All economic activity in Malta is potentially subject to Value Added Tax (VAT). As a Member of the European Union, Malta is subject to the EU’s own guidelines on VAT compliance, but it reserves the right to issue its own VAT rates on an activity-by-activity basis.
With recent changes made to VAT rates as a result of the COVID-19 pandemic, being aware of the current VAT situation is beneficial. Here is the updated Firstbridge guide to understanding the different VAT rates in Malta.
Covid-19 VAT developments
Malta has introduced new VAT relief measures for medical services heavily linked to the Coronavirus until the 31st of December 2022. A reduced VAT rate of 5% applies for vaccines, in vitro diagnostic medical devices and other services linked to Covid-19. What’s more, VAT charged on protective face masks has been reduced from 18% to 5%.
The Standard Rate
This rate currently stands at 18%.
This applies to all supplies of goods, services or importation that is subject to tax.
The Reduced Rate I
This rate currently stands at 7%.
It covers accommodation supplies licenced under the H.C.E.B. Act, mainly including hotel accommodation and sporting facilities.
The Reduced Rate II
This rate currently stands at 5%.
It generally affects:
- Various printed matter including newspapers, periodicals, books and e-books
- The supply of electricity
- Confectionery goods
- Household items
- Various medical accessories
- Household care services for vulnerable people including the young, sick, elderly or disabled
- Some cultural events and works of art
- Minor repairs including small alterations and mending of clothes, shoes, bicycles, and more
- Shoes and leather goods
- Certain medical equipment
The Zero Rate
As the name suggests, this rate is in fact 0%.
This includes an applied VAT exemption with a refund of tax being allocated. VAT exempt goods and services include:
- Some supplies of food products except for pre-cooked meals, highly processed dishes and pet food
- Prescribed medicine and pharmaceuticals
- Supplies of live animals used for yielding or producing food for human consumption
- Supplies of seeds and plants for food production
- Gold bars and ingots
- Intra-community and international transport of goods
- Services to goods and goods under Customs control
Where We Come In
The Firstbridge Team will be happy to help you maximise your company’s VAT compliance and efficiency.