VAT Registration Malta: Article 11 (Exempt)
This article aims to clarify the key points for taxable persons registered under Article 11 and Article 10 of the VAT Act, particularly in light of the changes effective from 1st July 2021.
Taxable Persons Registered Under Article 11
VAT Registration for taxable persons under Article 11 have specific obligations at the beginning of each calendar quarter. They must assess whether their turnover during the previous 12 months exceeded the Entry Threshold. This exercise determines their eligibility to remain registered under Article 11.
Key Update: As of 1st July 2021, the Entry Threshold has been adjusted to €30,000, replacing the previous thresholds of €24,000 or €20,000. This means that if a person’s turnover does not exceed €30,000, they can remain registered under Article 11. However, there is always an option to convert registration to Article 10 at any time, should they choose to do so.
Taxable Persons Registered Under Article 10
For taxable persons VAT registered under Article 10, there are different rules for changing their registration status. A person cannot switch to Article 11 registration unless they have been registered under Article 10 for a full 24 calendar months.
Key Update: From 1st July 2021, the Exit Threshold, which determines eligibility for switching from VAT Registration Article 10 to Article 11, has been set at €24,000, replacing the previous thresholds of €19,000 or €17,000. If a person’s turnover over the past 12 months does not exceed €24,000, they can opt to change their registration to Article 11.
Adjustments and Liabilities
When switching from Article 10 to Article 11, taxable persons must be aware of their liabilities regarding input VAT adjustments:
- Stock Adjustments: Any input VAT claimed on stock forming part of their economic activity must be adjusted as per the 2nd Schedule to the VAT Act.
- Capital Goods Adjustments: Input tax credits claimed with respect to capital goods are subject to adjustments under the Value Added Tax (Adjustments Relating to Input Tax on Capital Goods) Regulations (S.L. 406.12).
FAQs
Q1: What is the Entry Threshold for VAT registration under Article 11 as of 1st July 2021? A1: The Entry Threshold for VAT registration under Article 11 is €30,000.
Q2: Can I switch from Article 10 to Article 11 before 24 months? A2: No, you must be registered under Article 10 for a full 24 calendar months before opting to switch to Article 11.
Q3: What is the Exit Threshold for switching from Article 10 to Article 11? A3: The Exit Threshold for switching from Article 10 to Article 11 is €24,000.
Q4: Are there any adjustments required when switching from Article 10 to Article 11? A4: Yes, adjustments for any input VAT claimed on stock and capital goods are required.
Q5: Can I switch from Article 11 to Article 10 at any time? A5: Yes, a person registered under Article 11 can choose to convert their registration to Article 10 at any time.
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