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Malta Amends VAT Registration Thresholds

Friday, January 1, 2021

Malta has published The Value Added Tax Act (Amendment of Sixth Schedule) (Amendment No. 2) Regulations, 2020, which makes changes to the thresholds for VAT registration as a small undertaking.

The Regulations establish a new, single entry threshold of EUR30,000 for Article 11 registration and a single exit threshold of EUR24,000 for those making supplies other than "economic activities consisting principally of the supply of goods" – i.e. for those principally supplying services.

The Article 11 thresholds for those engaged principally in the supply of goods remain EUR35,000 and EUR28,000, respectively.

Maltese VAT Registration Rules

Those businesses whose turnover is below the established entry threshold for their business activity may apply to register under Article 11 of the VAT Act in order to be exempted from charging VAT when supplying taxable goods or taxable services. As well as not being obligated to charge VAT, they may not recover VAT. Those businesses whose turnover exceeds the "entry" threshold must register for VAT under Article 10.

Once registered under Article 11, a person can remain so registered as long as their turnover does not exceed the relevant "entry" threshold. Such taxpayers receive a VAT ID number without an MT prefix.

Under current rules, businesses registered under Article 10 (standard VAT registration) cannot opt out of this registration and register under Article 11 for 36 full calendar months from the date of registration under Article 10. Under The Value Added Tax Act (Amendment of Sixth Schedule) (Amendment No. 2) Regulations, 2020, this period is reduced to 24 months.