VAT Rates - Malta Institute of Management

Malta VAT Compliance Diploma 

Session 3 – Liability of Supply, Deemed Supplies & Self-Supplies 

Dr. Sarah Aquilina 

29 October 2008 

Liability of the Supply - Introduction 

Article 2 VATA: 

“Supply” = an operation treated as a supply of 

goods or a supply of services in terms of 2 nd 

Schedule VATA 

“Taxable Supply” = a supply on which tax is 

chargeable in terms of article 4 VATA and which 

is not exempt from tax in terms of article 9 VATA 

VAT Rates 

1

Liability of the Supply 

18% 

5% 

0% 

- 

Standard Rate 

Reduced Rate 

Exempt with credit/zerorate 

Exempt without credit 

Article 19 

Article 19(2); 

8 th Schedule 

Article 9; 

5 th Schedule Part 1 

Article 9; 

5 th Schedule Part 2 

Reduced rate – 5% 

1. Letting/provision of accommodation in 

premises which is required to be licensed 

under the Malta Travel & Tourism 

Services Act 

• Where price of supply includes other goods 

and services, the taxable value of 

accommodation shall be deemed to be 80% of 

the said price and the taxable value of he other 

supplies the remaining 20% of the price); 

• Definition of “accommodation” in the context of 

B/B, HB or FB includes services falling within 

the definition of accommodation on that basis. 

Reduced rate – 5% 

2. Supply of electricity 

3. Confectionery and similar items 

4. Medical accessories 

5. Printed Matter 

6. Items for the exclusive use of the disabled 

reference to 

C.N. Codes 

7. Works of art, collector’s items, antiques 

8. Minor repairs to bicycles, shoes, leather goods, 

clothing and household linen 

9. Domestic care services (incl. domestic help, care 

for the elderly) 

10. hiring of premises for cultural/artistic activities, 

entrance to museums and exhibitions 

2

Exempt with credit – 0% 

Part 1 Fifth Schedule VATA 

Zero-rated 

No Malta VAT charged 

Supplier can recover inputs attributable to 

those supplies 


5 th Schedule, Part 1 

1. EXPORTS 

(1) Supply of goods dispatched/transported to a destination outside 

the EC by/o.b.o the seller. 

(2) Supply of goods dispatched/transported to a destination outside 

the EC by/o.b.o the purchaser not established in Malta except for 

goods transported by the purchaser for fuelling/provisioning 

pleasure boats & private aircraft or means of transport for private 

use. (this exemption applies to travelers under the Retail Export 

Scheme) 

(3) Work on goods imported into Malta for that purpose and reexported 

by supplier, non-established customer or o.b.o. either. 


Retail Export Scheme (SL 406.13) 

Persons domiciled outside EU who visit Malta are 

entitled, when leaving Malta (when their final destination 

is outside EU), to a refund of Malta VAT paid on goods 

purchased: 

• Goods must be taken out in luggage accompanying 

traveler within 3 months from purchase 

• Goods cannot be wholly/partly consumed nor exported 

for business purposes 

• The total value of goods purchased relating to one 

departure must be at least EUR315 

• The value of goods on one receipt is at least EUR55 

3


2. INTERNATIONAL GOODS TRAFFIC 

(1) Supply of goods intended to be placed or while they are placed 

under a customs duty suspension regime. 

(2) Work on goods intended to be/whilst placed in customs duty 

suspension regime. 

Customs duty suspension regime = 

• Temporary storage 

• Free zone/free warehouse 

• Customs warehousing/ inward processing 

• Admittance of goods in territorial waters on drilling & production platforms 

• Temporary entry 

• External transit procedures 

• Internal transit procedures 


3. INTRA-COMMUNITY SUPPLIES 

(1) Intra- Community supply (“ICS”) to a VAT-registered 

person in another EC Member State 

• ICS = supply of goods transported by/o.b.o the supplier or 

purchaser from one EC Member State to another 

• The exemption does not apply to ICS by small undertaking or 

by 2 nd hand goods/works of art/collectors items dealer 

(2) ICS of a “New Means of Transport” to a non-VAT 

registered person (see definition of New Means of 

Transport” in article 2). 


(3) ICS of excise goods to a non-VAT registered person 

Excise goods = mineral oils, alcohol, tobacco (16 th Schedule) 

The Exemption does not apply to an ICS by a small undertaking 

(4) ICS of own goods transferred to another Member 

State 

The transfer by a business of its goods to anther Member State 

(see 2 nd Schedule, item 17) is treated as an ICS for VAT 

purposes, which ICS is exempt with credit. 

The exemption does not apply to an ICS by a small undertaking 

4


4. INTERNATIONAL TRANSPORT 

(1) International transport of persons (incl. transport of accompanying luggage and 

motor vehicles and services related to international transport of persons). 

(2) Transport of goods from outside the EC and services ancillary thereto where 

the value of the transport and the ancillary services is included in the taxable 

value of the imported goods. 

(3) Transport of goods connected with the export of those goods outside the EC. 

(4) Transport of goods subject to a customs duty suspension regime. 

(5) Services used for the purposes of transporting goods referred to in (3) & (4) 

relating to loading, unloading, transshipment, handling, valuation, storage etc. 

rendered in connection with the transport referred to above. 

(6) Services relating to customs formalities on importation/exportation/transit of 

goods. 

(7) Intra-EC transport of goods to/from Azores or Madeira. 


5. BROKERAGE/INTERMEDIARY SERVICES 

(see below) 

6. SEA VESSELS 

(1)Supply of sea vessels 

• used for navigation on high seas and carrying passengers for reward 

or used for the purposes of commercial, industrial or fishing activities; 

• used for rescue, assistance or coastal fishing 

• of war 

(2) Supply to constructors, owners or operators of the aforementioned 

sea vessels of equipment to be used/incorporated therein. 


(3) modification, maintenance, chartering and hiring of vessels 

referred to in (1) or equipment referred to in (2). 

(4) Supply to owners or operators of the aforementioned sea 

vessels of goods for the fuelling/provisioning thereof except 

• board provisioning of coastal fishing vessels 

• war vessels unless specified vessels (CN Code) bound for 

foreign ports 

(5) Services for the direct needs of vessels referred to in (a) [except 

war vessels] and for direct needs of cargo (e.g. towage, 

pilotage, mooring, rescue services), services provided to shipowners 

by maritime agents, services necessary for entrance, 

departure or stay of vessels in port, and assistance provided to 

the passengers or crew for the account of ship-owners. 

5


7. AIRCRAFT 

(1) Aircraft to be used by airline operators for reward chiefly for 

international transport of passengers/goods. 

(2) Supply to constructors, owners or operators of the aforementioned 

aircraft of equipment used/incorporated therein. 

(3) modification, maintenance, chartering and hiring of aircraft referred 

to in (1) or equipment referred to in (2). 

(4) Supply to owners or operators of the aforementioned aircraft of 

goods for the fuelling/provisioning thereof. 

(5) Services for direct needs of aircraft or cargo e.g. towage, pilotage, 

valuation, use of airports, services provided to operators by agents, 

services necessary for landing, take off or stay in airports, 

assistance to passengers and crew. 


8. GOLD 

(a) 

Supply of gold to Central Bank 

(b) 

(c) 

Supply of investment gold - Subject to option for taxation (14 th 

Schedule) 

Services of agents/intermediaries in the supply of investment gold 

- Subject to option for taxation (14 th Schedule) 

See Definition of “Investment Gold” in Part 6 of the 14 th Schedule. 


9. FOOD 

The supply of food for human consumption, excluding food supplied in 

the course of catering. 

“Food” – references to CN Codes 

Food supplied in the course of catering = food suitable for immediate 

consumption whether consumed in place where supplied or not and 

consisting of: 

Meals/snacks (incl. sandwiches, pastizzi, pizza, & biscuits, cakes 

etc except items sealed by manufacturer and items weighing 500g 

or more) 

Milkshake, tea, coffee and liquid chocolate 

Ice-cream (except family packs of 350g or more) 

6


10. PHARMACEUTICALS 

Reference to CN Codes 

11. TRANSPORT 

(a) 

(b) 

(c) 

(d) 

Transport by scheduled bus service 

Scheduled inter-island sea transport 

School transport 

Transport organized by employer to/from work as approved by 

Commissioner 

12. SUPPLIES OF GOODS ON BOARD CRUISE LINERS 

The supply of goods for consumption on board cruise liners where the 

place of supply of those goods is Malta. Refer to 3 rd Schedule Item 3 

for the purposes of determining whether a supply of goods on board a 

cruise liner takes place in Malta. 


5. BROKERAGE/INTERMEDIARY SERVICES 

Services of brokers or other intermediaries acting in the name 

and for the account of another person in the context of the 

following supplies: 

Exports (5 th Schedule item 1) 

International goods traffic (5 th Schedule item 2) 

Sea vessels (5 th Schedule item 6) 

Aircraft(5 th Schedule item 7) 

Gold(5 th Schedule item 8) 

Food(5 th Schedule item 9) 

Pharmaceuticals(5 th Schedule item 10) 


 

 

 

 

Part 2 Fifth Schedule 

Supplies which are exempt from VAT 

No Malta VAT is charged on these supplies 

The supplier cannot recover inputs attributable to those 

supplies [exception for exported financial services article 

22(4)(d) VATA] 

7



1. IMMOVABLE PROPERTY 

(1) Letting of immovable property except: 

accommodation licensed under Malta Travel and Tourism 

Services Act (5%) 

Designated parking sites (see Legal Notice 88 of 1999) 

Permanently installed equipment/machinery 

Letting by a Limited Liability Company to a person registered 

under article 10 for the purposes of the economic activity of that 

person 

(2) Transfer of immovable property 


Definitions: 

“immovable property” = an asset that is immovable property by definition of 

law 

“Letting of immovable property” includes: 

- the provision of accommodation under any title and any other supply of 

the use of immovable property; 

- Emphyteutical grant of less than 50 years 


2. INSURANCE 

The supply of insurance, reinsurance services and related transactions 

by persons licensed under the Insurance Business Act and the Insurance 

Intermediaries Act. 

3. CREDIT, BANKING AND SIMILAR SERVICES 

Includes: 

Granting and negotiation of credit and the management of credit by the person 

granting it; 

Transactions, including negotiation, concerning deposit and current accounts, 

payments, transfers debts etc; 

Transactions, including negotiation, concerning currency etc; 

Transactions, including negotiation, excluding management and safekeeping, in 

shares, interest in companies etc, (subject to exceptions) 

Management of any investment scheme by a person duly licensed under the 

Investment Services Act provided that these services are limited to those activities 

that are specific and essential to the core activity of the scheme 

8


4. CULTURAL & RELIGIOUS SERVICES 

The cultural services must be approved by the Minister 

5. SPORTS 

the supply of services related to sport by non-profit making 

organizations to persons taking part in sport, as approved by the 

Minister 

6. SERVICES RELATED TO EXEMPT SERVICES 

e.g. goods/services by non-profit making organizations to raise 

funds for the provision of exempt medical, welfare or education 

services 


7. SERVICES BY INDEPENDENT GROUPS 

Services supplied by independent groups of persons whose activities are 

exempt from or not subject to value added tax, for the purpose of rendering to 

their members the services directly necessary for the exercise of their activity, 

where these groups merely claim from their members exact reimbursements of 

their share of the joint expenses, provided that such exemption is not likely to 

produce distortion of competition. 

8. SERVICES BY NON-PROFIT MAKING ORGANISATIONS 

The supply of services for the benefit of their members in return for a 

subscription fixed in accordance with their rules by non-profit making 

organisations with aims of a political, trade union, religious, patriotic, 

philosophical, philanthropic or civic nature or whose main purpose is to 

represent and promote the common business or professional interests 

of their members 


9. LOTTERIES 

Government lotto and lotteries, the supply of agency services 

related thereto and supplies relating to gambling as may be 

approved by the Minister. 

10. POSTAL SERVICES 

Public postal services and the supply of goods (incl. stamps) incidental 

thereto 

11. HEALTH & WELFARE 

Services supplied by a person in the exercise of a licensed medical 

profession; 

Care, medical or surgical treatment in a government hospital or an 

approved hospital; 

supply of organs, blood, milk, 

Care facilities & homes (welfare services) 

transport for the disabled 

supply by a hospital, institution or home of goods connected with and 

essential for the provision of medical or welfare services 

9


12. EDUCATION 

(a) 

(b) 

(c) 

(d) 

(e) 

Education, educational research and distance learning by the University of Malta, 

licensed schools or an approved establishment 

Education/research by approved non-profit making organizations 

Private tuition of subjects normally taught in school/university excluding 

recreational, physical or sporting activities 

training and education in the Arts by accredited organizations 

Goods supplied by school/teacher in connection with the provision of the above 

education services (For example the supply to students by an institution of books 

or uniforms or other items essential for the provision of its educational services) 

13. SUPPLY OF GOODS IN RESPECT OF WHICH SUPPLIER DID NOT QUALIFY 

FOR INPUT TAX CREDIT 

14. BROADCASTING 

The activities of public radio/TV bodies other than commercial activities 

15. WATER 

The supply of water by public authorities 

Exempt intra-community acquisitions 


 

Intra Community Acquisition (“ICA”) made for the purpose of a subsequent 

supply in a triangular transaction (to be discussed in a subsequent lecture) 

 

ICA of goods whose importation would be exempt 

 

ICA of goods by persons not/not required to be art.10 registered where VAT 

on the ICA would have been refundable if charged 

 

 

 

ICA of goods intended to be placed under a customs duty suspension 

regime 

ICA of food (as defined) 

ICA of Investment gold (unless option for taxation is exercised) 

 

ICA of goods supplied under margin scheme for second hand goods, works 

of art etc. 

Exempt importations 


 

 

 

 

 

 

 

 

 

Goods the supply of which is exempt 

Goods exempt from customs duty on import 

Goods intended to be placed under a customs duty suspension 

regime 

Goods imported for the purposes of onward supply (Onward Supply 

Relief) 

Catches of fish 

Re-importation of exported goods in the same state 

Re-importation of goods exported for repair, transformation or 

adaptation (exemption limited to value of goods at time of export) 

Food (as defined) 

Investment gold (where option for taxation is not exercised) 

10

Onward Supply Relief 

5 th Schedule, Part 3 item 3 

 

 

 

 

 

 

Guidance notes issued by the VAT department 

Exemption from the payment of import VAT on goods imported into 

Malta and subsequently dispatched to another EC Member State as 

an exempt with credit intra-community supply; 

The goods must not undergo any processing in Malta; 

The goods must be dispatched to another EC Member State within 

30 days; 

The relevant reporting and documentary requirements must be met; 

VAT is accounted for by the purchaser in the MS of arrival as an 

Intra-community acquisition. 

Supplies of Goods & Services: 

Deemed supplies and 

Self-supplies 

Supplies of Goods & Services 

 

2 nd Schedule VAT Act – rules for determining what constitutes a 

supply of goods and what constitutes a supply of services; 

 

Concepts of deemed supplies, self-supplies, private use, free 

supplies; 

 

Principle: where VAT on goods was deducted, the private use or 

free supply thereof is considered to be a supply for consideration of 

those goods; 

 

“Self-supply” = the use or application of goods forming part of an 

economic activity of a person that does not consist of the delivery of 

the goods to or the performance of services for another person but 

which is treated as a supply of goods/services in terms of the 2 nd 

Schedule VATA 

11

Supplies of Goods & Services 

2 nd Schedule VATA: 

Item 14 – the application of goods forming part of an 

economic activity 

Item 15 – the private use of goods forming part of an 


“goods forming part of an economic activity = goods, 

including fixed assets, used by a taxable person for the 

purpose of his economic activity 

Application of goods forming part of an 


2 nd Schedule item 14: 

 

 

 

 

Private use by Article 10 registered 

person 

Private use by person’s staff 

Disposal free of charge 

Application for purposes other than 


…Where the VAT on the 

goods/components thereof was 

wholly/partially deducted 

Treated as a supply of 

goods for consideration 

The ‘supplier’ must 

account for VAT on 

taxable value (rules for 

determining the taxable 

value in the 7 th Schedule) 

The ‘supplier’, if registered 

under article 10, must 

issue tax invoice to 

himself (article 50(2)) 



Exception: 

Gifts made for business purposes where cost to donor is 

not more than EUR46 (unless a series of gifts to the 

same person) 

Gift of industrial samples in the form not available for 

sale to public 

 

the above are not considered to be supplies made for 

consideration by a taxable person acting as such and 

therefore they fall outside the scope of Malta VAT. 

gifts which form part of a “series or succession” of gifts 

made to the same person fall within the scope of VAT. 

12



Goods forming part of the economic activity of a person 

registered under article 10 at the time when the article 10 

registration of that person is cancelled (Where the VAT 

on the goods/components thereof was wholly/partially 

deducted): 

- The person shall be considered to have made a supply of those 

goods for consideration and must therefore account for VAT on 

the ‘supply’ (unless the business is transferred as a going 

concern to a person registered under article 10); 

- The Commissioner may exempt that person from accounting for 

VAT on the supply when the taxable value is less than EUR232. 

Private Use of goods forming part of an 



The use of goods forming part of an economic activity of 

a taxable person registered under article 10 by that 

person himself or by another person other than for the 

purpose of that economic activity 

…is treated as a supply of services for consideration 

made by that taxable person acting as such 

 

 

The taxable person must therefore account for VAT on the 

supply; 

The taxable person, if registered under article 10, must issue tax 

invoice to himself (article 50(2)) 

Transfer of a going concern 


Transfer of assets of an economic activity; 

To a person registered under article 10; 

Activity/part thereof being transferred is capable of 

separate operation; 

Assets transferred are to be used in carrying on the same 

kind of activity (whether or not as part of an existing 

activity of the transferee); 

Transfer is recorded in the records of the transferor 

indicating the registration number of the transferee; 

…NOT a supply of goods/services for Malta VAT purposes. 

13

VAT Rates - Malta Institute of Management

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