Regulations, 2024

L.N. 346 of 2024

VALUE ADDED TAX ACT

(CAP. 406)

Value Added Tax Act (Amendment of Sixth Schedule)

Regulations, 2024

IN EXERCISE of the powers conferred by article 75 of the Value

Added Tax Act, the Minister responsible for finance has made the

following regulations:-

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

Act (Amendment of Sixth Schedule) Regulations, 2024 and these

regulations shall be read and construed as one with the Sixth Schedule

to the Value Added Tax Act, hereinafter in these regulations referred to

as the "Sixth Schedule".

(2)

The scope of these regulations is to

(a) transpose the provisions of Council Directive (EU)

2020/285 of 18 February 2020 amending Directive 2006/112/EC

on the common system of value added tax as regards the special

scheme for small enterprises and Regulation (EU) No 904/2010

as regards the administrative cooperation and exchange of

information for the purpose of monitoring the correct application

of the special scheme for small enterprises;

(b) transpose the provisions 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; and

(c) introduce technical improvements to the existing

provisions contained in the Sixth Schedule.

(3)

These regulations shall come into force on 1st January

2025.

The Sixth Schedule shall be amended as follows

(a) the title "Thresholds" thereof shall be substituted by

the title "Small Enterprises", and immediately thereafter there

shall be added the following new items

"Definitions

For the purposes of this Schedule, the following terms

shall have the meaning assigned to them in this Part.

Calendar quarter

1. "calendar quarter" means a period of three (3)

calendar months ending on the 31st March, 30th June, 30th

September and 31st December, as the case may be.

Calendar year

2. "calendar year" means a period of twelve (12)

months commencing on 1st January and ending on 31st

December.

Turnover

(1) "turnover" means the turnover consisting

of the following amounts, exclusive of VAT

(a) the value of supplies of goods and

services, in so far as they would be taxed were they

supplied by a person registered under article 10;

(b) the value of transactions which are

exempt with credit in terms of items 1, 3, 5, 6, 7, and

8(1) of Part One of the Fifth Schedule;

(c) the value of immovable property

transactions, financial transactions referred to in item

3 of Part Two of the Fifth Schedule, and insurance

and reinsurance services, unless those transactions are

ancillary transactions.

(2) Disposals of the tangible or intangible capital

assets of a taxable person shall not be taken into account for

the purposes of calculating the turnover referred to in sub-

item (1).

(3) For the purposes of calculating the turnover

referred to in sub-item (1) of persons, other than physical

persons, registered or applying to register under article 11,

account shall be taken of the turnover of related persons in

accordance with the provisions of item 4 of Part One.

(4)

The turnover shall be denominated in euro (€).

Domestic annual turnover

"Domestic annual turnover" means the total

annual turnover from supplies of goods and services,

exclusive of VAT, made by a taxable person taking place

within Malta during a calendar year.

Domestic threshold

"Domestic threshold" means the threshold fixed

in Malta in accordance with Article 284(1) of Council

Directive 2006/112/EC which shall be an amount

equivalent to thirty-five thousand euro (€35,000).

Union annual turnover

"Union annual turnover" means the total annual

turnover from supplies of goods and services, exclusive of

VAT, made by a taxable person taking place within the

territory of the Community during a calendar year.

Union Threshold

"Union Threshold" means an amount equivalent

to one hundred thousand euro (€100,000).

Member State annual turnover

"Member State annual turnover" means the total

annual turnover in a Member State from supplies of goods

and services, exclusive of VAT, made by a taxable person

within such Member State during a calendar year.";

(b) Part One thereof shall be substituted by the following

new part

"Part One

[Article 11]

Special scheme for small enterprises for supplies made

within Malta by persons established in Malta

Threshold at the time of application

1. A taxable person who applies for registration

under article 11 qualifies as a small enterprise at the time of

the application where his Domestic annual turnover during

the preceding calendar year, if any, is not more than the

Domestic threshold.

Persons registered under article 10

2. (1) Notwithstanding the provisions of item 1,

a person registered under article 10 who applies for

registration under article 11 shall not qualify as a small

enterprise at any time during the first whole twelve (12)

calendar months from the date of the said registration

Provided that a person who is deemed to be

registered under article 10 by virtue of sub-article (6) of the

said article shall be deemed for the purpose of this item as

having been registered under the said article on the date on

which he was first registered under this Act.

(2) Notwithstanding the provisions of sub-item (1),

where a person who registers under article 10 makes a

request to the Commissioner to convert to a registration

under article 11, the Commissioner may accept the request

where

(a) the Commissioner is satisfied that the

person qualifies as a small enterprise; and

(b) such person has not claimed any input tax

credits during the period in which he was so

registered under article 10.

Threshold of persons registered under article 11

3. A person registered under article 11 shall

continue to qualify as a small enterprise where his turnover

during a calendar year does not exceed the Domestic

threshold

Provided that such person shall no longer

qualify as a small enterprise on the date the Domestic

threshold is exceeded within a calendar year.

Turnover of related persons

4. For the purpose of this Part, the turnover of a

person, other than a physical person, registered or applying

to register under article 11 shall include the proportionate

turnover of any other person, including a physical person,

who is related to the person registered or applying to be

registered under article 11. In this item, a person shall be

deemed to be related to a person registered or applying to

be registered under article 11 where the latter person is

owned or controlled, directly or indirectly, as to more than

ten percent (10%) by the former person, or as may be

prescribed by the Commissioner.

Declaration to be submitted to the Commissioner

5. (1) The declaration which is required to be

submitted to the Commissioner by a person registered under

article 11 in terms of article 30(1) shall be submitted to the

Commissioner electronically through the web portal

designated by the Commissioner for this purpose and

including any information requested therein

Provided that the Commissioner may otherwise

direct any person or class of persons to submit the said

declaration by other means.

(2) The declaration referred to in sub-item (1) shall

be submitted for a period of twelve (12) months, or as may

be directed by the Commissioner

Provided that persons registered under article 11

may opt for a shorter period.

(3) The period of twelve (12) months referred to in

sub-item (2) shall commence on the 1st January and end on

the 31st December of the same calendar year

Provided that where the effective date of

registration of a person under article 11 is a date other than

1st January, the first period of such person shall commence

on such effective date and shall end on the 31st December

of the same calendar year.

(4) Where a person ceases to be registered under

article 11, the last period of such person shall end on the

date when that registration is cancelled by the

Commissioner in accordance with the provisions of articles

11(6), (7) and (8).

(5) A declaration which is required to be furnished

for a period to the Commissioner in terms of this Part shall

be so furnished by not later than the fifteenth (15 th ) day of

the second (2) month following the month during which

such period ends.

Other information to be given to the Commissioner

6. A person who applies for registration under

article 11 shall submit all information that the

Commissioner may reasonably request for the purpose of

applying the provisions of this Part.";

(c) Part Two thereof shall be substituted by the following

new part

"Part Two

[Article 11A]

Special scheme for small enterprises for supplies made in

other Member States by persons established in Malta

Threshold at the time of application

1. (1) A taxable person who applies for

registration under article 11A qualifies as a small enterprise

at the time of the application where the following

conditions are satisfied

(a) his Union annual turnover during the

preceding calendar year is less than the Union

threshold;

(b) he makes supplies in at least one (1)

Member State in which he is not established, where

he is eligible to avail himself of the exemption in

terms of the special scheme for small enterprises

applicable in the respective Member State in

accordance with Chapter 1 of Title XII of Council

Directive 2006/112/EC; and

(c) the value of the supplies made in the

Member State referred to in paragraph (b) during the

preceding calendar year does not exceed the threshold

applicable in that Member State for granting the

exemption in accordance with Chapter 1 of Title XII

of Council Directive 2006/112/EC

Provided that the period referred to in paragraph

(c) may be extended to two (2) calendar years where

required by the respective Member State in accordance with

Article 288a(1) of Council Directive 2006/112/EC.

Prior notification

2. An application for a registration under article

11A shall be submitted electronically directly through the

established web portal designated by the Commissioner for

such purpose, and shall contain the following information

(a) the name, activity, legal form and address

of the taxable person;

(b) the Member State or Member States in

which the taxable person intends to avail himself of

the special scheme for small enterprises;

(c) the turnover from supplies of goods and,

or services carried out in Malta and in each of the

other Member States during the previous calendar

year;

(d) the turnover from supplies of goods and,

or services carried out in Malta and in each of the

other Member States during the current calendar year

prior to the application for a registration under article

11A; and

(e)

any other information requested therein.

Update to a prior notification

3. (1) A taxable person registered under article

11A shall inform in advance the Commissioner

electronically directly through the established web portal

designated by the Commissioner for such purpose of any

changes to the information previously provided in the prior

notification referred to in item 2, including

(a) the intention to avail himself of the

exemption in a Member State or Member States other

than the ones indicated in such prior notification; and

(b) the decision to cease applying the special

scheme for small enterprises in a Member State or

Member States in which such taxable person is not

established.

(2) The exemption in any Member State referred to

in sub-item (1)(a) shall be effective as from the date the

Commissioner notifies the taxable person that he may start

to avail himself of the exemption in the respective Member

State.

(3) The cessation referred to in sub-item (1)(b) shall

be effective as of the first (1) day of the next calendar

quarter following the receipt of the information from the

taxable person or, where such information is received

during the last month of a calendar quarter, as of the first (1)

day of the second (2) month of the next calendar quarter.

Declaration to be submitted to the Commissioner

4. (1) The declaration which is required to be

submitted to the Commissioner by a person registered under

article 11A in terms of article 30(1) shall be submitted to

the Commissioner electronically through the web portal

designated by the Commissioner for this purpose and

including the following information

(a) the turnover from supplies carried out

during the calendar quarter in Malta or "0" if no

supplies have been made;

(b) the turnover from supplies carried out

during the calendar quarter in each of the Member

States other than Malta or "0" if no supplies have been

made;

(c) where the Member State in which the

special scheme for small enterprises is availed of

applies varying thresholds as referred to in the second

sub-paragraph of Article 284(1) of Council Directive

2006/112/EC, the taxable person shall be obliged in

respect of such Member State to report separately the

total value of supplies of goods and, or services as

regards each threshold that may be applicable; and

(d)

any other information requested therein.

(2) The values referred to in sub-item (1) shall be

denominated in euro (€)

Provided that where the Member State in which

the special scheme for small enterprises is availed of has not

adopted the euro (€), the Commissioner may require such

values to be expressed in the national currencies of those

Member States. If the supplies have been made in other

currencies, the taxable person shall use the exchange rate

which applies on the first (1) day of the calendar year. The

conversion shall be made by applying the exchange rate

published by the European Central Bank for that day or, if

there is no publication on such day, on the next day of

publication.

(3) The declaration referred to in sub-item (1) shall

be furnished for each calendar quarter.

(4) Where the effective date of registration of a

person under article 11A is a date other than the first (1) day

of a calendar quarter, the first (1) period of such person

shall commence on such effective date and shall end on the

last day of the said calendar quarter.

(5) Where a person ceases to be registered under

article 11A, the last period of such person shall end on the

date when the said registration is cancelled by the

Commissioner in accordance with article 11A(5).

(6) A declaration which is required to be submitted

to the Commissioner in terms of this Part shall be so

submitted by not later than the last day of the month

following the end of the respective calendar quarter

Provided that, in accordance with article

11A(4)(c), the taxable person shall inform the

Commissioner within fifteen (15) working days from the

date when the Union annual turnover threshold is exceeded.

At the same time, the taxable person shall submit to the

Commissioner a further declaration electronically through

the web portal designated by the Commissioner for this

purpose, indicating the value of the supplies referred to in

sub-item (1) that have been made from the beginning of the

current calendar quarter up until the date the Union annual

turnover threshold was exceeded.

Exceeding the Union Threshold

5. Notwithstanding the provisions of article

11A(5), where the Union annual turnover of a person

registered under the said article during a calendar year

exceeds the Union threshold, the exemption provided for in

article 284(1) granted in the Member States in which such

person is not established shall cease to apply as from the

date the Union threshold is exceeded."; and

(d) immediately after Part Two thereof, as amended,

there shall be added the following new part

"Part Three

[Article 11B]

Special scheme for small enterprises for supplies made

within Malta by persons established in other Member States

1. A taxable person established in another Member

State deemed to have made a registration under article 11B

may be approved by the Commissioner where he qualifies

as a small enterprise at the time of the application by

satisfying the following conditions

(a) his Union annual turnover during the

preceding calendar year is less than the Union

threshold; and

(b) the Domestic annual turnover during the

preceding calendar year does not exceed the Domestic

turnover threshold.

Exceeding the Domestic threshold

2. Notwithstanding the provisions of article

11B(3), where the Domestic annual turnover of a person

registered under the said article during a calendar year

exceeds the Domestic threshold, the exemption provided for

in item 16(3) of Part Two of the Fifth Schedule shall cease

to apply as from the date the Domestic threshold is

exceeded.

Exceeding the Union Threshold

3. Notwithstanding the provisions of article

11B(3), where the Union annual turnover of a person

registered under the said article during a calendar year

exceeds the Union threshold, the exemption provided for in

item 16(3) of Part Two of the Fifth Schedule shall cease to

apply as from the date the Union threshold is exceeded.".

€1.08