162 tal-2018

L.N. 162 of 2018

VALUE ADDED TAX ACT

(CAP. 406)

Value Added Tax (Registration as a Single Taxable Person)

Regulations, 2018

BY VIRTUE of the powers conferred by article 5(6) of the

Value Added Tax Act, the Minister for Finance has made the

following regulations:-

(1) The title of these regulations is the Value Added Tax

(Registration as a Single Taxable Person) Regulations, 2018.

(2) These regulations shall come into force on 1st June 2018,

and shall apply only to applications, received in terms of regulation 8,

which come into effect on or after such date.

(Regulations 2 and 3)

For the purposes of these regulations, the legislation referred to is

that listed hereunder

the Banking Act, Chapter 371 of the Laws of Malta;

the Financial Institutions Act, Chapter 376 of the Laws of Malta;

the Gaming Act, Chapter 400 of the Laws of Malta;

the Insurance Business Act, Chapter 403 of the Laws of Malta;

the Insurance Intermediaries Act, Chapter 487 of the Laws of

Malta;

the Investment Services Act, Chapter 370 of the Laws of Malta;

the Lotteries and Other Games Act, Chapter 438 of the Laws of

Malta;

the Retirement Pensions Act, Chapter 514 of the Laws of Malta;

the Securitisation Act, Chapter 484 of the Laws of Malta.

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(1) In these regulations, save as provided in sub-

regulation (2), all words and phrases shall have the meaning as

prescribed in the Act.

(2) In these regulations, unless the context otherwise requires

"the Act" means the Value Added Tax Act;

"economic links" has the meaning given in regulation 3(3);

"Group Reporting Entity" means the member of a VAT Group

appointed as such pursuant to regulation 4;

"established" has the meaning given in article 2 of the Act;

"financial links" has the meaning given in regulation 3(3);

"member of a VAT Group" shall mean a person who forms part

of a VAT Group registered as such in terms of these regulations and

shall include the Group Reporting Entity;

"organisational links" has the meaning given in regulation 3(3);

"person" means a legal person and shall not include a physical

person;

"Schedule" means the Schedule to these regulations as may be

amended by the Commissioner from time to time by way of notice in

the Gazette;

"VAT Group" means two or more persons who, pursuant to

regulation 5, are registered under the Act as a single taxable person.

(1) Two or more persons established in Malta may apply Single taxable

to the Commissioner to be registered as a single taxable person for the person.

purposes of the Act if the following conditions are satisfied

(a) at least one of the applicants is a taxable person who

is licensed or recognised in terms of the legislation listed in the

Schedule;

(b) each of the applicants is bound to each of the others

by financial links, organisational links and economic links; and

(c)

at the time of application, all the applicants have

submitted all returns and notices due under articles 27 and 30 of

the Act, and all returns of income due in terms of the Income Cap. 372.

Tax Management Act, and have settled in full any and all

amounts due by way of tax declared in the aforementioned

returns and notices, as well as any interest and administrative

penalties due pursuant to the Act and the Income Tax Act and Cap. 123.

Income Tax Management Act

Provided that, when a valid objection or appeal has been

made against an assessment issued to any of the said applicants,

any tax and, or administrative penalty assessed which is in

dispute and which is kept in abeyance as a result of the said

objection or appeal, as well as any interest accruing thereon,

shall be disregarded for the purposes of this paragraph.

(2) A person established in Malta may apply to the

Commissioner to be admitted as a member of an existing VAT Group,

provided that the conditions set out in sub-regulation (1)(b) and (c)

are satisfied.

(3) For the purposes of this regulation

(a) the required financial links shall be deemed to exist

where any two or more of the following are, directly or

indirectly, held as to more than 90% by the same person or

persons (whether a legal person or an individual)

(i)

the voting rights or equivalent interests;

(ii) the entitlement to profits available for

distribution; or

(iii) the entitlement to surplus assets available for

distribution on a winding up or equivalent event;

(b) "organisational links" shall be deemed to exist

where the applicants have a shared management structure,

whether in whole or in part;

(c) the required economic links shall be deemed to exist

where the activity of each of the applicants is of the same nature

or within the same industry, or where the activities of the

applicants are interdependent or complementary, or where one

member of the group carries out activities which are wholly or

substantially to the benefit of any one or more of the other

members

Provided that, for the purposes of determining whether the

required economic links exist, the Commissioner may request

such additional information and documentation as may be

required to evidence such links, and the decision of the

Commissioner shall be final and conclusive.

(4) No person may be a member of more than one VAT Group

at the same time.

(5) Persons bound to each other by financial links,

organisational links and economic links may only form part of the

same VAT Group.

(6) In order for a group of persons to be treated as a VAT

Group, or to be admitted to a VAT Group, an application shall be

made in the manner specified in regulation 8.

(1) The members of a VAT Group shall nominate from

amongst themselves the Group Reporting Entity, which shall exercise

any and all rights and discharge any and all obligations arising to the

VAT Group under the Act.

(2) Any supply made by a member of a VAT Group shall be

treated, for the purposes of the Act, as a supply made by the Group

Reporting Entity.

(3) Any supply falling within the scope of article 4 of the Act

made to a member of a VAT Group shall be treated, for the purposes

of the Act, as a supply made to the Group Reporting Entity.

(4) Any intra-community acquisition falling within the scope

of article 4 of the Act made by a member of a VAT Group shall be

treated, for the purposes of the Act, as an intra-community acquisition

made by the Group Reporting Entity.

(5) Any importation falling within the scope of article 4 of the

Act made by a member of a VAT Group shall be treated, for the

purposes of the Act, as an importation made by the Group Reporting

Entity.

(6) For the avoidance of any doubt, notwithstanding the

particular description of any of the members of a VAT Group as a

taxable person or a non-taxable legal person, a VAT Group registered

as such pursuant to these regulations shall, for the purposes of any

supply, acquisition or importation referred to in sub-regulations (2),

(3), (4) and (5), be regarded as a taxable person.

(1) The Commissioner shall, following receipt of an Notification of

application made in the manner prescribed in regulation 8(1), register Group

treatment.

the applicants as a VAT Group if satisfied that the eligibility

conditions specified in regulation 3 have been met and shall, by

notice in writing

(a)

specify the date with effect from which the

applicants are to be regarded as a VAT Group for the purposes of

the Act;

(b) designate the person nominated in terms of

regulation 4(1), or such other person from amongst the

applicants as the Commissioner may deem fit, as the Group

Reporting Entity;

(c)

issue a Value Added Tax identification number to

the group pursuant to articles 10 or 12 of the Act, as the case

may be.

The notice in terms of this sub-regulation shall be issued to the

Group Reporting Entity.

(2) The rights and obligations arising in terms of the Act to a

person registered under article 10 or 12, as the case may be, shall

apply to the VAT Group with effect from the date referred to in sub-

regulation (1)(a).

(3) The Commissioner shall, following an application made in

the manner prescribed in regulation 8(2), where he is satisfied that the

conditions prescribed in the said regulation are satisfied, by notice in

writing to the applicant and the Group Reporting Entity, deem the

applicant to be a member of the VAT Group with effect from the date

specified in the said notice.

(1) Notwithstanding the provisions of article 4 of the

Act, and without prejudice to the powers of the Commissioner arising

in terms of sub-regulation (2), any supply of goods or supply of

services made by one member of a VAT Group to another member of

that VAT Group shall be disregarded for the purposes of the Act.

(2) The Commissioner may, in order to prevent tax avoidance

or evasion through the application of the provisions of these

regulations, direct that the provisions of sub-regulation (1) shall not

apply to a supply of goods or services made by one member of a VAT

Group to another member of that VAT Group which supply would,

had the VAT Group not existed, fall within the scope of article 4 of the

Act.

(3) Where a determination is made by the Commissioner

pursuant to sub-regulation (2), the supplies made by a member of the

VAT Group to another member of the VAT Group shall be treated, for

the purposes of the Act, as supplies made by the Group Reporting

Entity to itself.

(4) The Commissioner shall, in any direction given in terms of

sub-regulation (2), provide any such instructions as may be necessary

to enable the Group Reporting Entity to fulfil its obligations under the

Act.

Notwithstanding that the provision of services by one

establishment of a taxable person to another establishment of the same taxable

person shall not constitute a supply of services for consideration by a taxable

person acting as such for the purposes of article 4 of the Act, the provisions of

regulation 6(1) shall not apply to supplies of services made by or to an

establishment situated outside Malta if that establishment is a member of a

VAT group in a Member State that operates a system of VAT grouping in

terms of which the establishment alone, and not the entire enterprise of which

it forms part, is incorporated in a VAT group, and, in such circumstances,

supplies of services made by or to the establishment situated outside Malta

shall be treated, for the purposes of the Act, as supplies made by or to a

separate taxable person.

(1) An application for registration of two or more

persons as a VAT Group shall be made electronically, in the format

determined by the Commissioner, and shall contain, in particular,

information on the manner in which the applicants are bound by

financial links, organisational links and economic links, and shall

indicate the date with effect from which the applicants elect to be

registered as a VAT Group.

(2) An application for the admission of a person as a member

of an existing VAT Group shall be made electronically in the format

determined by the Commissioner, and shall contain, in particular,

information on the manner in which that person is bound to the other

members of the VAT Group by financial links, organisational links

and economic links, and shall indicate the date with effect from which

the applicant elects to be admitted to the VAT Group.

(3) The Commissioner may request any one or more of the

applicants for registration as members of a VAT Group, or the

applicant for admission to an existing VAT Group, as the case may be,

to provide such other information and documentation as may be

required.

(1) Where any one or more of the individual applicants Cancellation of

for registration as a VAT Group, or for admission to an existing VAT prior

registrations.

Group, are already registered under the Act, the Commissioner shall,

immediately upon the issuance of a notification in terms of regulation

5(1) or (3), as the case may be, cancel any such registration

Provided that the provisions of item 14(2) of the Second

Schedule to the Act shall not apply to any such cancellation of

registration.

(2) The cancellation of the individual VAT registration of an

applicant for membership of, or admission to, a VAT Group in terms

of sub-regulation (1) shall not relieve that person from any liability

incurred under this Act in virtue of anything done or omitted to be

done before the date of the cancellation.

(3) Following the cancellation of the individual VAT

registration of an applicant for membership of, or admission to, a VAT

Group in terms of sub-regulation (1), any excess credit or refund

entitlement which had arisen to that person in terms of article 24 of

the Act in respect of a tax period which ended prior to the effective

registration of, or admission to, the VAT Group shall be and remain a

refund payable to that person in accordance with the provisions of

article 24 of the Act, and shall not be available for set off by, or

refund to, the Group Reporting Entity.

(1) Where the assets of the economic activity of any of Where assets of

the applicants for membership of a VAT Group or for admission to an the

activity include

existing VAT Group include capital goods, as defined in the Value capital

Added Tax (Adjustments relating to input tax on capital goods)

Regulations, in respect of which the period of reference for the

purposes of determining the adjustment of the initial deduction

referred to in regulation 3 of the said Value Added Tax (Adjustments

relating to input tax on capital goods) Regulations has already started

to run, the said period of reference shall continue to run subsequent to

the date referred to in regulation 5(1)(a) or (3), as the case may be,

notwithstanding the cancellation of the said applicant’s individual

registration in terms of regulation 9(2).

(2) If any of the events referred to in regulation 4 of the Value

Added Tax (Adjustments relating to input tax on capital goods)

Regulations occur in relation to the capital goods referred to in sub-

regulation (1) subsequent to the date specified in regulation 5, the

Group Reporting Entity shall make any adjustment required to the

initial deduction adjustment in the manner prescribed in the said

Value Added Tax (Adjustments relating to input tax on capital goods)

Regulations.

(3) Where the assets belonging to a person who is a member of

a VAT Group include capital goods, as defined in the Value Added

Tax (Adjustments relating to input tax on capital goods) Regulations,

in respect of which the period of reference for the purposes of

determining the adjustment of the initial deduction referred to in

regulation 3 of the said Value Added Tax (Adjustments relating to

input tax on capital goods) Regulations started to run or was running

whilst that person was a member of the VAT Group, the said period of

reference shall continue to run subsequent to the termination of that

person’s membership of the VAT Group, or the dissolution and

deregistration of the VAT Group, in terms of regulation 12, and the

provisions of the Value Added Tax (Adjustments relating to input tax

on capital goods) Regulations shall continue to apply in respect of the

said capital goods

Provided that if any of the events referred to in regulation 4 of

the Value Added Tax (Adjustments relating to input tax on capital

goods) Regulations occur in relation to the capital goods referred to

above on or after the termination of that person’s membership of the

VAT Group, or the dissolution and deregistration of the VAT Group,

as the case may be, that person shall make any adjustment required to

the initial deduction adjustment in the manner prescribed in the said

Value Added Tax (Adjustments relating to input tax on capital goods)

Regulations unless such adjustment has already been made by the

Group Reporting Entity.

(1) Each member of a VAT Group shall be jointly and

severally liable for the payment of any tax, administrative penalties

and interest arising under the Act, which have become due and

payable by the Group Reporting Entity pursuant to the application of

regulation 4.

(2) Following the termination of a person’s membership of a

VAT Group in terms of regulation 12, that person shall remain jointly

and severally liable with the other members of a VAT Group for the

payment of any tax, administrative penalties and interest arising

under the Act in connection with anything done or omitted to be done

prior to the termination of that person’s membership of the VAT

Group.

(1) Where a member of a VAT Group no longer satisfies Termination of

or shall no longer satisfy any one or more of the conditions set out in Group

membership.

regulation 3(1)(b), the Group Reporting Entity shall, prior to the lapse

of fifteen days from the date of change in circumstances, notify the

Commissioner of the change or the intended change, as the case may

be. The Commissioner shall, once satisfied that any one or more of

the required conditions are or shall no longer be satisfied, terminate

that person’s membership of a VAT Group, and shall serve notice on

that person indicating the effective date of the termination of

membership.

(2) Where it appears to the Commissioner that a member of a

VAT Group no longer satisfies any one or more of the conditions set

out in regulation 3(1)(b), the Commissioner shall, unless satisfactory

evidence to the contrary is provided, terminate that person’s

membership of a VAT Group, and shall serve notice on that person

indicating the effective date of the termination of membership.

(3) The date of termination of a person’s membership of the

VAT Group pursuant to sub-regulations (1) or (2) shall not be a date

earlier than the date on which that person ceased to satisfy the

requirements of regulation 3(1)(b).

(4) Where the membership of a VAT Group of the Group

Reporting Entity is terminated, the remaining members shall

immediately appoint from amongst themselves a new Group

Reporting Entity, which shall notify the Commissioner in writing

within fifteen days from the date of the notification received pursuant

to sub-regulations (1) or (2)

Provided that, in such circumstances, the Commissioner may, at

any time and as he shall deem fit, designate in lieu of the person so

appointed, any other member of the VAT Group as the Group

Reporting Entity.

(5) The cancellation of a person’s membership of a VAT

Group shall not relieve that person from any liability incurred under

the Act in virtue of anything done or omitted to be done before the

date of the cancellation, or from the obligation of that person to make

an application for a fresh registration in any of the circumstances

under which a person is required to apply for registration in terms of

any provision of the Act

Provided that, where the person whose membership of a VAT

Group is cancelled as aforesaid is not liable to make an application

for registration under article 10 of the Act, the provisions of item 14

of the Second Schedule to the Act shall apply in respect of any goods

belonging to that person, where the value added tax on those goods

had been wholly or partially deducted.

(6) The members of a VAT Group may apply to the

Commissioner to dissolve and cancel the registration of the VAT

Group at any time after the lapse of twenty-four full calendar months

from the effective date of registration of the VAT Group, and a VAT

Group cannot subsequently be reconstituted with the same

membership until the lapse of twenty-four full calendar months from

the effective date of the cancellation thereof.

(7) When the registration of a VAT Group is cancelled

pursuant to sub-regulation (6), the Commissioner shall serve notice

on the Group Reporting Entity indicating the effective date of

cancellation of the registration

Provided that the cancellation of registration of a VAT Group

shall not relieve the persons who were members of the VAT Group

prior to the said date of cancellation from any liability incurred under

the Act in virtue of anything done or omitted to be done before the

date of the cancellation, nor from the obligation to make an

application for a fresh registration in any of the circumstances under

which a person is required to apply for registration in terms of any

provision of the Act

Provided further that where a person who was a member of the

VAT Group prior to the said date of cancellation of its registration is

not liable to make an application for registration under article 10 of

the Act, the provisions of item 14 of the Second Schedule of the Act

shall apply in respect of any goods belonging to that person, where

the value added tax on those goods had been wholly or partially

deducted.

(1) Unless otherwise stated herein, any reference in the

Act to a person registered under article 10 of the Act or a person

registered under article 12 of the Act, as the case may be, shall be

construed to include a reference to a VAT Group registered as such in

terms of these regulations.

(2) Any reference to a "person" and "registered taxable

person" in Part VI of the Act shall be construed as a reference to each

of the individual members of a VAT Group and, in particular, each

individual member of a VAT Group shall be required to keep full and

proper records of all transactions entered into with other members of

the VAT Group and with persons not being members of the VAT

Group

Provided that the Group Reporting Entity shall, in addition, be

required to keep consolidated records of all transactions which, in

terms of regulation 4, are treated as carried out by the Group

Reporting Entity, in the manner specified in the Eleventh Schedule to

the Act.

(3) The term "supplier" in item 4(2)(b) of Part One of the

Third Schedule to the Act shall, for the purposes of determining the

Distance Sales Threshold referred to in item 1 of Part Three of the

Sixth Schedule to the Act, be construed as referring to all the

members of the VAT Group.