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Legal Notice 231 of 2023 has been published in the Government Gazette on the 6th October 2023, titled the Value Added Tax Act (Amendment of Eight Schedule) Regulations, 2023. These regulations will come into effect from the 1st January of 2024.

The objective of this legal notice is to transpose the provisions of paragraph 5 of article 105a of Council Directive (EU) 2022/542 of 5 April 2022 amending Directives 2006/112/EC and (EU) 2020/285 as regards rates of value added tax.

This provision will allow Member States to reduce the applicable VAT rates to 12% on a certain number of items that are not listed under a list of goods and services of Annex iii of the Directive, to attain equal treatment between all the Member States.

Malta will be applying this provision to a selected few items, one of them being the short-term lease of pleasure boats. Currently in Malta, the standard VAT rate is set at 18%. With the transposition of this provision in our local legislation, there will be a reduction of 6% in the rate of VAT on the hiring of pleasure boats, down to a VAT rate of 12%.

Through this notice, the Eight Schedule of the Value Added Tax Act (Chapter 406) will be adding the following under item 14:

“Hiring of a pleasure boat to a person according to an agreement for any term or part of a term that, when added to the term of a previous hiring, of the same goods or of other goods of the same kind, to the said person during the previous twelve (12) months ending on the date of the beginning of the existing hiring, does not exceed five (5) weeks”

This will mean that from the 1st January 2024 a VAT rate of 12% will be applicable for the hiring of pleasure boats for not longer than five weeks.

Dr Cedric Mifsud


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