A new 12% Vat Rate to be added in the Tax Reports

Date: 15th May 2024 Purpose and Background Pursuant to the adopted on of the VAT Rates Directive (Council Directive (EU) 2022/542 of 5 April 2022), Malta adopted Legal Notice 231 of 2023 which amends the Eighth Schedule to the VAT Act (Chapter 406, Laws of Malta) resulting, with effect from 1st January 2024, in the application of a 12% VAT rate on several services, including services consisting of the care of the human body required to be delivered by a person in the exercise of any profession regulated by the Health Care Professions Act (Cap. 464), including services supplied in the course of a health studio business or similar business, but not including exempt supplies referred to in item 11 of Part Two of the Fifth Schedule. The reduced VAT rate of 12% shall apply on the afore-mentioned services where the date the tax on such services becomes chargeable in terms of the Fourth Schedule to the VAT Act falls on or acer 1st January 2024. The purpose of this document is for the Commissioner for Tax and Customs (‘CfTC’) to provide guidance, in conformity with article 75(2) of the VAT Act, on the application of the 12% reduced VAT rate on such supplies. These guidelines shall apply only in respect of assessing the VAT treatment of supplies from a Maltese VAT perspective which take place in Malta. Interpretation Items 11(1) and (2) of Part Two of the Fifth Schedule to the VAT Act provide for an exemption on the supply of medical care which is provided either by a person in the exercise of any profession regulated by the Health Care Professions Act or the Psychology Act, as well as the supply of medical care provided by such a person through a hospital or institution approved by the Minister for this purpose. It is pertinent to note that the above-mentioned items 11(1) and (2) do not cover all the supplies made by Health Care Professionals for the benefit of their parents and consequently, certain supplies made by Health Care Professionals may not qualify for the said exemption. Reason being that any such supplies must also qualify as “medical care” as defined in the Guidelines for the VAT treatment of Health Care Services published by the CfTC in order for the said exemption to apply.