VAT Guide for Freelancers in Malta

Regardless of where you're based, you must follow Maltese VAT laws if you have clients in Malta. For freelancers, the VAT threshold in Malta varies based on the economic activities you conduct. If your annual turnover exceeds this threshold, you are liable to register and pay VAT to the Maltese government. 

The standard rate of VAT in Malta is 18%, with reduced rates of 7% and 5% imposed depending on the goods and services you sell. The Maltese VAT system is generally based on the EU's VAT directives; however, locally, it is controlled and coordinated by the Office of the Commissioner for Revenue. You can find the latest updates regarding VAT laws on their website.

If you're a freelancer looking to learn more about the VAT system in Malta, you're in the right place! Let's get started.

What are the VAT rates in Malta?

The Maltese government applies three different VAT rates based on the type of goods and services you supply.

  • The Standard Rate of 18% - Unless the items or services you offer are in the reduced rate or zero-rated category, you should charge the standard VAT rate of 18%.
  • The Reduced Rate of 7% - Applies to hotel accommodations, other licensed premises for tourists, etc.
  • The Reduced Rate of 5% - Applies to electricity supply, medical accessories, printed matter, items for the exclusive use of disabled people, domestic care services, particular confectionery, printed books, newspapers, minor bicycle repairs, shoes, leather goods, clothing and household linen, admission tickets to museums, art exhibitions, concerts, theatres, etc.
  • No VAT - You should charge 0% VAT for exports, intra-community supplies, airline service, etc. Immovable property, non-commercial rent, services by non-profit organisations, insurance banking and investment services, sports, religious and cultural activities, etc., are exempt from VAT too. However, you should still record and report items with no VAT.

You can find more information on Maltese VAT rates and VAT-exempt services here.

When should you register for VAT in Malta?

As long as you conduct economic activities in Malta, you are considered taxable. For each taxable person, the Maltese government has specified an entry and exit VAT threshold based on which you will be liable to register for VAT. 

If your yearly turnover is over the entry threshold, you must register for VAT. Similarly, a VAT-registered freelancer, whose annual turnover is less than the exit threshold, is exempt from charging VAT.

If your freelancing involves the supply of goods, the entry and exit thresholds for your VAT registration are EUR 35,000 and EUR 28,000, respectively. In contrast, if you mainly deal with supplying services, the entry and exit thresholds for VAT registration are EUR 24,000 and EUR 19,000. If you conduct any other economic activities, the entry and exit thresholds for VAT registration are EUR 20,000 and EUR 17,000.

If you're in Malta and acquire goods from other EU countries, and their value exceeds EUR 10,000, you are liable to register and pay for VAT.

Once you've determined that you're liable for VAT registration, you need to report VAT once every three months to the Commissioner for Revenue. Depending on your yearly turnover, you may be required to report VAT monthly as well.

Related: Steps to register and start working as a freelancer in Malta.

How to register for VAT in Malta?

Wondering what documents you need to register for VAT in Malta?

  1. A copy of your I.D. Card/Passport
  2. Identification documents of your fiscal representative (if they are representing you)
  3. If you have a registered freelancing practice, a copy of the memorandum and articles of association

You can apply for VAT registration using the CFR Registrations Online Services; however, you need a Maltese e-ID to access the CFR Online Services portal. If you are not a Maltese citizen or don't have access to a Maltese e-ID, you must first complete form 1 from the Revenue Commissioner's website requesting access to VAT services. If you would like to appoint a tax paying Maltese citizen to submit VAT returns on your behalf, you can use form 2 from the Revenue Commissioner's website. This representative will need to fill out form 3. 

If you are a permanent resident of Malta, you do not need a fiscal representative; however, if you are an expat freelancer looking to sell your goods or services in Malta, you require a fiscal representative to conduct taxable activities in Malta.

You will be VAT-registered from the day you submit the registration form. The office of Revenue Commissioners will inform you if your application was successful in a few days. From this date forward, you must pay VAT to the Maltese government.

Alternatively, you can register with the Mini One-Stop Shop (MOSS system). It is an EU-wide tax system that allows you to consolidate all of your EU VAT in one single tax return. This scheme is optional but especially useful if you have customers in multiple EU countries, including Malta. MOSS allows you to avoid registering in each member state of consumption. To learn more, click here.

Lastly, you can hire an accountant or agency to handle your VAT returns and dealings with the Office of the Commissioner for Revenue. Xolo provides services like Xolo Go and Xolo Leap, which help with precisely this and any other VAT concerns you may have.

Financial Obligations of VAT Registered Freelancers in Malta

After registering for VAT, you must begin:

  • Charging the appropriate VAT rate to your customers.
  • Filing VAT returns and paying any VAT owed to the Office every three months.
  • Maintaining VAT records and a VAT account for at least six years.
  • Keeping all purchase bills, invoices, and records of transactions.
  • Keeping a running total of their VAT account.

You are also required to physically or digitally maintain your financial records for six to ten years. These records include: 

  • Copies of invoices you send out and receive
  • Copies of self-billing agreements and names addresses, and VAT numbers of self-billing sellers.
  • Notes (debit/credit)
  • All financial records of imports and exports.
  • Record of bank statements, balance part of the checks (stubs), and paying-in slips in addition to your VAT account.

You must format your invoices appropriately for them to be valid. They should include:

  1. The date of issue, a unique sequential number
  2. Name, address and VAT identification number of the supplier and the person who received the goods or services
  3. The quantity and type of goods or the extent or nature of rendered services
  4. Date of supply, date of payment
  5. The taxable value that is exempt, the unit price exclusive of tax, and an indication of any discounts if offered 
  6. Applied VAT rate, the VAT amount payable
  7. If the customer receiving your product creates the invoice, "Self Billing" must be mentioned
  8. If the VAT is chargeable when the payment is received, mention "Cash Accounting"
  9. If your customer is liable for paying VAT instead, mention "Reverse-Charge”

The MOSS service allows you to account for VAT in one consolidated online portal rather than submitting VAT returns to every country you conduct business with. For VAT MOSS, you need to maintain appropriate VAT records for a minimum of six years and a maximum of ten years.

At Xolo, we can help you to future-proof these vital financial records by storing and maintaining them electronically in our servers for as long as you need them.

How can Xolo help?

Learning all the Maltese tax guidelines can be challenging, especially if you’re a sole proprietor and in charge of several aspects of your business. Luckily, at Xolo, we offer a range of solutions that can handle all the paperwork and legal jargon, allowing you to focus on your core competencies.

  • Xolo Go is a quick and efficient way for freelancers who don't have a registered LLC or sole proprietorship to invoice clients legally. 
  • Signing up takes only 10 minutes, and once you do, taxation, corporate compliance, and all the tricky VAT calculations are all automatically taken care of in the background!
  • We charge a flat rate of 5% from every withdrawal to your personal bank account. No surprise fees, no contracts, and no BS.

  • Xolo Leap is the easiest and most effective way to create your own company through Estonian e-Residency! Reduce time spent on mundane business administration and focus on what you do best!
  • We offer different tiers of service depending on the solopreneur's (or as we call them, Xolopreneur's) individual needs.
  • Once you get your business set up with Xolo Leap, you can literally run it from anywhere in the world! So whether you’re a freelancer looking to gain access to the EU market or a digital nomad who can’t be tied down - this is the place for you! 
  • Xolo Go is a quick and efficient way for freelancers who don't have a registered LLC or sole proprietorship to invoice clients legally. 
  • Signing up takes only 10 minutes, and once you do, taxation, corporate compliance, and all the tricky VAT calculations are all automatically taken care of in the background!
  • We charge a flat rate of 5% from every withdrawal to your personal bank account. No surprise fees, no contracts, and no BS.

Connect with us, and we’ll help you get your one-person business up and running in Malta in no time!