As of 1 January 2025, Council Directive (EU) 2020/285 introduced a new special VAT regime for small enterprises, known colloquially as the SME scheme. Effective from that date, the EU introduced a new VAT special  scheme for small and medium-sized enterprises (SMEs). This initiative aims to simplify VAT compliance and reduce administrative burdens for SMEs operating across multiple Member States. The changes include provisions allowing SMEs to benefit from VAT exemptions beyond their home country, a harmonisation of national VAT exemption thresholds, and a streamlined compliance process.

In response to these EU-wide changes, Malta has amended its VAT Act to introduce Articles 11A and 11B, ensuring alignment with the new scheme. 

The VAT Framework for SMEs Prior to 2025

Before the introduction of the new VAT special scheme, SMEs operating within the EU were subject to a fragmented VAT system, where VAT exemptions were limited to domestic transactions. This meant that small businesses had to register for VAT in every EU country where they carried out taxable activities, creating significant administrative burdens and arguably going against two of the fundamental freedoms of the EU, goods and services.

Key Changes Introduced by the 2025 VAT Special Scheme

The new VAT special scheme for SMEs introduces several significant reforms aimed at addressing inefficiencies in the previous system.

  1. SMEs eligible for VAT exemption in their home country can now extend this exemption to cross-border transactions in other EU Member States, provided they meet the prescribed conditions. To qualify, SMEs must have a total annual turnover not exceeding €100,000 across all EU Member States. 


    a.    Additionally, their taxable supplies in each individual Member State must remain within that country’s respective national exemption threshold. In Malta, SMEs must ensure that their domestic annual turnover, derived from supplies of goods and services within the country, does not exceed the domestic threshold of €35,000 to qualify for VAT exemption.  
     

    For instance:

    Consider a small enterprise established in Malta that supplies goods both domestically and to customers in other EU Member States. During the calendar year, the business generates €30,000 from supplies within Malta, €25,000 from sales in Italy, €20,000 in France, and €15,000 in Germany. The total turnover across the EU therefore amounts to €90,000.

    Since the total turnover remains below the €100,000 threshold set under the new SME special scheme, the business qualifies to benefit from the cross-border VAT exemption. Additionally, the domestic turnover in Malta falls below the national threshold of €35,000, meaning the enterprise also retains its eligibility for the domestic VAT exemption under Article 11 of the Maltese VAT Act.

    Now consider a similar business, also established in Malta, but with higher levels of activity. Over the same calendar year, it earns €40,000 from sales in Malta, €30,000 in Italy, €20,000 in France, and €15,000 in Germany. This results in a total EU-wide turnover of €105,000.

    In this instance, the business exceeds the €100,000 threshold under the SME special scheme and is therefore no longer eligible to benefit from the cross-border VAT exemption. At the same time, the domestic turnover in Malta surpasses the €35,000 national threshold, causing the business to lose its eligibility under Article 11.

  2. The scheme also aims to reduce compliance burdens. SMEs will benefit from a more streamlined VAT compliance process, i.e. having one VAT registration throughout the EU.

  3. However, opting for VAT exemption under the new system comes with a significant caveat. Businesses that choose this option forfeit the ability to deduct input VAT on purchases related to their exempt supplies [More on this in our previous article].

  4. Businesses must report their eligibility and adhere to ongoing compliance requirements, ensuring transparency and proper application of VAT exemptions.

     

Malta’s Legislative Adaptation: Articles 11A and 11B

In light of the EU VAT changes, Malta has amended its VAT Act to include Articles 11A and 11B, ensuring local businesses comply with the new rules while maintaining consistency with EU directives.

  • Article 11A applies to taxable persons established in Malta who qualify as small enterprises under the Sixth Schedule of the VAT Act. 
  • Article 11B addresses taxable persons established outside Malta who wish to benefit from the VAT exemption within Malta. 

Registration becomes effective upon notification from the Commissioner, with the registration number including the suffix "EX."

Eligibility for registration requires that the taxable person:

  1. Has a "Union Annual Turnover" below the Union threshold in the previous year.

  2. Makes supplies in at least one Member State where they are not established and qualify for the small enterprise exemption.

  3. Ensures supplies in that Member State do not exceed the relevant exemption threshold.

The application must be submitted electronically, including the enterprise’s name, legal form, activity, and turnover in Malta and other Member States for both the previous and current year.

These legislative updates are designed to provide Maltese SMEs with greater flexibility in managing their VAT obligations while ensuring compliance with EU requirements. Registered persons must inform the Commissioner of any changes, such as applying the exemption in a new Member State or ceasing its use in an existing one. The exemption is effective only once approved.

Quarterly turnover reports are required. If the business exceeds the turnover limit or becomes ineligible, it must apply for a registration update or cancellation within 15 working days. The exemption ceases at the start of the next quarter or, if notified in the last month, the second month of the next quarter.

Conclusion

To fully optimise the benefits of this VAT scheme, it is crucial for businesses to conduct a comprehensive evaluation of its advantages and implications. RSM Malta, recognised for its expertise in the SME sector, is prepared to assist you throughout this process. Please contact us for further information and professional guidance. 

Mill-1 ta' Jannar 2025, id-Direttiva tal-Kunsill (UE) 2020/285 introduċiet reġim speċjali ġdid tal-VAT għall-intrapriżi żgħar, magħruf bħala l-iskema tal-SME. Effettiv minn dik id-data, l-UE introduċiet skema speċjali ġdida tal-VAT għall-intrapriżi żgħar u medji (SMEs). Din l-inizjattiva għandha l-għan li tissimplifika l-konformità tal-VAT u tnaqqas il-piżijiet amministrattivi għall-SMEs li joperaw f'diversi Stati Membri fl-UE. Il-bidliet jinkludu dispożizzjonijiet li jippermettu lill-SMEs jibbenefikaw minn eżenzjonijiet tal-VAT lil hinn mill-pajjiż tagħhom, armonizzazzjoni tal-limiti nazzjonali tal-eżenzjoni tal-VAT, u proċess ta' konformità ssimplifikat.

B'reazzjoni għal dawn il-bidliet fl-UE, Malta emendat l-Att tal-VAT tagħha biex tintroduċi l-Artikoli 11A u 11B, biex tiżgura l-allinjament mal-iskema l-ġdida.


Il-Qafas tal-VAT għall-SMEs Qabel l-2025

Qabel l-introduzzjoni tal-iskema speċjali l-ġdida tal-VAT, l-SMEs li joperaw fl-UE kienu suġġetti għal sistema tal-VAT frammentata, fejn l-eżenzjonijiet tal-VAT kienu limitati għal tranżazzjonijiet domestiċi. Dan ifisser li n-negozji żgħar kellhom jirreġistraw għall-VAT f'kull pajjiż tal-UE fejn iwettqu attivitajiet taxxabbli, joħolqu piżijiet amministrattivi sinifikanti, u potenzjalment imorru kontra żewġ libertajiet fundamentali tal-UE, dawk tal-merkanzija u tas-servizzi.


Bidliet Ewlenin Introdotti mill-Iskema Speċjali tal-VAT tal-2025
L-iskema speċjali l-ġdida tal-VAT għall-SMEs tintroduċi diversi riformi sinifikanti mmirati biex jindirizzaw l-ineffiċjenzi fis-sistema preċedenti.

  1. L-SMEs eliġibbli għall-eżenzjoni tal-VAT fil-pajjiż tagħhom jistgħu issa jestendu din l-eżenzjoni għal tranżazzjonijiet transkonfinali f’Stati Membri oħra tal-UE, sakemm jissodisfaw il-kundizzjonijiet preskritti. Biex jikkwalifikaw, l-SMEs iridu jkollhom dħul annwali totali li ma jaqbiżx €100,000 madwar l-Istati Membri kollha tal-UE. 

    a. Barra minn hekk, il-provvisti taxxabbli tagħhom f’kull Stat Membru individwali għandhom jibqgħu fi ħdan il-limitu nazzjonali rispettiv ta’ dak il-pajjiż. F’Malta, l-SMEs iridu jiżguraw li d-dħul annwali domestiku tagħhom, derivat mill-provvisti ta’ merkanzija u servizzi fil-pajjiż, ma jaqbiżx il-limitu domestiku ta’ €35,000 biex jikkwalifikaw għall-eżenzjoni tal-VAT.


Pereżempju:

Ikkunsidra intrapriża żgħira stabbilita f’Malta li tipprovdi merkanzija kemm lokalment kif ukoll lill-klijenti f’Stati Membri oħra tal-UE. Matul is-sena , in-negozju jiġġenera €30,000 minn bejgħ f’Malta, €25,000 minn bejgħ fl-Italja, €20,000 fi Franza, u €15,000 fil-Ġermanja. It-total tad-dħul madwar l-UE għalhekk jammonta għal €90,000.

Peress li t-total tad-dħul jibqa’ taħt il-limitu ta’ €100,000 stabbilit taħt l-iskema speċjali l-ġdida tal-SME, in-negozju jikkwalifika biex jibbenefika mill-eżenzjoni tal-VAT transkonfinali. Barra minn hekk, id-dħul domestiku f’Malta jaqa’ taħt il-limitu nazzjonali ta’ €35,000, li jfisser li l-intrapriża żżomm ukoll l-eliġibbiltà tagħha għall-eżenzjoni domestika tal-VAT taħt l-Artikolu 11 tal-Att tal-VAT Malti.

Issa ikkunsidra negozju simili, ukoll stabbilit f’Malta, iżda b’livelli ogħla ta’ attività. Matul l-istess sena kalendarja, jaqla’ €40,000 minn bejgħ f’Malta, €30,000 fl-Italja, €20,000 fi Franza, u €15,000 fil-Ġermanja. Dan jirriżulta f’dħul totali madwar l-UE ta’ €105,000.

F’dan il-każ, in-negozju jaqbeż il-limitu ta’ €100,000 taħt l-iskema speċjali tal-SME u għalhekk m’għadux eliġibbli biex jibbenefika mill-eżenzjoni tal-VAT transkonfinali. Fl-istess ħin, id-dħul domestiku f’Malta jaqbeż il-limitu nazzjonali ta’ €35,000, u jikkawża lin-negozju jitlef l-eliġibbiltà tiegħu taħt l-Artikolu 11.
 

  1. L-iskema għandha wkoll l-għan li tnaqqas il-piżijiet tal-konformità. L-SMEs se jibbenefikaw minn proċess ta’ konformità tal-VAT aktar ssimplifikat, jiġifieri li jkollhom reġistrazzjoni tal-VAT waħda madwar l-UE.
  2. Madankollu, l-għażla għall-eżenzjoni tal-VAT taħt is-sistema l-ġdida tiġi b’twissija sinifikanti. In-negozji li jagħżlu din l-għażla jitilfu l-abbiltà li jnaqqsu l-VAT fuq ix-xiri relatat mal-provvisti eżenti tagħhom [Aktar dwar dan fl-artiklu preċedenti tagħna (aqra bl-ingliż)].
  3. In-negozji għandhom jirrapportaw l-eliġibbiltà tagħhom u jaderixxu mar-rekwiżiti ta’ konformità kontinwi, u jiżguraw trasparenza u applikazzjoni xierqa tal-eżenzjonijiet tal-VAT.


L-Att tal-VAT ta’ Malta: Artikoli 11A u 11B

Fid-dawl tal-bidliet tal-VAT tal-UE, Malta emendat l-Att tal-VAT tagħha biex tinkludi l-Artikoli 11A u 11B, u tiżgura li n-negozji lokali jikkonformaw mar-regoli l-ġodda filwaqt li jżommu l-konsistenza mad-direttivi tal-UE.

  • L-Artikolu 11A japplika għal persuni taxxabbli stabbiliti f’Malta li jikkwalifikaw bħala intrapriżi żgħar taħt is-Sitt Skeda tal-Att tal-VAT.
  • L-Artikolu 11B jindirizza persuni taxxabbli stabbiliti barra minn Malta li jixtiequ jibbenefikaw mill-eżenzjoni tal-VAT f’Malta.

Ir-reġistrazzjoni ssir effettiva wara notifika mill-Kummissarju, bin-numru tar-reġistrazzjoni jinkludi s-suffiss "EX."

L-eliġibbiltà għar-reġistrazzjoni teħtieġ li l-persuna taxxabbli:

  1. Għandu "Union Annual Turnover" taħt il-limitu tal-Unjoni fis-sena preċedenti.
  2. Jagħmel provvisti f'mill-inqas Stat Membru wieħed fejn mhumiex stabbiliti u jikkwalifika għall-eżenzjoni tal-intrapriżi ż-żgħar.
  3. Jiżgura li l-provvisti f'dak l-Istat Membru ma jaqbżux il-limitu ta' eżenzjoni rilevanti.

Il-persuni rreġistrati għandhom jinfurmaw lill-Kummissarju bi kwalunkwe bidla, bħall-applikazzjoni tal-eżenzjoni fi Stat Membru ġdid jew il-waqfien tal-użu tagħha f'wieħed eżistenti. L-eżenzjoni tkun effettiva biss ladarba tiġi approvata.

Rapporti ta' fatturat ta' kull tliet xhur huma meħtieġa. Jekk in-negozju jaqbeż il-limitu tal-fatturat jew isir ineliġibbli, għandu japplika għall-aġġornament jew il-kanċellazzjoni tar-reġistrazzjoni fi żmien 15-il jum tax-xogħol. L-eżenzjoni tieqaf fil-bidu tat-trimestru li jmiss jew, jekk tiġi nnotifikata fl-aħħar xahar, fit-tieni xahar tat-trimestru li jmiss.

Dawn l-aġġornamenti leġiżlattivi huma mfassla biex jipprovdu lill-SMEs Maltin b’aktar flessibbiltà fil-ġestjoni tal-obbligi tagħhom tal-VAT filwaqt li jiżguraw konformità mar-rekwiżiti tal-UE.


Konklużjoni
Biex jieħu vantaġġ mill-benefiċċji ta’ din l-iskema tal-VAT, huwa kruċjali għan-negozji li jwettqu valutazzjoni komprensiva tal-vantaġġi u l-implikazzjonijiet tagħha. RSM Malta, rikonoxxuta għall-kompetenza tagħha fis-settur tal-SMEs, tinsab lesta biex tgħinek matul dan il-proċess. Jekk jogħġbok għamel kuntatt magħna għal aktar informazzjoni u gwida professjonali.