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.
The Maltese government applies three different VAT rates based on the type of goods and services you supply.
You can find more information on Maltese VAT rates and VAT-exempt services here.
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.
Wondering what documents you need to register for VAT in Malta?
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.
After registering for VAT, you must begin:
You are also required to physically or digitally maintain your financial records for six to ten years. These records include:
You must format your invoices appropriately for them to be valid. They should include:
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.
Connect with us, and we’ll help you get your one-person business up and running in Malta in no time!