Category: VAT

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VAT Grouping

Categories Business, Tax, Regulatory, VAT

VAT Grouping

Pursuant to the 2018 Government Budget Speech and the introduction of Subsidiary Legislation 406.21 Value Added Tax (Registration as a Single Taxable Person) Regulations, eligible entities are now able to register for VAT Grouping in Malta through the online application form issued by the Office of the Commissioner on 30th November 2018.

Any two or more legal persons established in Malta may apply to be registered as a single taxable person if the following conditions are satisfied:

  1. At least one group member is licensed under any of the Acts identified by the Regulations;
  2. Each of the applicants is bound to one another by financial, organisational and economic links; and
  3. All group members are fully compliant with their Income Tax and VAT obligations at the time of the application.

VAT Grouping generates several benefits for businesses, including a simplification of the administrative and compliance burdens, VAT cash flow advantages and potential VAT savings. Contact us for further information to know how your company can benefit from VAT Grouping!

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Malta Budget Summary 2019

Categories Economy, Blockchain, Cryptocurrency, VAT, ICOs, Malta, E&S Group, Technology, Budget

Malta Budget Summary 2019

The 2019 Malta Budget was presented on Monday 22nd of October 2018. Finance Minister Edward Scicluna noted a number of economic improvements that have occurred in Malta over the past year, specifically highlighting the following:

  • The first half of 2018 saw a real GDP increase of 5.4%;
  • Public administration, professional services, distributive trades and tourism-related activities, together with gaming and betting activities remain the highest contributors to growth;
  • Public administration, gaming, professional services, distributive trade and tourism-related activities contributed to 81% of the aggregate salary income annual growth earned during the first six months of 2018;
  • During the first half of 2018, total private consumption increased by 6.6%;
  • The gainfully occupied continued to increase and labour market is operating at an unemployment rate of less than 4.0%;
  • Surplus increased to 12.8% of GDP in the second quarter of 2018.

All of these facts indicate a healthy economy with the real GDP projected at 5.3%, real investment levels to rise by 8.4%, and inflation expected to rise from 1.3% to 1.7% during 2019.

In terms of plans for 2019, the minister made announcements in the following areas.

Infrastructure and the Environment

A number of measures have been introduced that will tackle the need to upgrade public transport, roads, energy sources, and public health facilities. Investment will also be given to the Malta film industry with the Rinella studio facilities being upgraded.

  • Public transport will receive a further investment which will be used to upgrade existing infrastructure. Malta’s road network will also receive EUR100 million towards the 7-year plan that was announced during 2018’s budget.
  • The maritime and aviation industry will receive further investment and commitment towards its strengthening.
  • Significant funds will be invested in renewable energy sources and increasing energy efficiency awareness. This will include the upgrade of electricity distribution centres in Paceville, Marsaskala and Kappara, as well as new reverse osmosis centres, and a new water distribution tunnel between Pembroke and Ta’ Qali.
  • Significant investment will be given towards the upgrading of the Rinella filming and tank facilities in a bid to continue the popularity of Malta as a filming location for international productions.
  • There will be an upgrade of existing mental health facilities as well as a new mental health hospital, a new outpatients block, and a 500-car underground carpark at Mater Dei.

Regulatory Authorities

Investment in startups, SMEs, and Fintech business operating in or from Malta is expected to be forthcoming as well as additional trading options on the Malta Stock Exchange.

  • Further investment to support SMEs and infrastructure projects.
  • REITS will be allowed to trade on the Malta Stock Exchange for the first time.
  • Assistance to be given to local Fintech companies in the form of a Fintech Accelerator Programme.
  • An increase in partnerships with entities operating with the blockchain and cryptocurrency sector.


Significant effort will be made to curb tax avoidance and changes will be made to various residency schemes as an effort to continue the support for foreign talent.

  • The introduction of a new IP and trademark act will aim to encourage more business to Malta, as well as more innovation on the island.
  • Student visas and the Malta Residency and Visa Programme will continue its progressive stance to attract more foreign talent to the country.
  • The Anti-Tax Avoidance Directive will be introduced as of 1st of January 2019 and will represent a range of anti-tax avoidance measures including:
    • An interest limitation rule that will apply when the borrowing costs of a company exceed the interest that is received. Excess interest deductions will be capped at 30% of the EBITDA if the borrowing costs are under EUR 3m and they do not apply to financial undertakings.
    • If a company changes its tax residence or transfers to another jurisdiction, the company will be subject to exit tax on its accrued gains.
    • A controlled foreign company rule will be introduced which shall subject to tax in Malta profits which are derived by a direct/indirect subsidiary of a Maltese company, where the tax paid on such profits outside of Malta is less than half of the tax that would have been paid had the income been subject to tax in Malta. This rule shall be subject to certain minimum thresholds to be established by law.


Changes to VAT will encourage citizens to use other forms of personal transport and a lower rate of VAT will be payable on e-books and other digital publications, showing awareness of the digital economy growth.

  • Reduced VAT rate on electronic publications will include just 5% VAT on e-books and other digital publications.
  • Grant on purchase of bicycles and electric bikes, motorcycles and scooters with recipients receiving a 15.25% grant up to €400
  • Grant on domestic water purification apparatus with VAT charged to maximum of €70.
  • Refund of VAT paid on vehicle registration tax with the final tranche of VAT refunds on vehicle registration, registered in 2008 being paid during 2019.
  • Additional free-trade zones are expected to be announced.


Efforts have been announced to support the rental market, as well as to encourage first-time, and second-time home buyers.

  • Duty exemption for first-time buyers on purchase prices up to €150,000.
  • Reduction in duty for second-time home buyers will include a refund of up to €3000.
  • Duty on acquisition of property in an Urban Conservation Areas will be at a reduced rate of 2.5%.
  • Duty on property purchased in Gozo will stand at 2%.
  • The amount allocated for property rental subsidies will increase.
  • Landlords who rent property at an ‘affordable rate’ for seven years, will receive a Government incentive.
  • Equity sharing scheme whereby someone over 40 could receive a loan to purchase a residential home where the government would pay the interest.
  • Home equity release program whereby a pensioner can remain in their home and receive monthly instalment payments in exchange for the assignment of the right over the property or a proportion of it.

Social Matters

Important measures have been announced for those on low incomes, the elderly, and people living with disabilities. Pensions will increase and investment and saving options will be given to those over the age of 62.

  • An additional one day of leave entitlement will be given to every employed person in Malta.
  • The minimum wage will increase by EUR 3 per week.
  • The amount allocated to each recipient of Children’s Allowance will increase.
  • Families that earn less than EUR 20,000 per annum will see an increase of EUR 96 per annum.
  • Those that suffer from chronic illnesses will receive an additional increase of EUR 5.14 per week.
  • The COLA increase will amount to EUR 2.33 per week.
  • Those receiving pensions will gain an extra EUR 2.17 per week and measures shall be introduced to enhance the Third Pillar Pension Scheme and the Voluntary Occupation Pension Scheme. These include an increase of the tax credit from 15% to 25% of the qualifying contribution with private pensions.
  • Citizens over the age of 75 will receive a grant of EUR 300.
  • For those aged 62 and over, a Government savings bond will be available.
  • Compliant voluntary organisations duly registered and recognised by the Commissioner for Voluntary Organisations having an annual income not exceeding €10,000 shall benefit from a tax exemption.
  • Tax refunds granted during 2018 to employees earning less than €60,000 shall also be granted in 2019. These refunds range between €40 and €68, depending on the level of income.
  • The reduced duty rate of 1.5% currently applicable for qualifying business transfers effected by parents to their children shall be extended by another year.

The Digital Economy

Reiterating the Government’s commitment to the Digital Economy, measures to tackle taxation and AML will be introduced as well as additional efforts to encourage foreign investment and business.

  • An international taxation system will be developed and strengthened that will reflect the ongoing digitalization of the economy.
  • Additional Anti-Money Laundering measures will be adopted to support the increase in digital business.
  • Significant investment will be allocated to blockchain, artificial intelligence, and the internet of things startups and entrepreneurs on the island.
  • A feasibility study of 5G technology will be conducted.
  • The website will be launched with the aim of marketing Malta’s efforts in disruptive technologies and innovations.

To find out how the Malta Budget 2019 will effect you, your business, your operations, or your employees, contact E&S Group today by sending us an email on [email protected]

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Indirect Tax – European Commission proposes reform of the EU VAT System

Categories Business, Tax, Economy, Regulatory, VATTags , ,


The European Commission (EC) estimates a loss in VAT revenue of €50 billion every year as a result of cross-border VAT fraud. In an effort to combat this issue and introduce a ‘more modern, robust and simpler’ system, the EC published a series of fundamental principles and key reforms which, if embraced, will have a significant impact on current VAT practices and the relevant stakeholders.

The EC envisions the implementation of the long-term plan with effect from 1 January 2022, which includes the introduction of a new definitive single European VAT Area. Meanwhile, in preparation for such major overhaul, ‘cornerstones’, ’quick fixes’ and the concept of ‘certified taxable persons’ have been proposed and are foreseen to come into force on 1 January 2019 subject to consultation at European Parliament and unanimous agreement by the European Council.


The following fundamental principles, or ‘cornerstones’, being proposed by the EC will change drastically the transitional VAT rules currently in place for cross-border supplies of goods.

  1. The principle of taxation at the Member State of arrival for intra-European Union (EU) cross-border supplies of goods.
    Under this principle, the VAT rate of the Member State of destination is charged and the current VAT exemption on intra-community supplies of goods at the Member State of departure is abolished.


  1. The confirmation that, as a general rule, the responsibility of charging and collecting VAT in cross-border supplies of goods is vested upon the supplier.
    The proposed rules allow an exception to the general rule where the buyer is a reliable taxpayer and meets the criteria of a ‘Certified Taxable Person’ (CTP), in which case the liability for payment of VAT in the Member State of destination is shifted upon the customer.


  1. Extension of the One Stop Shop, through which businesses will be able to submit declarations, pay VAT which is due in the Member State of destination as well as claim deductions via a single digital portal in their home Member State, as currently in place for electronically supplied services.
    National tax administrations would transfer any VAT due to each other directly. This measure, in combination with a simplification of the VAT invoicing rules, whereby vendors would still be allowed to issue invoices in accordance with their local rules, shall facilitate VAT compliance and reduce red tape.

Quick Fixes

The EC presented the following four short-term quick fixes to improve the current VAT system:

  1. Simplifications of rules for ‘call-off stock arrangements’
    Where goods are moved from one Member State to the other for storage purposes before being supplied to the customer, who would be known in advance of the transfer, the transaction is considered as a single supply rather than two distinct supplies. Such measure removes the need for a separate VAT registration in the Member State where the stock is located. The simplification is limited only to CTPs.
  1. Chain transactions simplifications
    Applicable where supplies in a chain do not lead to the actual transfer of the goods. The simplification is limited only to CTPs.
  1. Simplification of the proof of transport required for the exemption of Intra-Community supplies
    The simplification is limited only to CTPs.

4. Confirmation that, in addition to the proof of transport, the verification of the VAT number of the parties involved as per the EU VAT-number verification system (VIES) is an essential requisite in order for the cross-border VAT exemption to be applied under the current rules.

Certified Taxable Person

A business established in the EU can apply for the status of CTP from its national tax authority, which would allow the trusted VAT taxpayer to benefit from the simplified and time-saving measures. The pre-defined criteria to obtain such attestation are:

  1. Regular payment of taxes and absence of serious criminal offences or infringements;
  2. Reliable internal controls; and
  3. Proof of solvency

Such status is comparable to the Authorized Economic Operator status for customs purposes and is recognized across all Member states.

Concluding Remarks

These proposals represent a positive step forward towards the notion of a Single EU VAT area. Having said this, in order for the new rules to come into force, Member States must reach unanimous agreement at the European Council level, which itself is no mean feat. The tangible impact of the proposed changes can be determined upon the issuance of the detailed provisions, which are expected in Spring 2018.

For further information, please refer to the official EC website.

Or contact our team on [email protected] or +35620103020

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