Commercial Yacht Registration and Financing A Yacht can qualify to be registered as a Commercial Yacht when all the requirements set out in the relevant regulatory Code are satisfied. As with other similar Codes in other jurisdictions, the Commercial Yacht Registration Code contains a set of technical regulations which have to be abided with in order for commercial registration to take place. The technical regulations and specifications which are designed to distinguish a commercial yacht from the others are clearly in line with the various international maritime conventions to which Malta is a party. VAT Exemptions with credit for Chartering Activities Maltese law grants a VAT exemption with credit in the following scenarios: - the chartering and hiring by a Maltese VAT registered company of a commercially-registered yacht; - the supply of equipment to be incorporated in vessels used for navigation on the high seas and carrying passengers for a reward; - the modification, maintenance of such vessels or their equipment; - the supply of goods, fuelling or provisioning of such vessels; - the supply of other services for the direct needs of such vessels, such as valuation and agency services. Reduced VAT Rates in Finance Leasing Transactions Persons wishing to acquire yachts through finance leasing can now avail themselves of the advantageous VAT treatment which the Maltese Government has recently announced. The guidelines issued by the Maltese Government in relation to the VAT treatment of finance leasing of yachts provide that in the case of yachts used outside EU waters, no VAT is chargeable. Where, however, the leased yacht is used in EU waters, VAT on the finance lease payments is charged at a reduced rate established on a deemed percentage use of the yacht in EU waters. The deemed percentage use is based on the dimensions of the yacht and thus, while the standard Maltese VAT rate is 18%, a reduced VAT rate would apply in accordance with the table set out hereunder. The rates indicated in the table can be applied to any yacht which is leased by a Maltese VAT-registered lessor. No restrictions apply to the place of establishment of the lessee. Under certain circumstances, the reductions can also be applied without involving a bank or other finance institution.
 
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