Clarification on VAT due on rented property in Malta

Chetcuti Cauchi | Published on 08 Jul 2016

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In terms of the Malta VAT Act, the rental of immovable property in Malta is generally not subject to VAT. There are however a number of exceptions to this rule, most notably where the letting of the property consists in  the provision of accommodation which is required to be licensed in virtue of the Malta Travel and Tourism Services Act. This essentially means that when the property is licenced to be rented out to tourists, VAT at the reduced rate of 7% is due. In many cases it was however unclear whether VAT should be collected and clarification on VAT due on rented property in Malta was felt necessary. 

Recent amendments to the Malta Travel and Tourism Services Act have amended the definition of "tourist". " It has been updated to consider as a tourist "any person who is travelling to and staying in places outside his usual environment for not more than one consecutive year for leisure, business and other personal purpose other than by taking up employment or to establish a business in the place visited.".

This amendment to the definition of "tourist" has provided a necessary clarification on VAT due on rented property in Malta because it confirms that individuals who are renting property in Malta with the view of establishing their residence in Malta or individuals who move to Malta to work or operate a business would not be required to rent property that is licenced by the Malta Tourism Authority in terms of the Malta Travel and Tourism Services Act, and as a result would not be charged VAT on their lease agreements. 

On the basis of this clarification on VAT due on rented property in Malta, foreign nationals renting property in Malta may wish to inform their landlord about the nature of their stay in Malta to make sure that they are not unnecessarily charged VAT on their rental payments. 

 



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