New Aviation Leasing Guidelines issued by the VAT Department

The Malta VAT Department has issued new guidelines with respect to the VAT treatment of aircraft leasing.  The new guidelines replace the previous guidelines which were issued in October 2012. Whilst the existing conditions for applying VAT on the lease remain, the method which establishes the percentage of deemed use of the aircraft within EU airspace has been revised.  The […]

Written By ACT Team

On May 3, 2016
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The Malta VAT Department has issued new guidelines with respect to the VAT treatment of aircraft leasing.  The new guidelines replace the previous guidelines which were issued in October 2012.

Whilst the existing conditions for applying VAT on the lease remain, the method which establishes the percentage of deemed use of the aircraft within EU airspace has been revised.  The new method will now be based on the flight range of the aircraft. As a result, it now enables a wider range of aircrafts to fall within the scope of the new revised Guideline. The VAT treatment provides that on the basis of the use and enjoyment principle, only the portion of deemed use of the aircraft within European airspace is subject to VAT. The remaining portion is deemed to be effectively used and enjoyed outside the EU airspace and therefore falls outside scope of VAT.  

The guidelines may be downloaded by clicking on the following link.

http://vat.gov.mt/en/VAT-Information/Guidelines-to-certain-VAT-procedures/Documents/Aircraft%20Leasing%20Guide%20-%20Apr%202016.pdf

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].