Who may apply?
Under the Guideline, a person registered for VAT purposes under Article 10 of the VAT Act (Cap. 406) may apply to switch to monthly VAT periods where the Commissioner for Tax and Customs is satisfied that input tax is likely to exceed the output tax for the four consecutive tax periods following the application. These are the four consecutive tax periods commencing with the period immediately after the period during which the application is made — the statutory test is therefore forward-looking.
The Guideline indicates that this requirement will generally be regarded as satisfied where each of the preceding four tax periods resulted in a VAT refund position, treating historical performance as indicative evidence that the forward-looking test is likely to be met.
However, this condition alone is not sufficient. The Guideline sets out the following additional administrative criteria:
The excess of input tax over output tax for the previous four VAT periods cumulatively exceeds €50,000.
At least 90% of the taxpayer's supplies consist of exempt-with-credit supplies (including exports or Intra-Community Supplies of goods, international transport services, qualifying transactions concerning food or pharmaceuticals) and/or supplies made outside Malta that carry a right to deduct input tax.
The taxpayer must be fully compliant with all applicable tax obligations at the time of application.
These thresholds are administrative criteria published by the MTCA in the Guideline, rather than hard legislative requirements under S.L. 406.02 itself. The Commissioner retains discretion when assessing applications and may refuse an application notwithstanding that the stated criteria appear to be satisfied.
Application process
Applications must be submitted by email to servizz@gov.mt and should include:
Such a request may be submitted directly by the taxpayer or by an authorised representative.
Ongoing obligations
The Guideline states that taxpayers may be reverted to quarterly VAT periods where the relevant conditions cease to be met. This is underpinned by Regulation 5 of S.L. 406.02, which grants the Commissioner an express statutory power to revoke a monthly-period notice. Reversion may occur where output tax exceeds input tax, compliance obligations are not maintained, or the required 90% threshold is no longer satisfied.
Businesses benefiting from monthly VAT periods should therefore monitor their VAT position and maintain compliance with the applicable requirements.
Why does this matter?
The Guideline is particularly relevant for businesses that consistently operate in a VAT refund position — such as exporters, businesses engaged in Intra-Community supplies, and other internationally focused businesses whose activities give rise to recurring VAT refunds.
By allowing qualifying businesses to move to monthly VAT periods, the Guideline may help ease cash flow pressures through faster access to VAT refunds, representing a welcome administrative and commercial benefit.
How can we help?
Determining whether a business qualifies for monthly VAT periods requires an assessment of a number of conditions, including the nature of the supplies made, the business's entitlement to recover input tax, its historical VAT position, and its overall tax compliance status.
Our VAT team can assist with assessing eligibility, reviewing historical VAT positions, preparing and supporting the submission of applications, liaising with the MTCA, and advising on the practical implications of transitioning to monthly VAT reporting.
Stay up to date
with our latest thought leadership
Contact us
