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VAT Requirements for Company Formation in Malta

VAT Requirements for Company Formation in Malta
by
May 28, 2023
in Finance News, NEWS Malta, Taxation
257

If you are considering setting up a company in Malta, it is essential to have a thorough understanding of the VAT requirements. Value-Added Tax, commonly referred to as VAT, is an indirect tax charged on goods and services supplied by registered businesses in Malta. In this article, we will provide you with a comprehensive guide to VAT requirements for company formation in Malta.

What is VAT?

Value-added tax (VAT) is an indirect tax that is levied on the value added at each stage of production or distribution. The VAT system is used by many countries, including Malta, to raise revenue for the government.

VAT Rates in Malta

Malta has three VAT rates: the standard rate, the reduced rate, and the zero rate. The standard rate of VAT in Malta is 18%, while the reduced rate is 7%. The zero rate applies to certain goods and services, such as exports, certain food items, and medical supplies.

VAT Registration Requirements

If your company’s annual turnover is expected to exceed €35,000, you must register for VAT in Malta. Companies that do not meet this threshold may also voluntarily register for VAT.

VAT Return Filing Requirements

Registered companies must file VAT returns on a monthly or quarterly basis, depending on their turnover. VAT returns must be filed and paid by the 15th day of the month following the end of the reporting period.

VAT Compliance and Penalties

Non-compliance with VAT regulations can result in severe penalties. Companies that fail to register for VAT or file returns on time may be subject to fines and interest charges.

VAT Refunds for Non-Resident Businesses

Non-resident businesses may be eligible for VAT refunds if they incur VAT on goods or services in Malta. To be eligible, non-resident businesses must be registered for VAT in their home country and not have a permanent establishment in Malta.

Conclusion

Compliance with VAT requirements is essential for businesses in Malta. Understanding the VAT rates, registration requirements, return filing requirements, compliance, penalties, and refund eligibility is crucial for company formation in Malta.

FAQs

Do I need to register for VAT in Malta?

Yes, if your company’s annual turnover is expected to exceed €35,000, you must register for VAT in Malta.

What are the VAT rates in Malta?

Malta has three VAT rates: the standard rate of 18%, the reduced rate of 7%, and the zero rate.

What are the VAT return filing requirements in Malta?

Registered companies must file VAT returns on a monthly or quarterly basis, depending on their turnover. VAT returns must be filed and paid by the 15th day of the month following the end of the reporting period.

What happens if I do not comply with VAT requirements in Malta?

Non-compliance with VAT regulations can result in severe penalties, including fines and interest charges.

Can non-resident businesses receive VAT refunds in Malta?

Yes, non-resident businesses may be eligible for VAT refunds if they incur VAT on goods or services in Malta and meet certain eligibility criteria.

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