VAT registration in Malta: Articles 10, 11 and 12
Malta has one VAT rate that matters and three registration types that confuse. Here is what each does and which applies to you.
Value added tax in Malta is governed by the Value Added Tax Act (Chapter 406) and follows the EU VAT Directive. The standard rate is 18%. Reduced rates of 7% and 5% apply to a short list of supplies, including accommodation and certain printed matter and medical goods, and a zero rate applies to exports, intra-EU supplies of goods and international transport. What trips up new businesses is not the rate but the registration: there are three kinds, named after the articles of the Act that create them.
Article 10: full registration
A business that makes taxable supplies above the small-undertaking threshold, or that chooses to register in full, registers under Article 10. It charges VAT on its supplies, recovers the VAT on its purchases, files returns each quarter and receives a VAT number in the EU format that allows it to trade with other EU businesses without VAT on cross-border supplies. This is the normal registration for a trading company, and it is the only one under which input VAT is recovered.
Article 11: the small undertaking
A business whose turnover is below the small-undertaking threshold may register under Article 11. It does not charge VAT and does not recover it, and it files a simplified annual declaration. It is suited to a small local service business whose customers are private individuals. A business that expects to grow past the threshold, or that buys significant goods and services with VAT on them, is usually better off registering under Article 10 from the start.
The threshold is set by the Act and has been revised; at the time of writing a single threshold applied to most supplies. The current figure should be checked when the choice is made.
Article 12: exempt persons and intra-EU acquisitions
A person who makes only exempt supplies, or who is not in business at all, but who acquires goods from other EU states above the acquisition threshold, or receives services from abroad on which Maltese VAT is due under the reverse charge, registers under Article 12. It exists to account for VAT on those acquisitions and gives no right to recover input VAT. A holding company that receives services from foreign advisers is a typical Article 12 registrant.
Registering
A company registers with the Malta Tax and Customs Administration online, normally at incorporation, with its memorandum and articles, proof of its registered address, and a description of its activity. A VAT number is issued within days. A non-resident business with no establishment in Malta may need to register for supplies made here, and may appoint a fiscal representative.
Filing and paying
Article 10 returns are quarterly and due, with payment, six weeks after the end of the quarter. Late filing carries a fixed penalty and late payment carries interest. Businesses trading with other EU states file recapitulative statements, and larger traders file Intrastat. The one-stop shop schemes allow an EU-wide account for distance sales and digital services to consumers.
Frequently asked questions
- What is the VAT rate in Malta?
- The standard rate is 18%. Reduced rates of 7% and 5% apply to a short list of supplies, and exports and intra-EU supplies of goods are zero-rated.
- What is the difference between Article 10 and Article 11 VAT registration in Malta?
- Article 10 is full registration: the business charges VAT, recovers input VAT and files quarterly. Article 11 is for small undertakings below the threshold: no VAT charged, no VAT recovered, one annual declaration.
- Does a Malta holding company need a VAT number?
- Usually an Article 12 registration, to account for reverse-charge VAT on services bought from abroad. It does not give a right to recover input VAT.