Tax Planning & Compliance

An integral part of the management of any venture is the proper planning and computation of the future tax applicable. Gonzi & Associates, Advocates represents both individual and commercial entities as clients in matters having tax implications, instructing them on identifying key tax issues both locally and internationally and structuring their tax to minimize costs. In order to take full advantage of the business opportunities, the importance of expert long-term tax planning cannot be understated especially when taking into account the continuously changing nature of tax legislation.

By the setting up of Maltese trading and holding companies, it is possible to set up ownership and tax structures that would take advantage of the benefits offered by the Maltese jurisdiction increasing profits otherwise lost in other jurisdictions. Our firm also offers compliance services concerning income tax, VAT and other tax returns.

The Maltese legal system adopts a full exemption on income generated from the operation of their yachts and instead charges an annual tonnage tax in the form of a lump sum. The annual tonnage tax is set by fixed rates established according to different net tonnage brackets and then adjusted depending on the age of the vessel with the standard rate applying to vessels between 10 and 15 years old. Newer vessels benefit from a reduced rate and older vessels are subject to a surcharge.

Commercial yachts operating on the high seas and carrying passengers for reward are exempt from VAT on supplies, including maintenance costs, chartering, fuelling and provisioning.

VAT mitigation is possible in the sphere of the maritime sector with the availability of VAT leasing schemes applicable to the leasing of yachts. Through these leasing arrangements, VAT may be significantly reduced. Kindly visit ‘Yacht Leasing from Malta’ for more information.

In the event that a commercial yacht does not qualify for the exemption from income tax, they may take advantage of the low effective income tax rate of 5%. Any foreign income tax suffered on such a yacht’s commercial operations would be available as a credit against the Maltese income tax so that the effective Maltese tax could even be reduced to 0%.