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VAT highlights

Hiring of means of transport: 2013 changes to the ‘place of supply’ rules

As of 1 January 2013, the place of supply in respect of business-to-consumer ("B2C") supplies of hiring of means of transport, other than short-term hiring, is the place where the consumer is established. However, where such hiring relates to a pleasure boat (e.g. a yacht), the supply shall be deemed to have taken place for VAT purposes where the pleasure boat is actually put at the disposal of the consumer (provided that this is done from the place of establishment of the supplier, situated in that place).

This change was announced in Legal Notice 133 of 2009, which together with other legislation published in 2009, introduced amendments to the ‘place of supply rules’ contained in the Malta VAT Act, implementing the so-called EU “VAT Package” over the period 2010 - 2015. The final set of changes introduced with the “VAT Package” will come into effect on 1 January 2015. Click here for information on the 2015 changes to the place of supply rules. 

New VAT Invoicing rules

On 1 January 2013, new VAT invoicing rules came into force in Malta. The new rules, which transpose into Maltese law the new VAT invoicing rules introduced at EU level by Directive 2010/45/EC (‘the Invoicing Directive’), aim to simplify, modernize and further harmonize how invoices are drawn up throughout the EU.

The changes cover a wide variety of issues including, but not limited to, the content of invoices, deadlines by which invoices must be issued, the possibility to issue simplified and summary invoices and the issuance of electronic invoices. The possibility for businesses to account for VAT on a cash basis has also been significantly restricted. 

An overview of the key changes introduced may be found here.

Proposal for (new) VAT rules on vouchers

Despite vouchers being a booming business in Europe, Directive 2006/112/EC (‘the VAT Directive’) does not specifically provide for rules on the treatment of transactions involving vouchers. In the absence of common rules, EU Member States have developed their own solutions, however, inevitably inconsistent. Since uncertainty about the correct VAT treatment can be problematic for cross-border transactions and for chain transactions in the commercial distribution of vouchers, the European Commission is proposing to update the EU VAT rules to ensure a uniform VAT treatment of all types of vouchers across all EU Member States. 

Under the proposed new rules, the different categories of vouchers would be clearly defined, distinguishing between Single-Purpose Vouchers, Multi-Purpose Vouchers and Discount Vouchers, and the point of taxation for voucher transactions would be harmonized, to prevent mismatches which result in double taxation or double non-taxation. The time of taxation will be determined by the nature of the voucher, thereby clarifying whether the VAT should be charged when a voucher is sold or when it is redeemed for goods and services. 

The new rules draw a clear line between vouchers and other means of payment. In particular, the growing number of mobile devices makes it necessary to distinguish between prepaid telecom credits (which are vouchers) and mobile payment services (which are taxed differently). Changes in payment technology, notably the increasing use of mobile payments, require that any room for confusion is removed. 

The Directive further sets up common rules for the distribution of vouchers in a chain of intermediaries, especially where this extends across 2 or more EU Member States and includes a number of other technical measures to deal with the right of deduction, redemption and reimbursement procedures, the person liable for payment of the VAT and other obligations for businesses.

If the proposed Directive is enacted, it is proposed that Member States will be required to implement its provisions with effect from 1 January 2015.

 

For further information please contact Mark Grech.

This site is for information purposes only. It is intended to create an awareness of the upcoming amendments to the VAT Act and is not exhaustive. The information contained on this site does not constitute accounting, business, financial, investment, legal, tax, or other professional advice.

Contacts

Name:
Mark Grech
Company:
Deloitte Malta
Job Title:
Leader Indirect Tax
Phone:
+356 2343 2704
Email
mgrech@deloitte.com.mt
Name:
Sarah Aquilina
Company:
Deloitte Malta
Job Title:
Senior Manager - Indirect Tax
Phone:
+356 2343 8196
Email
saquilina@deloitte.com.mt

Related links

  • VAT 2015
    Clarification of the changes to the VAT place of supply rules - Telecommunications, Broadcasting and Electronic Services
  • VAT insights
    From our publications - Insightful applications providing information relating to VAT in Malta