VAT Grouping Regulations

By Virtue of L.N. 162, the newly implemented VAT Grouping regulations shall come into force as of 1st June 2018. VAT Grouping will enable members of a VAT Group to avoid irrecoverable VAT due on charges made between such members. Applicants forming the VAT Group will be required to be bound by financial, economic and organisational links.  Moreover, one of the applicants within the VAT Group must be a taxable person who is licensed or recognised by the Malta Financial Services Authority (MFSA) or the Malta Gaming Authority (MGA).

The members of a VAT Group shall nominate from amongst themselves the Group Reporting Entity and upon satisfaction of all eligibility conditions, the Commissioner shall issue a VAT identification number to the group.

Any supply of goods or supply of services made by one member of a VAT Group to another member of that VAT Group shall be disregarded for the purposes of the Act. In addition, supplies of goods or services provided by any of the members of the VAT Group to persons external to the said Group, are deemed to be carried out by the Group Reporting Entity. The VAT classification of such supplies affects the input VAT recoverability position of the Group Reporting Entity and therefore of the VAT Group as a whole.

Each member of a VAT Group shall be jointly and severally liable for any dues attributable to the Group Reporting Entity and tax avoidance and evasion measures have also been implemented within the regulations.

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