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.