Onward Supply Relief (OSR) procedure and sea vessels in Malta
Procedure for the VAT-Free Importation of Non-EU Goods for Onward Supply to another Member State
The procedure allows for the exemption from VAT on the importation of goods into Malta from outside the EU VAT by a registered persons in Malta, which goods are released into free circulation in Malta and subsequently transported within 30 days to a VAT registered person in another EU Member State as an intra-community supply (triggering the requirement of including such transaction in the recapitulative statement).
Eventually, the transaction is reported as an intra-community acquisition of goods by the final purchaser, generally under the reverse charge mechanism, effectively resulting in no requirement of cash outflow of VAT.
The OSR – An Attractive Solution for sea vessels
The OSR is particularly an attractive solution when yachts and pleasure crafts are being imported into the EU, relieving the immediate payment of VAT on import, whilst achieving the release of the craft into free circulation within the EU borders.
In practice, since sea vessels travel on their own steam there is the difficulty of lack of transport documentation. The Maltese importer would be required to submit to the customs authorities, documentary evidence that the sea vessel will be sailing to another EU member state, such as the relevant berthing requests and permits for the next port of call in the member state of destination.
The importer will also be required to submit a bank guarantee amounting to 10% of the Malta VAT due on the value of the sea vessel (capped to a maximum amount to be decided by the Customs Authorities). The guarantee will be released upon presentation of documentary evidence that VAT had been paid or accounted for in another Member State and that the yacht had proceeded to another Member State, which may not be the Member State of final destination.
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