Amendments to the VAT Act concerning registration of small enterprises

As of 1st January 2025, the amendments to the VAT Act introduced Articles 11A and 11B, thereby establishing a special scheme for small enterprises engaged in cross-border supplies within the European Union (EU). These changes aim to simplify VAT obligations for qualifying businesses by aligning with EU directives.

 

Article 11A: Small Enterprises Established in Malta

Article 11A pertains to taxable persons established in Malta who qualify as small enterprises under the Sixth Schedule of the VAT Act. To make use of this scheme, businesses must meet the following criteria:

• Union Annual Turnover: The total annual turnover from supplies of goods and services across the EU should not exceed the Union threshold of €100,000.
• Cross-Border Supplies: The business should make supplies in at least one EU Member State where it is not established and qualify for that Member State's small enterprise exemption.
• Member State Thresholds: The value of supplies in each Member State should not exceed the respective exemption threshold.

Taxable persons who wish to apply under Article 11A should submit an electronic application through the Malta Tax and Customs Administration online portal, including details such as the applicant’s name, activity, legal form, address, turnover in Malta and other Member States, and the Member State(s) in which the taxable person is seeing exemption. The Commissioner needs to be informed of any changes to the initially provided information upon registration. 


Registered businesses must report their turnover every calendar quarter, detailing supplies made in Malta and other Member States by not later than the last day following the end of the respective calendar quarter. If a business no longer qualifies as a small undertaking or exceeds the Union Annual Turnover threshold, it should apply for cancellation or update its registration within 15 working days.

 

Article 11B: Small Enterprises Not Established in Malta

Article 11B applies to taxable persons established outside Malta but within another EU Member State. Such businesses can benefit from the small enterprise exemption for supplies made in Malta without registering under Article 10 of the VAT Act, provided they are registered under Article 11B. 

As opposed to the registration under Article 11A, the registration process under Article 11B requires a notification from the Member State of establishment of the taxable person to the Commissioner for Tax and Customs in Malta. 

To qualify for this scheme, the applicant needs to satisfy the following conditions:

• Union Annual Turnover: The total annual turnover from supplies of goods and services across the EU should not exceed the Union threshold of €100,000.
• Domestic Annual Turnover: The total annual turnover from supplies of goods and services in Malta should not exceed the Domestic threshold of €35,000.

The Commissioner should then notify the Member State of establishment of the approval or otherwise within 15 working days. Similar to Article 11A, businesses registered under Article 11B should inform the Commissioner of any changes, such as intentions to use the exemption in a new Member State or cessation of the exemption. The exemption applies upon formal notification of approval by the Commissioner.
 

Alignment with EU Directives

These amendments align Malta's VAT legislation with EU Directive 2006/112/EC, as amended by Directive 2020/285, concerning the special scheme for small enterprises. The changes facilitate VAT compliance for small businesses engaged in cross-border trade within the EU, reducing administrative burdens and promoting intra-community commerce.

 

Want to know more?

Get in touch