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Malta To Pay 2004 Car VAT Refunds

by Lorys Charalambous,, Cyprus

23 June 2015

Transport Malta has announced that the Government will be refunding the full amount of VAT paid on the registration tax to vehicle owners who had a vehicle registered between May 1 and December 31, 2004. The amount reimbursed will be less the grant paid last year to all vehicle owners who were eligible.

The payments are aimed at settling a dispute between taxpayers and the island's tax authority concerning the payment of VAT and registration duty under Malta's now-revoked illegitimate registration duty regime, which was replaced on January 1, 2009.

Malta's previous registration duty regime was found to contravene EU law. Under this regime, registration duty was included in the taxable base for the calculation of VAT. All cars were subject to a registration tax based on the vehicle's engine capacity. The rate applied to the vehicle's value, which was determined by Maltese authorities. However, unlike under the regime for new motor vehicles, there was a minimum amount of registration tax that had to be paid for used cars. Even if the application of the corresponding tax rate to the taxable value resulted in a smaller amount of tax liability the taxpayer would be required to pay this (larger) minimum amount.

The regime meant that imported cars impacted by the minimum registration tax requirement were placed at a disadvantage to second-hand cars already available on the local market that had depreciated to the extent that the value of the residual registration tax (included in the car's market value) had fallen below the minimum payable registration tax amount.

Transport Malta has confirmed that VAT repayments will be issued in one full and final settlement, as announced in the last Budget. The same process will be adopted in the following years, until all payments for the eligible applicants up until the end of 2008 are settled.

Transport Malta will be notifying in writing the applicants who were eligible for the earlier grant and who had registered a vehicle between May 1 and December 31, 2004. The amount will be paid to eligible applicants by check. In order to apply for the refund, vehicle owners who receive the notification by Transport Malta must verify their personal details, sign, and return the application form to Transport Malta to accept the conditions stipulated in the grant. The application form must be duly filled in, signed, and sent by post or submitted in person by not later than the July 31, 2015.

TAGS: tax | Malta | law | tax authority | VAT refunds

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