Malta Tax and Customs Administration News
No news was published by the Malta Tax and Customs Administration with regards to Value Added Tax during this calendar quarter.
Legal Notices
No Legal Notices with regards to Value Added Tax legislation were published during this calendar quarter.
Acts
No Acts with regards to Value Added Tax legislation were published during this calendar quarter.
Chapter 02
Local Court Decisions
Administrative Review Tribunal
XXX v Kummissarju tat-Taxxa fuq il- Valur Mizjud – 226/2012VG –
Decided on the 13 of October 2025 th
The taxable person operated transport services for disabled persons via TDP cooperative, including school transport (exempt with credit) and ambulance services (exempt without credit). The Department disallowed substantial input VAT due to non compliant documentation and separately flagged undeclared intra Community acquisitions based on VIES data.
The appeal contested provisional assessments reversing input VAT for 2008–2009 and assessing VAT on undeclared ICAs for 2010. The taxpayer argued the costs furthered his economic activity and that compliant invoices could be produced or corrected; however, many claims rested on manual fiscal receipts or invoices not compliant with the Twelfth Schedule, and follow up evidence was not substantiated before the Tribunal. The inspectors computed partial attribution percentages for mixed supplies, but these were not applied because irregular purchase invoices materially exceeded the disallowance that would have resulted from apportionment alone.
The Tribunal reaffirmed that the right to deduct input VAT is conditional and documentation driven: the taxpayer must retain and produce compliant tax invoices, and the Commissioner is not required to obtain documents from suppliers to cure the taxpayer’s deficiencies. It further confirmed that ambulance transport is exempt without credit as a matter of law, precluding related input VAT even if a correct invoice were produced, and noted timing discipline, tax invoices dated outside a VAT period cannot be claimed in an earlier period.
For operators making mixed supplies, this decision underscores three practical points. First, compliant tax invoices are a precondition to deduction and will take precedence over any pro rata calculation where documentation is non compliant. Second, legal classification matters: school transport via TDP was treated as exempt with credit, whereas ambulance transport is exempt without credit by law. Third, VIES discrepancies must be periodised correctly, where ICAs are identified, assessments should align to the periods in which acquisitions occurred, not bundled into a later single period.
Other Judgements
XXX vs Kummissarju tat-Taxxa u d-Dwana – 175/2012VG – Decided on the 7 of October 2025 th
XXX vs Kummissarju tat-Taxxa u d-Dwana – 210/2012VG – Decided on the 7 of October 2025 th
XXX v Kummissarju tat-Taxxa fuq il- Valur Mizjud – 133/2012VG – Decided on the 7 of October 2025 th
XXX v Kummissarju tat-Taxxa fuq il- Valur Mizjud – 81/2012VG – Decided on the 11 December 2025 th
XXX v Kummissarju tat-Taxxa fuq il- Valur Mizjud – 242/2012VG – Decided on the 13 of October 2025 th
Civil Court, First Hall
Judgements
173/25 FDP – Kummissarju tat-Taxxi vs Digisec Media Limited
91/24 FDP - Il Kummissarju tat-Taxxa u d-Dwana vs Herald Schildenfeld – 6th November 2025 – Judge Francesco Depasquale – This case involved the enforcement for payment of tax with foreign tax authority as provided through Directive 2010/24/EU concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures.
Court of Appeal (Civil & Superior Jurisdiction)
No cases were decided and published during this calendar quarter by the Court of Appeal in both jurisdictions.
Court of Magistrates (Criminal Judicature)
This quarter, cases which were decided by the Court of Magistrates (Criminal Judicature) predominantly involved charges brought against taxable persons for failing to issue a fiscal receipt as prescribed by the Malta VAT Act.
VRET/7618/99/A - Il – Pulizija vs Kleaven Cassar – 5 November 2025 – Mag Yana Micallef Stafrace th
766/2023 – Il-Pulizija vs John Bonello – 3 November 2025 – Mag Donatella M. Frendo Dimech rd
2025/157269 – Il-Pulizija vs Raymond Buhagiar – 26 November 2025 – Mag. Yana Micallef Stafrace th
1/2025/157165 – Il-Pulizija vs John Bonello – 18 November 2025 0 Mag Dr. Astrid May Grima th
46/2023 – Il-Pulizija vs Sandro Portelli – 25 November 2025 – Ma. Dr. Donatella M. Frendo Dimech th
2025/157279 – Il-Pulizija vs Oreste Gatt – 26 November 2025 – Mag. Dr. Yana Micallef Stafrace th
Chapter 03 EU News
EU VAT Derogations
A new European Commission report maps how EU Member States apply VAT derogations and finds marked divergence in both scope and frequency, with potential implications for neutrality and competition in the single market. The analysis indicates that certain Member States make extensive use of rate derogations, while others rely on them sparingly, contributing to uneven outcomes across sectors and borders. The report also notes limited take-up of measures that would operate effectively across borders, underscoring coordination challenges. In response, the Commission points for the need of clearer criteria, stronger transparency, and closer alignment of VAT policy to support a more consistent application of the rules.
Commissioner Wopke Hoekstra hosts Implementation Dialogue on VAT in the Digital Age (ViDA)
The Commission hosted an implementation dialogue on VAT in the Digital Age (ViDA), bringing together business and association representatives to discuss practical challenges and opportunities. Participants stressed the need to avoid Member State-by-Member State divergence and called for clear, timely Commission guidance to support consistent application across core ViDA pillars, including einvoicing and digital reporting.
Stakeholders also highlighted opportunities to reduce compliance frictions by extending one-stop mechanisms to a broader set of cross-border transactions, improving the functionality and data quality of VIES, and leveraging automation and standardised data formats. The discussion underscored the importance of coordinated timelines, interoperable technical specifications, and early clarity on documentation and onboarding to minimise costs for businesses operating in multiple jurisdictions.
E-commerce: 150 EUR customs duty exemption threshold to be removed as of 2026
EU Member States reached an agreement to abolish the €150 customs duty exemption for e-commerce imports from non-EU countries starting in July 2026, changing how small parcels are treated at the border. The removal of the threshold is intended to level the playing field between e-commerce sellers importing many small parcels and traditional retailers importing goods in bulk. A temporary solution will be developed to collect duties as early as possible in 2026, ahead of the full implementation of the EU Customs Data Hub and Customs Agency expected in 2028 which will enable precise duty calculation.
EU introduces customs duties on low-value e-commerce packages
The EU is introducing a customs duty on low-value e-commerce packages entering the Union, ending the duty-free treatment for parcels valued under €150. A fixed customs duty of €3 per item will apply to goods imported from outside the EU with a value below €150, regardless of the total parcel value. The new duty is planned to take effect on 1 July 2026 as a transitional step toward abolishing the low-value exemption and reforming customs treatment for small parcels.
VAT Committee Meetings
128 Meeting held on the 17 of November 2025
Throughout the 128 Meeting, the VAT Committee discussed and issued various Working Papers which touched upon multiple VAT topics. VAT questions on specific VAT topics were raised by various Member States, including Italy, Cyprus and Belgium, whilst also discussing key areas of interest raised by the Commission itself for which Information Papers were issued.
One of of the Working Papers, particularly Working Paper 1114 discussed the CJEU case of Arcomet Towercranes together with its implications on transfer pricing in the VAT realm.
VAT Expert Group Meetings
41 Meeting held on the 7 of November 2025
The agenda for the 41 VAT Expert Group Meeting predominantly involved discussions on the VAT in the Digital Age Package’s Implementation, where the draft explanatory notes on Digital Reporting Requirements were reviewed and discussed, and the results of the Fiscalis Workshop in Madrid with regards to the Platform Economy were also noted. A quick state of play with regards to the Single VAT Registration platform and a secure IOSS system were also noted.
Group on the future of VAT Meetings
50 Meeting – 20 October 2025
During this meeting, the Group on the Future of VAT discussed key information points regarding the ViDA package, similar to those discussed by the VAT Expert Group.
Chapter 04
CJEU DecisionLatest Selection Update
T-646/24 - MS KLJUČAROVCI vs Republika Slovenija
MS KLJUČAROVCI (“MS”), a Slovenian company registered for VAT, acquired goods from suppliers in Germany and resold those goods to three Danish companies, providing its Slovenian VAT identification number to the German sellers. MS organised the transport of the goods directly from Germany to Denmark. In its Slovenian VAT returns and recapitulative statements, MS applied the triangulation simplification measure for triangular transactions, and in turn shifted the VAT liability to the Danish customers, without registering for VAT in Denmark. MS also issued invoices marked “Reverse charge”.
Under this simplification measure, a triangular transaction involving three operators in three Member States can exempt the intermediary from accounting for VAT on the intra-Community acquisition, transferring the liability to the final customer.
However, when the Slovenian tax authority sought information from the Danish tax administration under the EU cooperation regulation (Regulation 904/2010), it was informed that the three Danish companies had not actually acquired the goods, paid VAT, or maintained any premises in Denmark and were effectively missing traders. The goods were instead collected at storage or mixing facilities in Denmark on behalf of ANC Group, a Danish company associated with those three entities, meaning the commercial operation involved four operators in three Member States and a single transport from Germany to Denmark.
As a result, no VAT was paid in either Denmark or Slovenia on those acquisitions. Based on these findings, the Slovenian tax authority raised a VAT assessment against MS for those years, arguing that MS could not benefit from the simplification for triangular transactions because more than two supplies occurred within one transport operation and because MS knew or ought to have known that the transaction chain was part of a VAT fraud scheme.
The national court referred three questions to the General Court seeking clarification on the interpretation of Articles 41, 42, and 141 of Council Directive 2006/112/EC (“VAT Directive”).
In its deliberations, the General Court drew on established case law defining triangular transactions and the place of intra-Community acquisitions, emphasising that the concept of supply of goods within the VAT Directive does not require physical delivery to the buyer for ownership to be transferred. It held that Article 141(c) does not require physical receipt of the goods by the intermediary, so transporting the goods to the intermediary’s customer does not preclude satisfying that condition. Also, the intermediary’s awareness of the delivery arrangements does not affect compliance with Article 141(c).
However, the Court confirmed that EU law cannot be abused and that national authorities may refuse the benefits of the simplification where the taxable person knew or should have known that it was participating in VAT fraud.
While every effort was made to ensure that the content of this newsletter is accurate and reflects the current position at law and in practice, we do not accept any responsibility for any damage which may result from a change in the law or from a different interpretation or application of the local law by the authorities or the local courts. The information contained in the newsletter is intended to serve solely as guidance and any content of a legal nature therein does not constitute or should be interpreted as constituting legal advice. Consulting your tax practitioner is recommended in case you wish to take any decision connected to content of this newsletter.
Should you require further information on the above please contact Brandon Gatt on brandon@zampapartners.com