VAT on Yachts – EU Commission sends letter of formal notice

The European Commission has announced that it has sent an additional letter of formal notice to Malta in connection with the method applied for calculating the VAT on the lease of yachts.

Following the initial letter of formal notice on 8 March 2018, Malta modified its legislation in order to align it with the requirements under EU law. However, the Commission appears to be of the view that the revised national rules are still not completely in line with EU law, since a time-based methodology rather than a distance-based methodology should be applied to determine effective use and enjoyment.

Without a satisfactory response within 2 months, the Commission may decide to address a reasoned opinion to Malta.