VAT Grouping – The Definitive Summary for simplifying VAT Compliance

The introduction of VAT Grouping legislation in Malta has introduced a valuable fiscal tool for licensed operators, enhancing their cash flow and, in some cases, optimizing their VAT position. This regime has been particularly beneficial for companies in the financial services and gaming sectors.

Benefits of VAT Grouping

One of the primary advantages of VAT grouping is that transactions between group members are disregarded for VAT purposes, meaning no output VAT is charged on these intra-group supplies. Additionally, the group operates under a single VAT number, simplifying compliance with only one VAT return required to cover all transactions within the group.

Eligibility Criteria for VAT Grouping

To qualify for VAT grouping in Malta, the following conditions must be met:

1. License or Recognition: At least one applicant must be a taxable person licensed or recognized under one of the following Acts:
   • The Banking Act
   • The Financial Institutions Act
   • The Gaming Act
   • The Insurance Business Act
   • The Insurance Distribution Act
   • The Investment Services Act
   • The Lotteries and Other Games Act
   • The Retirement Pensions Act
   • The Securitisation Act
2. Links Between Applicants: All applicants must be connected through financial, organizational, and economic links:
   • Financial Links: Over 90% of voting rights, profit entitlement, or assets must be directly or indirectly held by the same person or persons.
   • Organizational Links: The applicants should share a management structure, wholly or partially.
   • Economic Links: The applicants’ activities should be of a similar nature, interdependent, or complementary, with one member’s activities significantly benefiting others.
3. Compliance: At the time of application, all applicants must have submitted all required returns and notices under the VAT Act and the Income Tax Management Act, and settled any outstanding tax liabilities, including interest and penalties.

How to Check Your Eligibility

To apply for VAT Grouping, use the following link: VAT Grouping Application. Ensure that you have a Malta VAT number; if not, apply for a VAT Identification number exclusively for VAT grouping purposes.

Once approved, individual VAT numbers of the group members will be deactivated, and a single Group VAT Number will be issued.

Anti-Avoidance Measures

Malta’s VAT grouping rules incorporate anti-abuse measures in line with the European Court of Justice decision in the Skandia case (C-7/13).

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