1. VAT Registration

VAT registration is crucial for individuals or companies engaging in economic activities. Failure to register within 30 days from the start of an economic activity could results penalties. Companies not involved in economic activities, such as pure holding companies, are not required to register for VAT. Below are the different types of VAT registrations and their conditions:

1.1    Article 10

1.1.1   Registration Conditions

Article 10 registration is applicable to taxable persons whose annual turnover exceeds the specified €35,000 per annum threshold. Those persons registered under Article 10 must charge VAT on their taxable supplies of goods and/or services. Additionally, persons carrying out mixed supplies must also register under Article 10. Taxable persons registered under Article 10 may reclaim input VAT incurred during their taxable activities.​​​​​​​​​​​​

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1.1.2   Compliance Requirements

Article 10 registered persons are required to file quarterly VAT returns which must be submitted within 6 weeks following the end of each VAT quarter (by the 15th of the second month following the end of the VAT period, extended to the 22nd for online submissions and payments). Taxable persons must also issue invoices or fiscal receipts with all necessary details and maintain records of invoices from which they are claiming input VAT. Late submissions result in a monthly administrative penalty of €20 or 1% of the VAT due, with a capping based on the VAT payable. Late payments incur an interest rate of 0.6% per month.

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1.1.3 VAT Recapitulative Statements

Taxable persons registered under Article 10 may also be required to periodically submit statements summarising their intra-community sales. These statements are applicable when a taxable person supplies goods or services to other VAT registered taxable persons in the EU, provided the VAT number is valid. If required, these statements must be submitted by the 15th day of the month following the relevant period (which would be quarterly or monthly). Late submissions will result in administrative penalties of €50 monthly, not exceeding €600, for each statement.

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1.2   Articles 11, 11A & 11B

1.2.1  Registration Conditions

Taxable persons whose local annual turnover does not exceed the specified €35,000 threshold may opt to register under Article 11 of the VAT Act. From 1 January 2025, significant updates took effect for small and micro-enterprises (‘SMEs’) through the introduction of Articles 11A and 11B allowing for cross-border EU trade, aligning Malta’s VAT regime with EU VAT Directive on exemptions for SMEs.

SMEs established in Malta can, if eligible, benefit from a harmonised VAT exemption when making supplies to customers in other EU Member States if registered under Article 11A. This applies provided the total value of cross-border supplies across the EU does not exceed €100,000 in the current or previous calendar year, and the local thresholds set by each Member State are respected (for example, Malta’s local threshold is €35,000, as mentioned above).

SMEs established in other EU Member States that apply their own national SME VAT exemption and whose Union turnover remains below €100,000 per annum can also make VAT-exempt supplies locally in Malta, provided their turnover in Malta does not exceed the domestic threshold (currently €35,000, as mentioned above), and provided they are registered under Article 11B.

Taxable persons registered under Article 11, 11A and 11B do not charge VAT on their taxable supplies of goods or services and cannot reclaim VAT incurred during their taxable activities. Exceeding the relevant annual threshold automatically ends the exemption and requires the taxable person to register under Article 10 for the standard VAT regime. Taxable persons qualifying for registration under these Articles still have the option to choose to register under Article 10 if preferred.

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1.2.2  Compliance Requirements

Article 11, 11A and 11B registered persons must meet specific compliance and reporting obligations, including annual or quarterly declarations, prompt notification of changes in turnover and issuing of fiscal receipts with all necessary details as specified in the VAT Act. Failure to submit a VAT declarations by the deadline results in a monthly administrative penalties, depending on the registration type.

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1.3   Article 12

1.3.1  Registration Conditions

Companies not engaged in economic activity or taxable persons not registered under Article 10 but making intra-community acquisitions of goods exceeding €10,000 annually, or intra-community services must register under Article 12 of the VAT Act and pay VAT on these acquisitions.

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1.3.2  Compliance Requirements

Persons registered under Article 12 must submit Notices of Payment of VAT whenever they receive any services from the EU or outside the EU or make intra-community acquisitions of goods. They are also required to file an annual declaration. The Notices and payment are due by the 15th day of the second month following the invoice date or the month during which the service is received, whichever is earlier. Failure to submit a VAT declaration by the deadline (by the 15th March of the following year) results in a monthly administrative penalty of €10, capped at €120 per declaration.

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2. One Stop Shop Registration and Compliance

Taxable persons providing cross-border services or distance sales of goods to non-taxable persons in the EU can opt for the One Stop Shop (OSS) scheme to simplify VAT compliance. This scheme shifts the place of supply to the customer's location, allowing businesses to avoid multiple VAT registrations in different EU countries. OSS returns must be submitted electronically on a monthly or quarterly basis, depending on the scheme, to the Member State of identification, within 20 days from the end of the relevant reporting period, with VAT payments also due by this date.

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3. VAT Grouping

VAT grouping allows two or more VAT-registered taxable persons established in Malta and linked through financial, economic, or organisational connections to be treated as a single taxable entity for VAT purposes. This mechanism can simplify VAT compliance by enabling transactions between group members to fall outside the scope of VAT, eliminating the need to account for VAT on intra-group supplies.

To qualify for VAT grouping in Malta, the entities must demonstrate the required connections, and at least one member of the group must be licensed or recognised under specified legislation, such as financial services, gaming, or insurance regulations. VAT grouping is particularly beneficial for businesses operating within sectors where such connections are common, as it can reduce administrative burdens and improve cash flow efficiency.

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VAT Rates Applicable in Malta

It is very important to be aware of the various VAT rates that apply to different goods and services. Malta operates a multi-tiered VAT system, with rates that vary depending on the nature of the item or service supplied. The applicable rates, along with a summary of descriptions and typical examples, are outlined below to help businesses and consumers understand which VAT rate may be relevant to their transactions.​​​​​​​​​​