VAT Grouping


31 May 2018

VAT Grouping Financial Services and Gaming Industries


In presenting the Malta Budget 2018, the Minister for Finance announced the introduction of VAT Grouping – a fresh concept in Malta, which allows for separate legal persons, connected together by specific criteria to be grouped together as a single taxable person for VAT purposes.

The legal notice outlining the rules entitled ‘Value Added Tax (Regulation as a Single Taxable Person) Regulations, 2018, was published on 22nd May 2018 as legal notice 162 of 2018. These regulations came into force on 1st June 2018.

Key Features

Two or more legal persons established in Malta will be allowed to register as a single taxable person under the VAT Grouping mechanism provided the following conditions are satisfied:

  1. at least one of the applicants must be a taxable person licensed or recognized by the MFSA or the MGA as prescribed;
  2. each of the applicants must be bound to each of the other by financial links, organizational links and economic links:
    1. a financial link is deemed to exist

where the same legal/physical

person/s, hold/s directly or indirectly more than 90% of at least two of the following:

  • the voting rights or equivalent interests;
  • the entitlement to profits available for distribution; or
  • the entitlement to surplus assets available for distribution on a winding up or equivalent event. organizational link is deemed to exist where the applicants have a shared management structure, whether in whole or in part. economic link is deemed to exist where:

  • the applicants carry out the same trading activity;
  • the applicants operate in the same industry;
  • the applicants’ activities are interdependent or complementary.

iii. one member of the group carries out activities which are wholly or substantially to the benefit of any one or more of the other members.

Applicants cannot be members of more than one VAT Group at the same time.

The VAT Group will be allocated one VAT identification number and any individual VAT identification number of the members, if any, will be cancelled from the date of registration as a VAT Group or from the date of joining an existing VAT Group.

The members of the VAT Group must nominate one member of the group as a Group Reporting Entity to exercise all the rights and discharge all obligations of the VAT Group.

Any intra-group supplies would fall out of the scope of VAT since a taxable person cannot charge tax to itself.

VAT Grouping mechanism may provide an opportunity for tax optimization in the gaming and financial services industries.

For further information kindly contact