Which companies can register for VAT in Malta?

First and foremost a company must be making an economic activity in order to register for VAT in Malta.  However, VAT rules have become very complex to say the least and all requests for the issuance of a VAT number are examined on a case by case basis. It is ultimately at the discretion of the VAT department in Malta as to whether or not an application can be processed and a VAT number is issued. We assist clients in determining their VAT position as well as registering for a VAT number in Malta.

Are there companies that cannot register for VAT?

In all cases a clear analysis of the activities, suppliers, customers and structure of the companies needs to be carried out.  The Absence of an economic activity, for example the mere holding of shares in another company, does not entitle the company to obtain a VAT number.  One has to keep in mind that even though historically a company may have not had an obligation or a right to register for a VAT number, VAT regulations have been changing constantly and may now require a company to apply for a VAT number.  For example, recent rules have required that, depending on the supplies provided, certain gaming companies are now required to shift from a historical article 12 registration to an article 10 registration.

How often do I need to check my VAT position?

Whilst the rules are not constantly changing it is deemed advisable to keep abreast of changes. We do keep our clients informed of said changes if these have an effect on their business.

How do I register a company for VAT purposes in Malta?

If the company is trading in goods and/or services in Malta, it is obliged to register under Article 10 of the VAT Act within 30 days of its first supply of goods and/or services made in Malta.  Alternatively, if a company is established for VAT purposes in Malta, but is trading with foreign (EU or non-EU) parties, it may register under Article 10, likewise within 30 days of its first supply of goods and/or services made in Malta.

On which items purchased may a company claim input VAT on?

A company may claim input VAT only if it is registered under article 10 of the VAT Act.  It would be able to claim back so much of the input tax as is attributable to taxable supplies, exempt with credit supplies and supplies made outside Malta which, had these been made in Malta, would have been classified as taxable supplies or exempt with credit supplies.  Where the economic activity of a registered person consists in a mixture of taxable/exempt with credit supplies and exempt without credit supplies, input VAT would have to be apportioned by using either the direct method of attribution or the partial attribution method.

What is the difference between a tax invoice and a fiscal receipt?

A tax invoice may only be issued by a person registered under article 10 (in Malta) to either another person registered under article 10 or to another person established in another EU member state registered for VAT under a similar article in the law of that other member state.  Tax invoices must be issued as per the Twelfth Schedule of the VAT Act.

A fiscal receipt must be issued when a registered person makes a supply to a non-registered person.  The fiscal receipt is used only locally.  A fiscal receipt must be issued in accordance with the Thirteenth Schedule of the VAT Act.

What kind of books and records must be kept for VAT purposes and for how long?

The registered person must keep the following records and documents:

  • Copies of Fiscal Receipts issued, if any
  • All Customs import/export documentation
  • Purchases and Sales Invoices
  • Debit and Credit Notes
  • Cash Books and Petty Cash Books
  • Day Purchases and Sales Ledger
  • Value Added Tax Account and Annual VAT Account
  • Bank Account connected with the business
  • Any other records and documents relevant to your economic activity

The registered person is obliged to retain these records and documents for six years as the Department may request them for inspection.

Companies may also be required to apply for a VAT number under Article 12. We do offer the service of analysing companies position to ensure that the company and its officers are not exposed to risk for falling foul of the VAT rules.

Fenlex provides all the assistance required in obtaining a VAT number in Malta, including, where applicable, attending meetings at the VAT Department when requested.  The application is normally made online, and it is accompanied by other documents requested relating to the company and its directors. The application is a declaration on the type of business of the company and the estimated turnover and purchases in Malta and in the other EU Member States.   Since it is submitted online, a signature as such is not required.  However, the VAT Department deems it as a signed document (by the signatory/ies – director(s)) once it is submitted. Should you need further information please contact our team at Fenlex on taxcompliance@fenlex.com for guidance.

Fenlex also offers clients VAT services such as compiling VAT Returns which are to be prepared quarterly and submitted on a timely basis to the VAT Authorities in Malta. Failure to meet the reporting deadlines will result in late submission fines and penalties being imposed by the VAT Authorities.  Persistent non-compliance with the VAT Rules, in particular failure to submit VAT Returns, may lead to criminal charges being taken against the company.