VAT Rates in Malta
18%Applies to most goods and services.
0%, 5%, 7%Applies to some goods and services such as food or home energy.
|VAT Rates for Digital Products|
Reporting currency in Malta is EUR.
Value Added Tax in Malta
Value added tax (VAT), or Taxxa tal-Valur Miżjud (VAT) as it is called locally, is a type of indirect consumption tax imposed on the value added to products or services, specifically during different stages of the supply chain. A supply chain may include legally separate entities involved in production, wholesale, distribution, supply, or any other stages that add value to a product.
VAT is generally reclaimed by businesses that are involved in the supply chain and that carry a registered VAT ID. Its local name is Vat reg. no. (Vat No.). The end-consumer at the end of the supply chain will pay the consumption tax.
Governments around the world use VAT as one of their main sources of revenue. Failure to report and pay VAT may therefore result in heavy penalties.
Charging VAT on Digital Products or Services
Governments want to ensure that they receive taxes on all goods and services consumed by their citizens. Physical products are taxed at customs. Electronically supplied services (ESS) don’t cross any borders to pass through customs. As a business, you are made responsible to charge the applicable VAT regardless whether you are based inside or outside Malta.
As a supplier of ESS to end-consumers, you’re responsible for applying, collecting and remitting VAT to the individual governments at their various VAT rates.
Exceptions to Charging VAT in Malta
When you make a sale to a customer in Malta, request the customer’s VAT ID (or Vat No.). Most businesses or individuals carrying out an economic activity will have one, end-consumers will not.
Some buyers may try to pretend that they’re a business just to avoid the VAT charge, so they’ll submit a dummy VAT ID. Check to make sure each VAT ID is valid. You can use our VAT number check to verify it automatically during online payment.
If your customer owns a valid VAT ID, you’re exempt from charging VAT in intra-community (EU) and cross-border (international) supplies. The transaction is covered by the reverse charge mechanism. With the reverse charge mechanism, the buyer is responsible for filing VAT on the transaction.