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
Rikors Nru 14/2024VG – XXX vs il-Kummissarju tat-Taxxi
XXX Ltd. appealed before the Administrative Review Tribunal against VAT provisional assessments issued on the 16 of January 2024 (notified under a notice dated 25 January 2024) covering VAT periods from Q1 2017 through Q4 2021. The Compliance & Investigations Directorate initiated a combined income tax and VAT audit and requested the production of records within 30 days. Following the taxpayer’s lack of timely cooperation, the Compliance & Investigations Directorate proceeded to issue assessments.
During the review stage, the Review Officer requested specific records on the 12th of October 2023 with a deadline on the 26th of October 2023. XXX Ltd submitted some documentation but failed to provide all the requested records, particularly for the years covering 2017 to 2019. The Tribunal highlighted that where bank statements are requested formal and complete bank statements are required; spreadsheet exports without bank and company identifiers are inadequate. It also noted that VAT workings, reconciliations, extended trial balances, and full sales/purchase invoices should cover all years under review, not just selected years.
The taxpayer argued the assessments were based on a misunderstanding of its business and on undisclosed third party statements and maintained that its expenditure and records were real and properly documented. It also invoked rights to be informed of the audit’s scope and reasons.
The Commissioner opposed the appeal and, invoked Article 48(5) of the VAT Act to preclude the taxpayer from producing during the Tribunal proceedings documents it failed to provide within 30 days of written notice without reasonable excuse.
While acknowledging that taxpayers have a right to be informed of the audit’s scope and reasons, the Tribunal held that such rights do not suspend the taxpayer’s obligation to cooperate and to submit the requested documentation within the statutory timeframes. Finding no reasonable excuse for the non-compliance and noting the qualitative and completeness deficiencies in the documents provided, especially for the years covering 2017 to 2019, the Tribunal upheld the Commissioner’s objection.
Civil Court, First Hall
Rikors Nru 762/2024 DC – Kummissarju tat-Taxxa u d-Dwana vs Rene Homgren
The Civil Court (First Hall) in Malta ordered the registration of Danish enforcement instruments for the recovery of a Danish tax debt owed by Rene Holmgren, thereby granting them the status of an enforceable title in Malta.
The request was made by the Commissioner for Tax and Customs (Malta) acting on a mutual assistance request from the Danish competent authority under Directive 2010/24/EU. The amount at issue was DKK 22,729.23 (circa €3,049.02), plus statutory interest.
The Commissioner, acting under Malta’s implementation of the Directive in Legal Notice 153 of 2012 (S.L. 460.08), applied to register the Uniform Instrument permitting enforcement so that it would constitute an executive title in Malta. The Court noted the procedural steps: the application was filed, the decree was listed, and the respondent was duly notified. The matter was heard on the 12th of November 2024, with the judgment being delivered on the 10th of July 2025 by Hon. Judge Dr. Doreen Clarke.
In its analysis, the Court reiterated that its function in these proceedings is strictly limited to verifying compliance with the formal requirements of the Directive and S.L. 460.08, namely that the standardised instrument contains the requisite information and that procedural safeguards (including notification) are observed. The Court emphasised that it is not its role to examine the substantive merits of the foreign tax claim or the instrument; any such challenge must be brought before the courts of the applicant State.
Finding that the formal requirements were satisfied, that the Uniform Instrument contained the required particulars, and that the respondent raised no objection, the Court ordered the registration of the executive title. As a result, the Danish instruments now constitute an enforceable title in Malta, enabling the Maltese authorities to proceed with enforcement against the debtor for the amounts owed to Denmark.
Further Judgements
During this past quarter, there were other cases which was decided by the Civil Court, First Hall:
Rikors Guramentat Nru: 1235/2019MH – Steven Delicata, David Agius u Hollywood Caterers Limited vs Kummissarju tat- Taxxi.
Rikors Guramentat Nru: 1310/24 FDP – Kummissarju tat-Taxxi vs Suzanna Leigh Woods.
Court of Appeal (Civil & Superior Jurisdiction)
Appell Numru 44/2014 LM – Concorde Developments Limited vs Direttur Generali (Taxxa fuq il-Valur Mizjud)
Concorde Developments Limited acquired a site in Mellieħa in 2004 intending to demolish the existing structure, construct a new block (the Concorde Building), and dispose of the resulting units by way of sale. That initial plan, being an exempt without credit supply for VAT purposes, did not give rise to input VAT recovery.
In 2012, Concorde applied for and was granted a VAT registration under Article 10 with effect from 1st January 2008, describing its economic activity as property letting. It then claimed input VAT of €73,910.68 for the period covering 2008 to 2012 on development and related costs.
Following a credit control exercise, the VAT Department rejected most of the claim. It relied on objective indications that the original intention was to sell property, and it found that only the subsequent decision to lease could support such deduction. It also identified significant documentary deficiencies, including documents not qualifying as tax invoices, invoices addressed to individuals rather than the company, and items falling outside the relevant periods.
Concorde Developments argued that the change in intended use entitled it to recover the full development input VAT, invoking EU principles of VAT neutrality and preparatory acts. It also challenged administrative penalties and interest as disproportionate given its good faith.
The Administrative Review Tribunal partially upheld the appeal, accepting the deduction only to the extent that it is supported by compliant documentation and linked to units actually leased. On further appeal, the Court of Appeal (Inferior Jurisdiction) confirmed that, given the accepted retroactive registration, the company was a taxable person as from 1st January 2008. However, the right to deduct was confined to the objectively evidenced taxable use, specifically, two units: the commercial premises “Gusti Siciliani” (from 7 December 2012) and Flat 2 (from 3 July 2013).
Crucially, the Court endorsed the Tribunal’s application of EU law consistent adjustments and attribution framework for capital goods. Input VAT could be recovered only to the extent directly attributable to the proven taxable leasing, supported by proper tax invoices, and then spread and adjusted in accordance with Maltese rules transposing Articles 185–189 of Council Directive 2006/112/EC. The broader claim over the entire block was therefore rejected. The Court also confirmed that penalties for over-claimed input VAT arise by statute and are not dependent on bad faith, subject to recalculation with the revised assessment. The Director General was ordered to finalise the reassessment within 30 days, with costs borne by Concorde.
Court of Magistrates (Criminal Judicature)
Il-Pulizija vs Romedan Said Ali Taha, Kaz Dwana Nru 238/2019
Romedan Said Ali Taha faced two sets of charges arising from seizures of duty unpaid cigarettes, each relating to excise duty, import duty, and VAT. The first incident occurred on the 29th of July 2018 at the Floriana Sunday Market, where Customs officials seized Business Royals cigarettes. The second incident took place on the 11th of April 2019 in Floriana, when Police, responding to reports of a domestic dispute, recovered Marlboro and Business Royals cigarettes hidden in nearby public areas. In both cases, the Authorities recorded the valuation and tax computations covering excise, import duty, and VAT, and the VAT Department issued Letters to Prosecute.
The prosecution alleged that the accused knowingly possessed, received, kept, or otherwise participated in the carriage, concealment, or deposit of unstamped cigarettes with intent to defraud the Government of duties and taxes, contrary to the Customs Ordinance and the Excise Duty Act. The defence denied ownership or control, contending that the goods did not belong to him, pointing to the role of Mona Ibrahim and emphasising material inconsistencies in her statements and testimony.
The Court recorded the withdrawal of the 2018 charge following the accused’s payment of an administrative penalty to Customs and abstained from further action on that count. As to the 2019 incident, the Court held that while the State proved the nature of the goods and their untaxed status, thereby confirming the tax exposure including VAT, the prosecution did not prove beyond reasonable doubt that the cigarettes were possessed or controlled by the accused. The Court’s analysis stressed that, even under the burden framework of Article 77 of the Customs Ordinance, criminal liability still requires reliable evidence linking the accused to the specific contraband. Here, the case relied heavily on the testimony of Mona Ibrahim, which the Court found inconsistent and insufficiently corroborated.
On outcome, the Court acquitted the accused of the 2019 charge and, notwithstanding the withdrawal of the 2018 count, ordered the confiscation of the seized cigarettes in favour of the State under Article 60 of the Customs Ordinance.
The judgement reinforces that VAT and excise consequences arise on contraband cigarettes, even where criminal liability is not established, and that illegal goods are subject to confiscation regardless of acquittal.
Further Judgements
During this past quarter, there was another case which was decided by the Court of Magistrates in its jurisdiction as a Court of Criminal Judicature:
Il-Pulizija vs Piero Di Bartolo u Trafford Vella, Kaz Dwana Nru 1948/24.
Chapter 03 EU News
Continued growth in revenue and registrations confirms success of reformed EU VAT rules for e-commerce.
On the 23rd of July 2025, the European Commission reported that Member States collected over €33 billion in VAT through the EU’s e-commerce systems (OSS and IOSS) in 2024, a 26% increase on 2023 and nearly €88 billion since their launch in 2021. Registrations also rose to more than 170,000 businesses, underlining the success of the reforms in simplifying compliance and securing revenues, with further changes expected under the upcoming VAT in the Digital Age (ViDA) package and EU Customs Reform.
European Commission Launches Public Consultation on VAT Rules for Travel and Tourism Sectors
On the 24th of July 2025, the European Commission launched a 12-week public consultation inviting stakeholders to modernise VAT rules within the travel and tourism sectors covering the special VAT scheme for travel agents, passenger transport services, and related distortions in the current framework. The review, aiming to better reflect digital sales trends, intra-EU transport developments, and the effects of Brexit, runs until mid-October with the goal of delivering a proposal by end-2026.
ViDA: Implementation strategy to support businesses and Member States
On the 24th of September 2025, the European Commission unveiled its “VAT in the Digital Age” (ViDA) implementation strategy, setting out a roadmap to modernise VAT across the EU. The plan introduces new digital reporting obligations, addresses VAT challenges in the platform economy, and seeks to simplify cross-border compliance via a single VAT registration. Over the next decade, ViDA is projected to deliver between €172 billion and €214 billion in economic gains, including about €51 billion in cost savings for businesses.
VAT Committee Meetings
No VAT Committee Meetings took place during this time.
VAT Expert Group Meetings
No VAT Expert Group Meetings took place during this time.
Group on the future of VAT Meetings
No Group on the future of VAT Meetings took place during this time.
Chapter 04
CJEU DecisionLatest Selection Update
C-726/23 – SC Arcomet Towercranes SRL v. Directia Generala Regionala a Finantelor Publice Bucuresti
Arcomet Towercranes SRL, a Romanian subsidiary in a crane rental group, operated under a 2012 services agreement with its Belgian group company, Arcomet Service NV. The Belgian company centralised key commercial and operational functions, strategy and planning, supplier framework negotiations, financing terms, engineering, central fleet, and quality and safety management, and assumed principal risks. Remuneration was settled annually by reference to OECD transfer pricing guidelines (TNMM) to align the Romanian entity’s operating margin within a 0.71% to 2.74% range; amounts above 2.74% were invoiced by Belgium, with reverse charge applied in Romania.
Following a tax audit, the Romanian authorities denied input VAT on those invoices on the basis that Arcomet Romania had not proved that services were actually supplied or used for its taxable activity; one of the annual settlement invoices was also treated by the taxpayer as outside the scope of VAT. The Bucharest Tribunal dismissed the taxpayer’s challenge. On appeal, the Court of Appeal in Bucharest referred two questions to the CJEU.
The two referred questions to the CJEU by the national Court of Romania were:
1.Whether an intra-group year end settlement determined by OECD transfer pricing methods can be consideration for a taxable supply of services under Article 2(1)(c) of the VAT Directive; and
2.Whether, for deduction under Articles 168 and 178, tax authorities may require documents beyond invoices to evidence the existence and use of the services.
The CJEU held that, assessing economic and commercial reality, there was a reciprocal legal relationship with identifiable services conferring a specific advantage on the subsidiary. A remuneration set using transfer pricing methods can constitute consideration where there is a direct link between the services supplied and the amount paid. The fact that remuneration is profit linked, varies by year, or is derived from OECD arm’s‑length methods does not, in itself, sever that direct link. The Court distinguished this situation from passive shareholding, noting active management and service provision connected to taxable transactions.
As for the deduction, the Court ruled that tax authorities may require evidence beyond invoices to verify that services were actually supplied by another taxable person and used for the taxable person’s own taxed transactions, provided such requests are necessary and proportionate. Authorities may not condition deduction on demonstrating the economic necessity or profitability of the input. The judgment noted that the invoices at issue lacked sufficient detail on the nature and scope of services and pricing methodology, which justified seeking proportionate supporting documentation.
Accordingly, the CJEU concluded that the intra group remuneration at issue constitutes consideration for a taxable supply. Input VAT may be deducted if the taxpayer substantiates actual supply and use with proportionate supporting evidence beyond the invoice.
Further Judgements
The following judgments have been decided by the CJEU throughout the pass quarter:
1.C-808/23 – Högkullen AB v Skatteverket – Decided on the 3 of July 2025. rd
2.C-733/23 – Beach and bar management’ EOOD V Nachalnik na otdel ‘Operativni deynosti – Burgas pri Direktsia ‘Operativni deynosti’ pri Tsentralno upravlenie na Natsionalna agentsia za prihodite – Decided on the 3 of July 2025. rd
3.C-605/23 – ‘Ati-19’ EOOD v Nachalnik na otdel ‘Operativni deynosti’ – Sofia v Glavna direktsia ‘Fiskalen kontrol’ pri Tsentralno upravlenie na Natsionalna agentsia za prihodite – Decided on the 3 of July 2025. rd
4.C-276/24 – KONREO, v.o.s., acting as insolvency administrator of FAU s. r. o., v Odvolací finanční ředitelství – Decided on the 10 of July 2025 th
5.C-602/24 - W. sp. z o.o., v Dyrektor Izby Administracji Skarbowej w W – Decided on the 1 of August 2025. st
6.C-433/24 - Galerie Karsten Greve v Ministère de l’Économie, des Finances et de la Souveraineté industrielle et numérique – Decided on the 1 of August 2025. st
7.C-375/24 – Keesing Deutschland GmbH v Finanzamt für Körperschaften II - Decided on the 1 of August 2025. st
8 C 794/23 Fi Ö i h P G bH D id d h 1 f A 2025 st
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