Extension of the Malta VAT exemption

In terms of Legal Notice No. 383 of 2016, the VAT exemption of investment scheme management services as provided by item 3(6), Part Two of the Fifth Schedule to the Malta VAT Act was amended.  As a result of this amendment, the scope of the VAT exemption has been significantly extended.  Prior to the amendment, […]

Written By ACT Team

On December 5, 2016
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In terms of Legal Notice No. 383 of 2016, the VAT exemption of investment scheme management services as provided by item 3(6), Part Two of the Fifth Schedule to the Malta VAT Act was amended.  As a result of this amendment, the scope of the VAT exemption has been significantly extended. 

Prior to the amendment, the exemption only applied for management services provided to collective investment schemes and retirement schemes. Following the change, the provision will also cover such services were provided to: 

  1. Securitisation vehicles as defined under the Securitisation Act, and
  2. Authorised reinsurance special purpose vehicles as defined in the Re-Insurance Special Purpose Vehicle Regulations. 

The new Legal Notice is good news to securitisation vehicles and authorised reinsurance special purpose vehicles established in Malta which acquire management services. Prior to the amendment, such services were not covered by the VAT exemption, thus often resulting in an irrecoverable VAT cost for such vehicles.  This exemption will also however mean that managers providing their services to securitisation vehicles and / or to authorised reinsurance special purpose vehicles will have the recoverability of their input vat significantly curtailed since their services will now classify as exempt without credit supplies. 

How can we help?  

For further information, please contact one of the firm’s tax partners, Stephen Balzan on [email protected] or Elaine Camilleri [email protected]. ACT can help you understand the changes to the tax rules and how these can impact your business.  

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on [email protected].