[NEW] VAT FAQs | vat 7% – NATAVIGUIDES

Last Updated: 13/05/2020​

 

Who is liable to register for VAT?

If you are a
person performing an economic activity, whatever the result or scope of that

activity, then you are considered as a taxable person. Under normal
circumstances, you are required to register for VAT under article 10. If your
annual turnover does not exceed the established threshold (see below) then you
may opt to register under article 11 as an exempt person.

Persons based outside Malta may also be liable to register for VAT in Malta if they are themselves liable for the payment of VAT in Malta on a supply deemed to take place in Malta.

 

What is an economic activity?

An economic
activity means an activity carried on by a person, who is not an employee (see
article 5(5) for the definition of employee), and consisting of any one or more
of the following:

·

        

any
trade, business, profession or vocation and the provision of any personal
services;

·

        

the
exploitation of tangible or intangible property for the purpose of obtaining
income there from on a continuing basis;

·

        

the
provision by a club, association or organisation of the facilities or
advantages available to its members for a subscription or other consideration;

·

        

the
admission of persons to any premises for a consideration.

The activities of a public authority assuming functions assigned to it by law shall not be deemed to be an economic activity except as and to the extent provided in the First Schedule of the VAT Act and except where such treatment as non-taxable persons would lead to significant distortions in competition.

 

Under what registration type should
you register?

There are
three types of Registrations for VAT as follows: (a) If you are supplying goods
or services and your annual turnover exceeds the established exempt threshold
below, you have to register for VAT under article 10, by which you would be
liable to charge VAT on your taxable supplies and you could claim back the VAT
you incur in the course of your taxable activity under certain conditions.

A person
registered under article 10 would

·

        

have
a VAT number with the prefix MT

·

        

have
to issue fiscal receipts or tax invoices, as the case may be, on all supplies
made by him

·

        

normally
submit a VAT return for a tax period of three months by the not later than 6
weeks after the end of the tax period, or as directed by the Commissioner.

(b) If you
are supplying goods or services and your annual turnover does not exceed the
established entry threshold (see below), you may register for VAT as exempt
under article 11. You will not charge VAT on your supplies and will not be able
to claim back the VAT you incur in the course of your economic activity.
However, you may instead opt to register for VAT under article 10 to charge VAT
and claim a deduction of the VAT incurred in the normal way. If you decide to
opt for the latter option, then you are required to remain under article 10 for
a minimum of thirty-six months. It is only after that period that you would be
able to register under article 11 and provided that the exit threshold is not
exceeded.

A person
registered under article 11 would

·

        

have
an identification number without the MT prefix

·

        

have
to issue fiscal receipts on all supplies
made by him

·

        

submit
a declaration (simplified tax return) at the end of each calendar year which
must be submitted by the 15th March of the following year.

(c) If you
are a non-taxable legal person or a taxable person not registered under article
10, and you make intra-community acquisitions of goods in Malta the value of
which exceed €10,000 since the start of the year, then you are liable to
register for VAT under article 12 and pay VAT in Malta each time you make such
intra-community acquisitions.

If you are
registered under article 11 as an exempt taxable person and you intend to make
Intra-Community Acquisitions and pay VAT thereon in Malta, then you need to
register also under Article 12 to obtain a valid identification number for this
purpose and qualify for such an arrangement.

 

What are the entry and exit
thresholds?

The entry
threshold is the amount of turnover per annum under which a person could opt to
register as an exempt person under article 11 (see above). This threshold
depends on whether you are supplying goods, services with high value added, or
services with low value added. The exit threshold is applied in the case where
a person who is registered under article 10 would change his registration to
article 11 (exempt).

Services
with low value added are those services where the value of the service includes
goods which are incorporated in the value of that service, e.g. an electrician
or catering services. Other services are services usually with high value added
where the value of the service has a very high content of value added, i.e. the
value of the goods incorporated with the supply are minimal, e.g. services of
an accountant or a lawyer.

The
different thresholds are as follows:

 

Economic Activity

Entry Threshold

Exit Threshold

Economic activity
consisting mainly of supplies of goods

€35,000

€28,000

Economic activity
consisting mainly of supplies of services with low value added

€24,000

€19,000

Other economic
activities

€20,000

€17,000

 

Where a
person registered under article 11 provides both goods and services, the
applicable threshold shall be determined in accordance with the principal
nature of the supply, taking account of the total value of all the supplies.

The turnover
of a business is the total value of sales, excluding:

·

        

Exempt
without credit supplies

·

        

The
transfer of a business as a going concern

·

        

The
sale of fixed assets

·

        

Supplies
made to the business and deemed to be made by that business under the reverse
charge provisions

The
thresholds for each economic activity pertaining to the same category are
assigned by the Department and apply across the board for that category.

 

What documents do I need to register
for VAT?

A Copy of
the I.D Card/Passport of the applicant or in the case of a Limited Liability
Company, of the authorised representative vested with the legal representation
must be presented at the time of registration. In the case of a limited
liability company or a registered partnership, a copy of the Memorandum and
Articles of Association should be produced.

 

How can I register for VAT?

Registration for VAT purposes is to be made online using the 

Registration for VAT purposes is to be made online using the CFR Registrations Online Services . A Maltese e-ID is generally required to access the CFR Online Services.

However access is granted to persons not having an e-ID if such person cannot be issued with an e-ID. For such cases, kindly follow this guidance

 

When and how often do I need to submit a VAT Declaration / Return?

This depends on the registration type of the person.

Article 10 VAT Registration: A VAT Return for every VAT period shall be submitted to the Commissioner for Revenue by 1 month and 15 days from the end of the respective VAT period. The VAT period typically allocated to a person registered under Article 10 would be a period of 3 calendar months. Exceptions apply where a tax period may be of more or less than 3 months. A 12 month VAT period applies where the value of sales made does not exceed the relevant ‘Exit Threshold’ as specified in the 6th Schedule to the VAT Act . Monthly VAT periods may also be applied at the discretion of the Commissioner for Revenue.

Article 11 VAT Registration: A periodical declaration covering a 12 month calendar period is to be submitted to the Commissioner for Revenue by 1 month 15 days from the end of the 12 month calendar period.

Article 12 VAT Registration:  Declarations of intra-community acquisitions of goods made for which the person is liable to self-charge VAT in Malta are to be submitted to the Commissioner for Revenue by no later than 15 days from the end of the month in which such acquisition takes place. Declarations of purchases of services for which the person is liable to self-charge VAT in Malta are to be submitted to the Commissioner for Revenue by no later than 1 months and 15 days from the end of the month in which the service is received (or the month when a tax invoice is issued, if such invoice is issued within 15 days from the end of the month in which the service is received).

(Please note that this information only provides general guidance for general application and does not replace the provisions of VAT legislation.)

 

How long does the process for VAT
Declaration / Return take to complete online?

The
electronic process for VAT Declaration / Return takes approximately 15 minutes
to complete.

Guidance in relation to the rules for VAT Refunds to taxable persons not established in the Member State of the refund but established I another Member state can be found here

 

How long does it take for the VAT
Department to complete your VAT Declaration / Return submission?

The process of vetting and processing of the submission takes a maximum period of 90 working days. IF A REFUND DUE TO YOU IS NOT PAID TO YOU IN TIME THEN YOU WILL BE PAID INTEREST OF 0.33% PER MONTH (S.L. 406.19)

 

How long does the process for the VAT
Refund (8th Directive) take to complete online?

The
electronic process for VAT Refund (8th Directive) takes approximately 20
minutes to complete.

 

How long does it take for the VAT
Department to complete your VAT Refund (8th Directive) submission?

The process
of vetting and processing of the submission takes a maximum period of 4 months.
IF A REFUND DUE TO YOU IS NOT PAID TO YOU IN TIME THEN YOU WILL BE PAID
INTEREST OF 0.33% PER MONTH.

 

When is a registered person obliged
to inform the VAT Department of his change of status from an exempt to a
non-exempt classification?

If you are
operating below the threshold and you have opted to be classified as an exempt
person, you are duty bound to inform the Department that you no longer qualify
to be classified as exempt as soon as it becomes evident that you will exceed
the applicable threshold.

This can be
arrived at by calculating the annual turnover for the previous twelve months at
the end of each calendar quarter. When it results that the applicable threshold
is exceeded, you should inform the Department within thirty days of occurrence,
and VAT has to be collected immediately after the lapse of this period.

 

I am adding another activity with the
one I already had. Do I have to apply for registration again?

If the new
business activity is in addition to other business activities that you carried
out under a VAT number, the same number should be used for the new activity.
However you must inform the Department in writing about the nature of the new
business activity.

If the new
business activity were carried out under a new limited liability company set up
to carry out such activity, a new registration number would be required.

 

I have opened a new branch of my
business in a different locality. Can I use the same VAT number or do I have to
apply for registration again?

No, you will
not have to register again. You will use the same VAT number but you need to
advise the Department about this event, giving all pertinent details such as
the Name and address of the new branch, the increase of the number of employees
and the estimated increase of the turnover of your business.

 

I intend to retire from doing business.
Can I pass on the business to my son or sell the business to somebody else
together with the VAT registration number?

If you are a
sole trader then you are required to de-register your business while a new
application for VAT registration shall be drawn up by your son or any person
who takes over your business, unless that person is already registered for VAT.

However, if
the business is a limited liability Company, then the transfer has to be
carried out through the Malta Financial Services Authority (MFSA), and the VAT
Department must be advised as to the change in the Directors and Shareholders
of the Company, by means of a certified copy of the memorandums supplied by the
same MFSA.

 

What shall I do if I need to
de-register from VAT?

In order to
de-register from VAT you are required to call at the Customer Care Unit of the
Department to complete the appropriate form. An application for de-registration
cannot be processed unless you have all VAT returns and payments up to date,
and any pending matters settled with the Department.

It is
pertinent to point out that if you are registered as non-exempt (under article
10) you shall be deemed to have supplied to yourself all remaining business
assets belonging to your business, immediately before the cancellation of your
registration. In this regard you must therefore account for the VAT due thereon
in your last VAT return.

 

I have applied for de-registration
but to date I am still receiving VAT forms and monthly balance statements. What
should I do?

For de-registration
to be effected you must first settle all pending issues with the Department. If
you continue to receive VAT forms and monthly balance statements after having
applied for de-registration, you should call at the Customer Care Section of
the Department during office hours to enquire about your situation. Department
officials will guide you accordingly.

Once all
pending issues have been settled, including the payment of any outstanding
amounts due to the Department, action for de-registration will be finalised.

 

I was de-registered from VAT but now
I intend to re-start the same activity. What should I do?

In order to
re-activate your old VAT registration number you should inform the Department
in writing stating your request. The VAT registration number and your Identity
Card Number should be included with your letter.

 

What is input and output tax?

Input tax is
the VAT that is paid by the business operator for goods and services he
receives in the course of his economic activity. Output tax is the VAT that is
charged by the business operator when he himself supplies goods or services to
his customers.

 

What is taxable and what is exempt?

In Malta,
goods and services are generally taxable at a standard VAT rate of 18%.

However,
certain goods and services have a reduced rate of 7% or 5% or 0%.

Supplies
that are taxable at 7% are:

·

        

Accommodation
in a hotel or guest house

·

        

Accommodation
in any premises, where for the purpose of that accommodation, it is required
that the premises be licensed in terms of the Malta Travel & Tourism Act.

·

  

    Use of sporting facilities

Supplies
that are taxable at 5% are:

·

        

Supply
of electricity

·

        

Confectionery
and other edible items

·

        

Medical
Accessories

·

        

Printed
Matters

·

        

Certain
Items for the exclusive use of the disabled

·

        

Minor
repairing of bicycles, shoes and leather goods, clothing and household linen
(including mending and alteration)

·

        

Domestic
care services such as home help and care of the young, elderly, sick or
disabled

·

        

Admission
to museums, art exhibitions, concerts and theatres.

The
following supplies are rated at 0% (i.e. Exempt with credit, where no VAT is
charged on the value of the supply but the registered person is entitled to
claim back input VAT incurred in the provision of that supply)

·

        

Food
for human consumption

·

        

Pharmaceutical
products

·

        

Scheduled
bus service (tal-linja)

·

        

Domestic
inter-island sea passenger transport

·

        

International
passenger transport

·

        

Exports

·

        

Intra-community
supplies of goods

(Please note
that this information does not replace the provisions of VAT legislation. This
list is not exhaustive and reference to VAT legislation would be appropriate)

The
following supplies are exempt without credit, where no VAT is charged on the
value of the supply but the supplier is not entitled to claim back input VAT
incurred in the provision of that supply. In this case the supplier is not
required to register with the Department.

·

        

Supply
of water by a Public Authority

·

        

Supply
of buildings and building land

·

        

Supply
of Health and Welfare services

·

        

Supply
of insurance and financial services

·

        

Letting
of immovable property is exempt without credit except in the following
situations:

o

  

Letting
for the purposes of accommodation in any hotel or guest house or similar
establishment or in any holiday camp or camping site (at 7%)

o

  

Letting
of accommodation in holiday flats required to be licensed in virtue of the
Malta Travel and Tourism Act (at 7%)

o

  

The
letting of immovable property by a limited liability company to a registered
person for the economic activity of that registered person (at 18%)

(Please note
that this information does not replace the provisions of VAT legislation. This
list is not exhaustive and reference to VAT legislation would be appropriate)

 

How can I calculate the amount I should charge VAT on?

The amount of turnover chargeable to VAT, i.e. the taxable value of a supply, is determined in terms of the Seventh Schedule to the VAT Act . As a general rule, the taxable value of a supply is the value received or receivable by the supplier in return for the supply made to the customer. This includes any subsidy directly linked to that supply but excludes VAT.

The taxable value of a supply shall include taxes, duties, levies fees and other charges related to that supply and also incidental expenses such as commissions, packing, transport and insurance costs charged by the supplier to the purchaser (even if they are covered by a separate agreement/document)

The taxable value of a supply excludes: 
   a)  price reductions by way of discounts for early payment;
   b)  rebates and other price reductions 
   c)  penalties and interest for late payment
   d)  certain disbursements paid in the name and for the account of the customer
   e)  deposits on returnable packing where the deposit is lower than the cost of the packing.

If payment is made partly or wholly in kind, or where the value of the payment for a supply cannot be determined, the portion of the taxable value of that supply which cannot be determined shall be its open market value. The open market value is the price which the underlying good or service would fetch if sold in the open market on the date and in the state they were in when the said good are delivered or the services are performed.

(Please note that this information only provides general guidance for general application and does not replace the provisions of VAT legislation.)

 

What happens when an activity changes
from taxable or exempt with credit to exempt without credit?

Where the
nature of the use of property on which input VAT had been claimed has changed
from a taxable or exempt with credit operation to an exempt without credit one
part of that input VAT claimed is to be refunded back to the Department through
an adjustment in the VAT return. Such adjustment should be made within twenty
years for immovable property and within five years for any other property.

For example:
if a hotel (taxable activity) is changed to an old people’s home (exempt
without credit), some of the input VAT that was claimed will have to be
refunded to the Department. As regards immovable property this should be worked
out as a proportion for a twenty year period, i.e. if the change in economic
activity occurs after ten years, half of the original input VAT claimed is to
be refunded.

 

If services are deemed to be made
outside Malta should they be accounted for in the VAT return?

In order to
determine whether input tax incurred on supplies made outside Malta may be
claimed back or not, one must establish whether they would, had they been made
in Malta, be treated as taxable supplies or exempt with credit supplies.

In the
affirmative, the value of these supplies is to be included in the VAT return as
exempt with credit supplies.

If no right
to claim back input tax exists, their value is to be included in the VAT return
as exempt without credit supplies.

 

What items and services qualify for
credit/refund of Input VAT?

Persons who are registered for VAT under article 10 (i.e. they have not opted to be classified as exempt persons) are entitled to claim back so much of the input tax as is attributable to taxable supplies, exempt with credit supplies, supplies made outside Malta which, had these been made in Malta, would have been classified as taxable supplies or exempt with credit supplies, and supplies made outside Malta which are exempt without credit in terms of Maltese VAT legislation but are subject to VAT outside Malta.

Where the
economic activity of a registered person consists in a mixture of
taxable/exempt with credit supplies and exempt without credit supplies, input
VAT would have to be apportioned by using either the direct method of
attribution or the partial attribution method.

Where the
above methods do not give a fair and reasonable result, the Commissioner is
empowered to decide on the percentage of attribution.

However,
under the provisions of legislation, certain input VAT incurred on certain
supplies is blocked and cannot be claimed back even when incurred on expenses
relating to the economic activity.

 

On which items is Input VAT blocked
and therefore cannot be claimed?

Persons who
provide exempt without credit supplies (e.g. insurance companies and education
and health and welfare services), and persons who are classified as exempt
persons cannot claim back input VAT incurred on purchases relating to their
business.

No input VAT
can be claimed on the following supplies even when such supplies are purchased
in connection with the economic activity of a registered person, namely input
VAT incurred on:

·

        

Tobacco
or tobacco products, unless purchased for resale

·

        

Alcoholic
beverages, unless purchased for resale

·

        

Works
of art and antiques, i.e. paintings, drawings and pastels executed by hand,
other than hand-painted or hand-decorated manufactured articles; original
engravings, prints and lithographs; original sculptures and statuary, in any material;
antiques of an age exceeding one hundred years; collections and collectors’
pieces of zoological, botanical, mineralogical, anatomical, historical,
archaeological, palaeontological and ethnographic interest, unless purchased
for resale

·

        

Motor
vehicles, vessels or aircraft, excluding vessels and aircraft acquired for the
purpose of being provided under a charter or hire agreement, unless purchased
for resale or unless acquired and used for the purpose of the carriage of goods
or passengers for a consideration.

·

        

Goods
and services for the purpose of repairing, maintaining and keeping motor
vehicles, vessels or aircraft and fuel used therein.

·

        

Car
leasing by a lessee, including VAT incurred on fuel

·

        

The
supply of any goods and services used in the provision of receptions,
entertainment or hospitality except where that supply is made in the normal
course of an economic activity

·

        

The
supply of goods and services used in the provision by a person to his employees
of transport or entertainment, except where the transport is provided on
vehicles with a seating capacity of not less than seven.

 

I am a retailer. Am I entitled to a
refund of VAT I paid on commercial vehicles and fuel?

Yes,
provided that the vehicle is a commercial vehicle and it is used in the furtherance
of your economic activity. The Department may however, after verifying and
assessing such factors as the ratio of “business” use to
“private” use; the extent of your declared turnover vis-a-vis the
capital expense in purchasing the vehicle and the need for the purchase of the
vehicle in relation to your type of economic activity etc., adjust your claim
for input VAT as it deems necessary.

The VAT law
considers as commercial vehicles, motor vehicles designed mainly for the
carriage of goods with seating accommodation normally adjacent to the driver
and which are not normally suitable for the carriage of passengers, or with

seating accommodation for nine persons or more.

 

Are doctors, accountants and other
professionals entitled to a refund of VAT paid on vehicles and fuel?

The supply
of medical services is classified as exempt without credit and therefore
doctors do not charge VAT and are not allowed any credit on input tax they
incur.

Accountants
and other professionals are not entitled to claim back VAT paid on the purchase
of a vehicle and that paid on fuel.

 

What is the difference between a Tax
Invoice and a Fiscal Receipt?

A tax
invoice must be issued when a person registered under Article 10 makes a supply
to another registered person.

A fiscal
receipt must be issued when a registered person makes a supply to a
non-registered person.

 

Tax
Invoices

A tax
invoice issued by a registered person who is not classified as an exempt person
should contain the following information:

·

        

the
date of issue;

·

        

a
sequential number, based on one or more series, which uniquely identifies the
invoice;

·

        

the
name and address of the supplier and the VAT identification number under which
he made the supply;

·

        

the
name and address of the person to whom the supply is made and the VAT
identification number under which the customer acquired the goods or services
supplied to him;

·

        

the
quantity and nature of the goods supplied or the extent and nature of the
services rendered;

·

        

the
date on which the supply was made or completed or the date on which a payment
on account of the supply was made insofar as that date can be determined and
differs from the date of issue of the invoice;

·

        

the
taxable value per rate or exemption, the unit price exclusive of tax and any
discounts or rebates if they are not included in the unit price;

·

        

the
VAT rate applied;

·

        

the
VAT amount payable, except where a special arrangement is applied;

·

        

where
the person liable for payment of VAT is a tax representative in another Member
State, the VAT identification number of that tax representative, together with
his full name and address;

·

        

where
the VAT becomes chargeable at the time when the payment is received, the
mention “Cash accounting”;

·

        

where
the customer receiving a supply issues the invoice instead of the supplier, the
mention “Self-billing”;

·

        

where a tax invoice refers to supplies on which no tax is chargeable, it shall indicate a brief reference to the relevant provisions of the VAT Act , or the appropriate provisions of Council Directive 2006/112/EC, or any other indication on the grounds of which no tax is chargeable;

·

        

where
the customer is liable for the payment of the VAT, the mention “Reverse
charge”;

·

        

where
the margin scheme for travel agents is applied, the mention “Margin scheme
– Travel agents”;

·

        

where
one of the special arrangements applicable to second-hand goods, works of art,
collectors’ items and antiques is applied, the mention “Margin scheme –
Second-hand goods”; “Margin scheme – Works of art” or
“Margin scheme – Collector’s items and antiques” respectively;

·

        

in an invoice for the intra-Community supply of a new means of transport the description of the goods supplied shall contain the particulars referred to in the definition of “new means of transport” in the VAT Act

 

In the case
of a local transaction where the taxable person liable for VAT is not liable to
pay VAT and the amount of the invoice inclusive of the tax is not higher than
€100, or where the registered person making the supply is an exempt person, a
simplified invoice may be used. Such simplified invoice shall contain at least
the following details:

·

        

the
date of issue;

·

        

a
sequential number, based on one or more series, which uniquely identifies the
invoice;

·

        

the
name, address and the Value Added Tax identification number of the supplier;

·

        

the
Value Added Tax identification number of the person to whom the supply is made;

·

        

a
description sufficient to identify the goods and services supplied;

·

        

the
total amount of tax payable or the information needed to calculate it;

·

        

where
the invoice issued is a document or message treated as an invoice, specific and
unambiguous reference to that initial invoice and the specific details which
are being amended.

 

Fiscal
Receipts

Retailers
and persons whose activity consists in the supply of food in the course of
catering (e.g. restaurants and snack bars) must issue a fiscal receipt by means
of a fiscal cash register.

Service
providers must issue a manual fiscal receipt from manual fiscal receipt books
supplied by the Department on application.

The Fiscal
Cash Register and manual fiscal receipts should be kept at the premises where
the economic activity is intended to be carried out.

Taxi drivers
must issue fiscal receipts by means of a fiscal taximeter.

Registered
persons who intend to use computerised receipts must seek prior approval in
writing from the Department. On approval the exemption number issued by the
Department should be shown on the receipt, or by an electronic means.

Admission
tickets to events may also accepted as fiscal receipts provided that prior
approval in writing is sought from the Department. The VAT permit number issued
by the Department should be shown on the ticket.

 

What does make a receipt a Fiscal
Receipt?

A fiscal
receipt is considered as such when issued in one of the following situations:

·

        

By
means of an approved fiscal cash register

·

        

On
manual fiscal receipt books supplied by the Department

·

        

By
means of a computerized or electronic system or a point of sale system,
provided that prior approval has been obtained from the Department and the
exemption number issued by the Department is printed on the receipt

·

        

On
application and following approval by the Department, tickets of admission to a
function may be approved as fiscal receipts provided that the information as
required in writing by the Department is printed on each ticket

·

        

By
means of a fiscal taxi-meter.

 

Since medical, health and education
services are exempt without credit, is it necessary for persons supplying these
services to issue fiscal receipts?

Persons who
provide exempt without credit supplies are not required to issue fiscal
receipts, although they are still obliged to issue an ordinary receipt under
other existing legislation.

Such persons
are not required to register with the Department.

 

I am a non-exempt registered person.
If I supply goods or services to people who are exempt without credit, do I
have to issue a tax invoice or a fiscal receipt?

You must
issue a fiscal receipt. Fiscal receipts must always be issued for supplies of
goods or services to people who are exempt without credit. It does not matter
whether the supplier is a non-exempt registered person or an exempt registered
person.

 

I am a retailer. When should I issue
a fiscal receipt and when should I issue a tax invoice?

A retailer
and a person who supplies food in the course of catering (e.g. restaurant or
snack bar) should always issue a fiscal receipt for each and every supply made
(except in the cases where legislation allows certain supplies to be covered by
a fiscal receipt to be issued at the end of the day to cover the supplies made
during that day). This applies both to taxable supplies and to exempt with
credit supplies.

Where a
retailer makes a taxable supply to another registered person the latter may
request the retailer to issue a tax invoice instead of a fiscal receipt.

A fiscal
receipt issued by means of a fiscal cash register may be accepted as a tax
invoice if it includes the details above which are required in a tax invoice.

 

If there is a power failure, can I
issue one receipt manually to cover all the sales during the time the failure
lasted?

If there is
a power failure a registered person must issue a manual fiscal receipt for each
and every supply made.

The same
applies when a cash register is out of order. However the registered person
concerned is obliged to ensure that his fiscal cash register is repaired within
a very short time.

 

I am a retailer and classified as an
exempt person. When I issue fiscal receipts are goods sold which would normally
be subject to VAT to be indicated as ‘E’ or as ‘F’?

When a
retailer who is classified as an exempt person issues a fiscal receipt by means
of a fiscal cash register on the sale of a supply which would have been taxable
had it not been for that classification, the tax rate to be indicated on that
fiscal receipt should be ‘F’ and not ‘E’.

 

Is there any category of registered
persons to which different arrangement for the issue of a fiscal receipt apply?

Yes, the
categories of business shown hereunder are entitled to issue one fiscal receipt
at the end of the day to cover sales of supplies made during the day:

·

        

Registered
persons who make supplies from a vehicle either by door-to-door delivery or to
the general public in a public road, of gas, milk and milk products or bread.

·

        

A
registered person who makes supplies of fuel from pumps.

·

        

A
registered person who makes supplies of food and beverages situated in a work
or study area, after authorisation had been requested and granted in writing by
the Department to issue one fiscal receipt at the end of the day to cover
supplies of food made during that day and another fiscal receipt to cover
supplies of beverages made during that day.

·

        

A
registered person who makes supplies of bread from the bakery where that bread
has been baked.

In the case
of the registered persons referred under the 3rd and 4th bullets above, the
Department may, at any time, withdraw the authorisation by means of a notice in
writing.

 

What kind of books and records do I
need to keep and how long do I need to preserve these records and books?

You need to
keep the following records and documents:

·

        

Copies
of Fiscal Receipts issued

·

        

Fiscal
cash register FCR Z Readings

·

        

All
Customs import/export documentation

·

        

Purchases
and Sales Invoices

·

        

Debit
and Credit Notes

·

        

Cash
Books and Petty Cash Books

·

        

Day
Purchases and Sales Ledger

·

        

Value
Added Tax Account and Annual VAT Account

·

        

Bank
Account connected with the business

·

        

Any
other records and documents relevant to your economic activity

You are
obliged to retain these records and documents for six years as the Department
may request them for inspection.

However in
cases where the provisions for adjustment of input tax on capital goods and on
immovable property applies, the six years shall start to run from the end of
the five year period or twenty years period respectively as the case may be.

 

What are the reasons and the purpose
of an inspection by the VAT Department?

Inspections
by the VAT Department are intended to:

·

        

Educate
registered persons about their rights and obligations vis-a-vis VAT;

·

        

Check
the tax liability of a registered person to ensure that the right amount of tax
is being collected and submitted to the Department;

·

        

Examine
and verify claims for refunds made by registered persons;

·

        

Exercise
control on the business activity of registered persons by examining their
business records and books of account to ensure that no under-declaration of
output tax and/or over-declaration of input tax is being made;

·

        

Spot-check
registered person’s establishments to ensure that fiscal receipts are being
issued to clients on sale of a product/service.

 

When a VAT inspector announces an
inspection visit, can I ask to change the proposed date or can I refuse to
receive the Inspector?

You
definitely may contact the VAT Inspector to agree on a convenient day for both
to set up an appointment. However, you cannot refuse to receive the Inspector
as this goes against the law.

You are also
advised that the VAT inspector may request any person to produce, or may remove
from any person, including a third party, the records, documents, accounts and
electronic data required to be kept by him and to make copies thereof.

 

If the VAT Inspector at the end of an
inspection visit contends that I made mistakes and I don’t agree with the
inspector, what can I do?

The VAT
Inspector is obliged at the end of a visit, to discuss areas of disagreement
with you. If disagreement still persists and in the opinion of the VAT
Inspector your mistakes resulted in tax being under-declared or input VAT being
over-declared the Department will proceed to raise “Provisional
Assessments”.

When you
receive notice of a “Provisional Assessment” you are to register
within 30 days, if you so wish, a “Request for a Review” with the
Department stating precisely and specifically your reasons for disagreement.

This
“Request for a Review” will be processed by a Review Officer who
after conducting the necessary verifications may cancel, adjust or confirm the
provisional assessment.

 

What are the conditions for a
registered person to lodge an appeal?

In order to
be valid an appeal against an assessment submitted to the Administrative Review
Tribunal must satisfy the following criteria:

·

        

a
return for the tax period to which the assessment refers has been delivered to
the Commissioner before the appeal is entered;

·

        

all
tax payable by the appellant which is not in dispute has been paid;

·

        

it
is made within thirty days from the date of the service of the notice against
which the appeal is made;

·

        

it
is made in such form and in such manner as may be prescribed under the
Administrative Justice Act;

·

        

a
payment of such fees for lodging an appeal as may be prescribed under the
Administrative Justice Act has been made.

 

Is a non-profit making organisation
required to register for VAT?

Services
made to members of non-profit making organisations are exempt without credit
and the organisation is not required to register for VAT.

However,
where the organisation provides other services against payment, each supply
will have to be considered in the context of VAT legislation.

The
following are some examples where a non-profit organisation will be required to
register with the Department, and subject to its right and option to be
classified as an exempt person, charge and collect VAT:

·

        

operating
a bar for its members

·

        

renting
of space to third parties to be used as a bar

·

        

selling
of advertising space in its magazine

·

        

Fund
raising activities, except were the beneficiary of such activities will be a
health, welfare or education institution. In such cases the Department’s prior
permission for the exemption will be required.

If a
non-profit making organisation is required to register with the Department and
does not opt to be classified as an exempt person, its right to claim input tax
is limited to the supplies on which VAT is collected, either by directly
attributing its inputs or by partially attributing such inputs.

 

Am I required to account for VAT on
accruals or on a cash basis?

As a general
rule all registered persons must account for VAT on an invoice (accruals)

basis. However, the Department may direct that accounting for VAT for the
following suppliers be made on a cash basis:

·

        

Retailers.

·

        

Supplies
by civil, mechanical and electrical engineering contractors.

Supplies of
professional services where the person supplying those services holds a warrant
issued under any law in force in Malta to practice that profession are to
account for VAT on a cash basis. In order to account for VAT on invoice basis
people who provide such services must request authorisation in writing from the
Department.

When a
registered person accounts for VAT on cash basis such accounting must be made
in respect of supplies made to him and supplies made by him.

 

After compiling and submitting my tax
returns I destroyed the invoices, as I sincerely did not know that I was
obliged to retain them for six years. What is my position with the Department
particularly with respect to my Input VAT?

By
destroying your invoices you seriously jeopardised your claim for Input VAT
since Input VAT may only be allowed if backed by a valid tax invoice. Failure
to produce valid tax invoices for inspection by the Department would result in
an assessment being raised to annul your Input VAT claim.

 

Recently I moved house and duly
changed my ID Card. I was under the impression that the ID Cards Department
would inform the VAT Department about my change of address, but I continued to
receive my tax returns at the old address. What is the procedure one has to
follow in such cases?

Registered
persons are required to inform the Department with any changes, including
change of address, changes in details appearing on the registration application
and the cessation or transfer of business or part thereof, within fifteen days
from that change.

 

 

  

Whilst Germany follows the EU rules on VAT compliance, it is still free to set its own standard (upper) VAT rate. The only proviso is that it is above 15%. Suppliers of goods or services VAT registered in German must charge the appropriate VAT rate, and collect the tax for onward payment to the German tax authorities through a VAT filling see German VAT returns briefing.

Germany extends temporary cut VAT to help support Hospitality, restaurants and cafes businesses and consumers during the Coronavirus pandemic crisis.

Once registered for German VAT , you will have to start following the local rules in a number of aspects. This includes:

The tax point, or time of supply rules in Germany determine when the VAT is due.  It is then payable to the tax authorities 10 days after the VAT reporting period end (monthly or quarterly).

For most goods, it is the time of delivery or passage of title.  For services, it is the completion of the service.