Malta’s VAT lease framework is one of the most effective commercial regimes in 2026, offering a flexible way to attain EU VAT paid status and one of the lowest VAT rates amongst EU port-states.
Designed to provide advantages for owners whilst sailing in EU waters, the framework allows VAT to be spread across the use and enjoyment of the vessel, potentially reducing the overall VAT payable and savings on the yachts value.
Whether you’re commissioning a new build, acquiring a pre-owned vessel or simply reviewing your current setup, Malta’s VAT yachting lease framework and robust maritime heritage, offers an efficient, compliant and fully supported yachting experience that’s hard to find elsewhere in Europe.
The framework was introduced under the Commissioner for Revenue Act L.N 92 of 2019. At its core, it’s essentially a commercial lease agreement: a Maltese VAT-registered company (the lessor) purchases the yacht and leases it to another party (the lessee).
Because the transaction is treated as a service (the provision of a lease), VAT is applied to the monthly or annual lease payments rather than the total purchase price of the hull.
The framework structure is closely aligned with the Maltese VAT Department’s depreciation guidelines. It ensures that the tax paid by the owner is proportionate to the actual economic value of the yacht as it ages, providing a fair and legally robust method for managing tax liabilities within the EU.
One of the most unique features of the framework is the EU ‘use and enjoyment’ provision. This stipulates that VAT is only due on the portion of the lease during which the yacht is physically located within EU territorial waters.
If a yacht spends time in the Caribbean, the United States, or any other non-EU waters, no VAT is due on the lease payments for that specific period, giving you more flexibility to enjoy your yacht wherever you please.
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To benefit from the framework, you must meet certain structural and operational criteria. Malta prides itself on transparency and compliance, making sure every lease is ground in genuine commercial substance.
The role of the lessor and lessee
The lessor: The yacht must be owned by a company incorporated and VAT-registered in Malta. This company acts as the owner of the vessel for the duration of the lease.
The lessee: The party leasing the yacht should ideally be a Maltese company. Individuals are also permitted to be lessees, but corporate structures are generally preferred to manage liability and professionalise the operation.
Lease terms and payments
Duration: The lease can last for up to 21 years. However, most owners opt for a more practical term, usually ranging between five to seven years.
The 4% rule: to ensure the lease reflects a fair market value, the annual lease charge is typically set at 4% of the yacht’s original cost.
The VAT rate: VAT is charged at a standard rate of 18%. However, this is only applied to the lease payment itself (the 4%), not the entire value of the yacht.
The framework is designed to maximise your operational freedom and financial clarity.
Improved cash flow management
By spreading VAT payments over a longer lease period, you’ll avoid the shock of an immediate 18–22% VAT charge upon purchase. Your remaining capital can be invested as you see fit.
Material savings upon sale
The true efficiency of the model comes at the end of the lease. When the lease expires and the lessee chooses to purchase the yacht (or the vessel is sold to a third party), VAT is only charged on the yacht’s depreciated value.
The VAT paid certificate
On completion of the lease and settlement of the final VAT on the depreciated value, the Maltese authorities can issue a VAT paid certificate. This proves that the vessel has ‘union status’, allowing it to circulate freely through EU waters without the risk of being impounded or charged with unexpected tax bills by customs authorities in other EU countries.
Commercial substance and EU compliance
Because the framework is based on clear legislation and follows strict guidelines, your yacht will be recognised as a fully compliant, ‘white-listed’ structure that stands up to the scrutiny of international tax authorities.
Beyond the benefits of the VAT lease framework, Malta offers one of the most sophisticated, supportive maritime environments in the world.
The largest flag in Europe
Malta’s Flag is the largest merchant flag in the European Union and is highly respected by international maritime organisations. Flying the Maltese Cross is a mark of quality, ensuring that the yacht is recognised by ports around the world as being maintained to the highest safety and regulatory standards.
World-class infrastructure
From the historic Grand Harbour in Valletta to modern superyacht berths in Birgu and Sliema, Malta offers exceptional marina facilities. The island is home to a vast network of shipyards, refit specialists, marine engineers, and legal experts, making it a one-stop shop for yacht maintenance and management.
A stable, pro-business climate
As a member of the Eurozone with a stable legal system, Malta provides a predictable environment for yacht owners. Its strategic location at the centre of the Mediterranean makes it the perfect gateway to explore the Amalfi Coast, the Greek islands, or the French Riviera.
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While the Malta VAT framework is designed to be simple, its administration requires specialist expertise.
With 15 years’ experience in Malta and our status as one of the leading corporate service providers in the yachting sector, we have everything you need to take full advantage of the island’s unique opportunities.
We pride ourselves on our knowledge, high standards of confidentiality, and risk management skills, giving you total of peace of mind throughout your lease.
Our comprehensive yachting services
We help you manage every aspect of the yacht’s lifecycle:
Company formation: Setting up the Maltese lessor and lessee companies.
VAT registration and administration: Managing filings and ensuring use and enjoyment evidence is correctly documented.
Lease drafting: Creating bespoke lease agreements that satisfy the Maltese Commissioner for Revenue’s requirements.
Registration: Handling the formal registration of the yacht under the Malta Flag.
Compliance: Ensuring that as regulations change, your structure remains fully compliant and protected.
Through Affinity Crew, we also offer tailored crew-management services, covering all aspects of employing seafarers.
Our Malta team is ready to help you explore the framework further and answer any questions you might have. Please feel free to contact us:
Joanne Fenech
Managing Director (Malta)
Tel: (+356) 2010 4700
Mob: (+356) 7986 6473
Email: joanne@affinityco.com
Registered in the Isle of Man.
Affinity Group, Second Floor, 14 Athol Street, Douglas Isle of Man, IM1 1JA
