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New VAT Legal Notices

Dated: [bxcode.pagedata.date]

New VAT Legal Notices concerning the increase in the threshold for small traders and new rules on VAT groups​

In line with the Budget for 2018, LN 163 of 2018 has implemented an increase in the threshold for small traders. The turn over threshold under which a service provider remains eligible for registration under Article 11 has been increased from €14,000 to €20,000 for a period of one calendar year.

The VAT Act provides taxable persons to register under Article 10 of the Act when they provide taxable supplies or exempt with credit supplies and would therefore charge VAT on their supplies (where taxable) and then have the right, where applicable, to claim credit for input tax incurred on their purchase.

The VAT Act also provides for another option whereby taxable persons may instead register under Article 11 of the Act when they provide taxable supplies or exempt with credit supplies which do not exceed the stipulated threshold. In such cases the taxable person so registered would not charge VAT on their supplies but would be eligible to claim credit for input tax incurred on their purchases.

By virtue of the Council Implementing Decision (EU) 2018/279 of the 20th February 2018 and the implementation of LN 163 of 2018 on the 22nd May 2018, the thresholds for taxable persons whose economic activity is mainly to provide supply of services of a high value added (low inputs) shall, as from the 1st July 2018, be increased as follows:

       Entry threshold from €14,000 to €20,000

       Exit threshold from €12,000 to €17,000

The Inland Revenue Department has issued an explanatory note which outlines in detail how it works and its effects. This may be viewed at https://cfr.gov.mt/en/vat/legislation-and-LNs/Documents/Explanatory%20Note%20-%20Small%20Traders%20Threshold_EN.pdf

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