quarters of the use, the lessee must first pay the full VAT on the leasing rates, which are then checked according to the used driving conditions. If used outside the EU/offshore, the excess tax will be refunded. The quota then proven will be used as the basis for the VAT advance for the following tax year. At the end of that year, the driving quotas will be re-examined in the previous year, the tax adjusted and, on a new basis, the advance payment for the next leasing year.
4. The leasing contract can be terminated at any time to sell the yacht or to purchase it by UBO (taxed).
5. The yacht can also be transferred ex VAT to a commercial use.
6. The new guidelines regulate the way in which yachts are delivered on the basis of the VAT tax principle laid down in Article 59a of the VAT Directive, according to their actual use. The new guidelines provide for a system for the actual "use and enjoyment" of yachts based on the distances traveled. If the lessor can demonstrate that the yacht was used by the lessee through logbooks and records of GPS coordinates outside EU waters, the appropriate adjustments to the VAT returns can be made, as explained in the Guidelines, so that VAT does not become due during this period.
The authorities will ensure that the guidelines are implemented correctly and with the greatest transparency. In addition, the authorities expect a realistic percentage of yachts' use and benefits in EU waters each year, except in cases where lessees can demonstrate that the yacht has spent the year outside the EU, as would be the case for ships sailing in the Pacific while traveling around the world.
A leasing agreement may be terminated upon expiry or by a cancelation agreement between the parties in accordance with the terms of the leasing contract, e.g. 112 B. in the event of the occurrence of a particular event such as the sale or loss of the yacht. In this case, the ownership of the yacht would be returned to the lessor who is free to take on a new lease or sell the yacht. Alternatively, the lease may be renewed if the parties so decide after the deadline.
The lessee may also purchase the yacht before the lease is terminated or after its expiry. In the latter case, he receives a VAT PAID certificate if the yacht is sold to the lessee at market value in Malta. This requires that the authorities be shown that the sales conditions are comparable to those of a third party and that all VAT payable in Malta has actually been paid. The Maltese authorities still provide guidance on how the market value of a yacht will be determined for income and customs purposes.
Otherwise, the parties are largely free to regulate their relations according to their wishes and in accordance with Maltese and EU rules, within the framework of the new VAT guidelines and EU law.
For the consultant, this means to develop design options that comply with the law and comply with the law.
We are happy to design an individual solution for you, too!
An EU notification and the incompatibility of the Malta Yacht Lease Scheme with EU law (ECGH/Mercedes Case) ended in August 2018. Malta's national law had for years classified de facto financing leasing as operational leasing.
The new leasing offer from Malta - published February 29, 2019 - has nothing in common with the old one! It is no longer a VAT "tax turbo" where after - mostly - 12 months of payment lease the "VAT-PAID" is issued to the yacht, but is a purely operational leasing, whereby the yacht remains VAT-FREE and the owner/user pays VAT only on the use of the yacht in EU waters according to certain quota formulae. The yacht can be sold EX VAT.
The new Malta Lease model requires much more consultancy, management and planning than the old lease scheme, because everything has to be individually designed and built on a case-by-case basis. The day-to-day administration also carries a lot more work than the previous standard scheme, especially for those customers where we also provide services for directors, since the manager of the lessor/lessors is responsible for the VAT liability at the end of the day when a tax assessment is issued and VAT is accepted and due.
In addition, especially in the new lease, a legal and tax-secure structure based on international law must be established. It is not the Malta Lease in its national version that decides on its legal compatibility with the UBO's host country law, but the international and national rules applicable to it in its country of residence.
For German UBOs, for example, the often practiced 1-Ltd. or 2-Parallel-Ldt are often practiced in Malta. Solutions as a structure do not comply with the law.
The model is therefore suitable for yachts from 24 - 28 meters with real use of the voyage. For sun lovers on the pier or in bays hardly!
Through fundamental legal changes on EU-level and ratification in the EU-countries in the last two years as well as the recent decisions of BFH, the Standard-Malta-Leasing-Model functions specially for yachts above 24 m only for Malta-citizens and leads to VAT related problems in the country of residence (including yachtleasing in case of yachts above 24 m and longer than 90 days at country of residence of the leaser), corporate tax, income tax, settlement tax and withholding tax. Risks of the hidden profit distribution are also added.
The Problem is not the Malta-Lease-Model per se, but its legal usefor the Non-Malta-citizens. We have worked out a solution in an international, cross-border team afterseveral weeks: to make Malta-Leasing-offer further possible in terms of law and tax for EU-citizens who are Non-Maltese. The solution reached is not a modification in the legal Malta-Yacht-Leasing-Model-offer, rather a necessarily and fundamentally new way of its legal use and delivery- and is individually separated for every event according to the laws prescribed in the country of residence of UBOs. Furthermore, it is important to consider the current changes. There is no scheme, even though it will gladly be sold in Malta.
I can not stress it enough: Malta leasing - till 2018 and especially the new version 2019- is not a product you can literally buy off a shelf and everything is fine. On the contrary, such a shelf product can not stand an audit if it is not designed according to the tax rules of the country of residence and the tax situation of the owner.
We shall guide you with our Malta-solution legally in Full-Service.
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Ausgabe 1/2014 Die Premiumflagge mit dem weißen Kreuz
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Ausgabe 4/2014 Zwischen 0 und 27 Prozent - Serie "Effizienter Yachtbetrieb" Teil 2
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