VAT in Malta for the self-employed: Article 10, 11 or 12?

The three registrations, side by side

Article 12 is not an alternative to the other two for your sales in Malta. Many people who hold one are registered under Article 11 as well, which the Act provides for: an Article 11 person who supplies services to businesses in other EU countries registers under Article 12 in addition, and keeps Article 11.

Article 11: the small-undertaking exemption

Article 11 is the registration most freelancers start on. While your turnover from supplies made in Malta stays within €35,000 in a calendar year, measured without VAT and by supply date rather than invoice date, you do not charge VAT and you do not reclaim it. You file a single annual declaration, due 15 February for the year before; filed online, it carries no late-filing penalty until 22 February.

• It is a choice, not a default. Below the threshold you may register under Article 11 instead of Article 10. Some freelancers choose Article 10 anyway, for example to reclaim VAT on a large start-up cost or because their clients are VAT-registered businesses that reclaim the VAT you charge them.
• It starts when MTCA receives your application. An Article 11 registration takes effect from the first day of the month the application is received, or from when your activity starts if that is later. It does not reach back.
• Your Article 11 number is not a VAT identification number for EU purposes, which is why cross-border services bring Article 12 into the picture.

How the €35,000 is counted, and what happens the day you cross it, has its own guide: the Malta VAT threshold, explained.

Article 10: full VAT registration

Under Article 10 you charge VAT on your taxable supplies, normally at the 18% standard rate, reclaim the VAT on costs that go into them, and file a VAT return every quarter, due by the 15th of the second month after the quarter ends. Your own quarters are set on your registration, so read the certificate rather than assuming calendar quarters.

• Thirty days. If you are registered under neither Article 10 nor Article 11, the VAT Act requires you to apply for Article 10 registration within thirty days of your first taxable supply in Malta. The clock starts at the supply, not when you set up.
• Crossing the threshold. If you are on Article 11 and your turnover in Malta exceeds €35,000 in a calendar year, you stop qualifying on that day. You have fifteen days to apply to cancel the Article 11 registration, and the switch to Article 10 takes effect from the first day of the following month.
• Also on Article 10: the EU recapitulative statement for supplies to businesses in other EU countries is an Article 10 obligation; it does not apply to Article 11.

Article 12: services across EU borders

Article 12 is the registration people discover late, usually because of a software subscription. It applies to someone who is not on Article 10 in three situations:

• You buy services from a business in another EU country. Design software, cloud hosting and advertising are often invoiced from another EU country with no VAT on the invoice, because you, the customer, are liable for it. In Malta that liability starts from the first euro: you register under Article 12, self-charge Maltese VAT on the service and pay it. On Article 11 or Article 12 you cannot reclaim it, so it is a real cost, typically 18% on top of the price.
• You supply services to businesses in other EU countries. Where the customer accounts for the VAT, an Article 11 person registers under Article 12 as well, on or before the date of the first such supply, and stays on Article 11. The Article 12 registration gives you the VAT number your EU customer needs.
• You buy goods from other EU countries above a threshold. Intra-EU purchases of goods trigger Article 12 once they exceed €10,000 in a calendar year. The services rule above has no threshold at all: the €10,000 is for goods only.

Tax self-charged on a service from abroad is paid with a notice of payment, by the 15th of the second month after the earlier of the invoice date and the month the service was received. An Article 12 registrant does not file the quarterly Article 10 return.

Which one are you?

1. Will your turnover from supplies in Malta exceed €35,000 this calendar year? Then you are on Article 10. If not, you may choose Article 11.
2. On Article 11, do you pay for services from businesses abroad, such as software, hosting or ads? If they are invoiced from another EU country, you also need Article 12 for those, and the VAT on them is a cost you cannot reclaim.
3. On Article 11, do you invoice businesses in other EU countries for services? Then you register under Article 12 as well, before the first such invoice, and keep Article 11.
4. Are your clients mostly VAT-registered businesses, or are your costs heavy in VAT? Article 10 may suit you even below the threshold. That is a decision worth making with your accountant.

How Settlano keeps track

Settlano counts your turnover toward the €35,000 line by supply date, the way the Act counts it, and warns you before you reach it. Mark a purchase as a service from a supplier in another EU country and it sets aside the VAT you will self-charge on it; turn on Article 12 and it dates every notice of payment. Every VAT date sits on one calendar with your income tax and Class 2 dates, all estimates you can take to your accountant.

Common questions