Reverse charge VAT on services received from EU B2B suppliers in Malta

Reverse charge VAT on services received from EU B2B suppliers in Malta

When a business established in Malta buys services from a taxable person established in another EU Member State, the supplier normally issues its invoice without VAT and the Malta recipient accounts for the Malta VAT itself on its own VAT return, deducting the same amount as input tax where its activity allows deduction. This Guide covers the rate to apply to that self-charge and the MTCA pages that govern registration and return filing. Figures are for tax year 2026. The MTCA VAT Rates page cited below does not itself state a tax year; it states the rates as currently applicable.

Who this is for

Persons carrying on an economic activity in Malta who receive services from suppliers established in another EU Member State. It is not for private individuals buying services for their own personal use, not for goods (intra-Community acquisitions of goods are a different mechanism), and not for services received from suppliers outside the EU.

Rates, thresholds and deadlines

Rates, thresholds and deadlines (https://mtca.gov.mt/business-tax/vat1/vat-compliance/vat-rates/vat-rates)

What	Value	Note
Source	all figures below	https://mtca.gov.mt/business-tax/vat1/vat-compliance/vat-rates/vat-rates
Standard VAT rate	18%	Page: unless a reduced rate or exemption specifically applies, the standard rate of 18% is applicable on any taxable supply within the scope of VAT taking place in Malta
Reduced VAT rates	12%, 7%, 5% or 0%	Page: "The reduced rates applicable in Malta are 12%, 7%, 5% or 0%"

• Standard VAT rate — 18% % (Page: unless a reduced rate or exemption specifically applies, the standard rate of 18% is applicable on any taxable supply within the scope of VAT taking place in Malta)
• Reduced VAT rates — 12%, 7%, 5% or 0% (Page: "The reduced rates applicable in Malta are 12%, 7%, 5% or 0%")
• Rate to self-charge — The rate the recipient self-charges is the Malta rate that the same service would carry if supplied in Malta, so the standard rate in the table above applies unless one of the reduced rates or an exemption in the Fifth Schedule to the VAT Act covers that service. (Fifth Schedule to the VAT Act)

What this draft does not state

• The registration threshold and the registration article that applies to a person who only receives services from EU suppliers: not taken from an allowed host for this draft, so no figure is given here. The reviewing accountant should read the MTCA Registrations and De-Registrations FAQs at https://mtca.gov.mt/docs/default-source/documents/business-tax/vat/faqs/registrations-de-registrations-faqs.pdf?sfvrsn=7f879b9a_2 and insert the figure and article number from that page.
• The VAT return period length, the filing deadline and the payment deadline: not taken from an allowed host for this draft, so no dates or periods are given here. The reviewing accountant should read https://mtca.gov.mt/personal-tax/self-employed/vat-return-cycle and insert the dates from that page.
• Which reduced rate, if any, attaches to a particular service: the VAT Rates page lists the rates but the item-by-item allocation sits in the Fifth Schedule guidance at https://mtca.gov.mt/business-tax/vat/vat/guidelines.

The method, step by step

1. Confirm the recipient's VAT status and register if not already registered, using MTCA's Register for VAT service at https://mtca.gov.mt/1/top-level-menu-bar/eservices/vat/register-for-vat. The registration article that applies, and any threshold attached to it, must be read off the MTCA Registrations and De-Registrations FAQs before this step is completed.
2. Give the supplier the Malta VAT identification number so that it invoices without charging its own country's VAT, and keep the supplier's invoice showing the untaxed amount as part of the VAT records.
3. Determine the Malta rate for that service from the VAT Rates page cited in the table above, applying the standard rate unless a reduced rate or an exemption specifically applies, and check the service against the Fifth Schedule guidance at https://mtca.gov.mt/business-tax/vat/vat/guidelines.
4. Compute the VAT on the taxable value of the service at that rate and record it as output tax in the VAT account for the period in which the service is received.
5. Claim the same amount as input tax in the same VAT return to the extent that the recipient's activity gives a right of deduction; where the activity is exempt without credit, the self-charged VAT is a real cost and is not recovered.
6. File the VAT return and pay any balance through MTCA's VAT Online Services at https://mtca.gov.mt/1/top-level-menu-bar/eservices/vat/vat-online-services, on the cycle set out at https://mtca.gov.mt/personal-tax/self-employed/vat-return-cycle.
7. For the place-of-supply treatment of the mirror situation, where a Malta business supplies rather than receives cross-border services, read MTCA's note "Supplying Services to Taxable Persons Established in the EU and Taxable and Non-Taxable Persons Established Outside the EU" at https://mtca.gov.mt/docs/default-source/documents/business-tax/vat/faqs/supplying-services-to-taxable-persons-established-in-the-eu-and-taxable-and-non-taxable-persons-established-outside-the-eu.pdf?sfvrsn=f847fb5_2.

Ask the client first

• Is the client registered for VAT in Malta, and under which article of the VAT Act is the registration held?
• Is the EU supplier a taxable person acting as such, and did it quote a valid VAT identification number on the invoice?
• What exactly is the service, in enough detail to decide whether a reduced rate or an exemption applies rather than the standard rate?
• Does the client's own activity give a full right to deduct input tax, a partial right, or none, since that decides whether the self-charge is cost-neutral?
• Does the client have a fixed establishment outside Malta that received the service instead of the Malta establishment?
• Was the service invoiced with foreign VAT already charged, which would need to be taken up with the supplier rather than self-charged in Malta?

When to refuse or refer

• Goods bought from EU suppliers, including intra-Community acquisitions and distance sales, which run on a different mechanism from the one in this Guide.
• Services received from suppliers established outside the EU.
• Services received by a private individual or by a body with no economic activity.
• Land and property services, passenger transport, admission to events, restaurant and catering, and short-term hire of means of transport, where the place of supply follows special rules not covered here.
• Exempt without credit sectors, in particular financial services, insurance, health, education and gambling, where the self-charged VAT is irrecoverable and partial attribution has to be computed.
• Any case where a registration threshold, a filing date or a payment date has to be stated, until those figures are read off the MTCA pages named above, since this draft does not carry them.
• Penalties, interest and corrective returns for past periods.

Sources

• https://mtca.gov.mt/business-tax/vat1/vat-compliance/vat-rates/vat-rates (the page the rates table cites)
• https://mtca.gov.mt/business-tax/vat/vat/guidelines (Fifth Schedule rate and exemption guidance referred to in the method)
• https://mtca.gov.mt/1/top-level-menu-bar/eservices/vat/register-for-vat (registration step)
• https://mtca.gov.mt/1/top-level-menu-bar/eservices/vat/vat-online-services (filing and payment step)
• https://mtca.gov.mt/personal-tax/self-employed/vat-return-cycle (return cycle, figures still to be read off by the reviewer)
• https://mtca.gov.mt/docs/default-source/documents/business-tax/vat/faqs/registrations-de-registrations-faqs.pdf?sfvrsn=7f879b9a_2 (registration article and threshold, still to be read off by the reviewer)
• https://mtca.gov.mt/docs/default-source/documents/business-tax/vat/faqs/supplying-services-to-taxable-persons-established-in-the-eu-and-taxable-and-non-taxable-persons-established-outside-the-eu.pdf?sfvrsn=f847fb5_2 (cross-border services note)

Drafted by OpenAccountants. Not yet reviewed or approved by a named accountant.