Article 11 VAT in Malta, or Article 10: which is cheaper

**A plumber in Birkirkara — a plamer, as the trade is still called in Maltese — invoices 31,400 euro of work in a year and buys 13,900 euro of boilers, copper and fittings before tax to do it. He is registered under article 11, so he charges no taxxa and has the cheapest quote on the street. The 18 per cent his merchant added to the materials, 2,502 euro, he will never see again.**

Whether that 2,502 euro is a waste or the price of a cheaper quote depends on one thing only: whether the people who sign his quotes can recover VAT. Both cases are worked through below with the same figures, and they come out in opposite directions.

The two registrations, and the third one nobody mentions

The third line is the one that surprises people, because it sits on top of article 11 rather than instead of it. A small undertaking that buys materials from Italy past a euro threshold has to hold an article 12 registration as well, and the number it is given behaves differently from the one on its letterhead — VAT number and VAT certificate in Malta: what each is for takes that apart.

One threshold since January 2025, and most pages still print three

Until the end of 2024 Malta's small undertaking rules had a set of thresholds that depended on the kind of supply you made — a higher one for economic activity consisting principally in the supply of goods, lower ones for services. A plumber and a plant hire firm could be on different numbers.

That is gone. Act No. XXXVIII of 2024 replaced the set with a single domestic threshold of 35,000 euro with effect from 1 January 2025, as part of Malta's implementation of Council Directive (EU) 2020/285 on the special scheme for small enterprises. Item 5 of the Sixth Schedule now says it in one sentence:

"Domestic threshold" means the threshold fixed in Malta in accordance with Article 284(1) of Council Directive 2006/112/EC which shall be an amount equivalent to thirty-five thousand euro (€35,000).

A good number of guides and firm pages still list the old figures side by side, and a contractor reading one of them can talk himself into believing he is under a limit that no longer exists. The turnover test also widened at the same time: related party transactions and certain exempt supplies now count towards it, while the disposal of capital assets does not — so the van you sold does not push you over, and the work you did for your brother-in-law's company does.

What the threshold does not do is decide whether you are a taxable person. That question has no turnover limit in Malta at all; 35,000 euro decides only whether the exemption is open to you. The rate that applies once you are outside it is a separate question with a very short answer, and it is in Eighteen per cent, every time: VAT on building work in Malta.

Run the number for your own trade, not for a shop

Take the Birkirkara figures and hold everything else still: 31,400 euro of work, 13,900 euro of materials before tax, 2,502 euro of VAT on those materials.

Selling to homeowners. A private customer sees one number, the one he pays. Under article 11 the plumber asks 31,400 euro and keeps 31,400 minus the 16,402 euro the materials actually cost him with the VAT on top — 14,998 euro to cover labour, the van and everything else. A competitor registered under article 10 asking the same 31,400 euro gross has 26,610.17 euro of it as his own net price, and after 13,900 euro of materials he keeps 12,710.17 euro. The exempt business is 2,287.83 euro ahead on the identical job.

Selling to a property management company. Now the customer recovers whatever VAT he is charged, so he compares net prices and nothing else. The article 10 business quotes 31,400 euro plus VAT, keeps 31,400 minus 13,900 and is left with 17,500 euro. The article 11 business quotes 31,400 euro flat, still pays 16,402 euro for its materials and is left with 14,998 euro. The exemption costs it 2,502 euro — to the cent, the input tax it could not deduct.

Both sums assume the same work at the same price, and the whole of the gap in the second case is the 18 per cent on the materials. Change the material share and the answer moves with it: a trade that is mostly labour loses little by staying exempt, and a trade that buys half its turnover in goods loses the 18 per cent on half its turnover, every year, quietly.

The day you cross it, and the fifteen days that start running

Three provisions decide the timing, and together they are stricter than the yearly rhythm most people assume.

• Item 3 of Part One of the Sixth Schedule: a person registered under article 11 shall no longer qualify as a small enterprise on the date the domestic threshold is exceeded within a calendar year. Not at the year end. On the day the invoice takes you past it.
• Article 11(5)(b): apply to the Commissioner for cancellation of the article 11 registration within fifteen days from that date.
• Article 11(8): the Commissioner may register the person under article 10 immediately on cancellation.

The practical consequence is that the threshold has to be watched during the year. One commercial job in November can carry a 30,000 euro business over the line, and the fifteen days run from that invoice, not from the following January.

Going back the other way is slower. Item 2(1) of Part One blocks a move into article 11 during the first twelve calendar months of an article 10 registration, and the first proviso to article 11(2) makes any later move effective only from the first day of the month following the application. Coming in takes a day; leaving takes a year. That asymmetry belongs in the decision, because it means the choice made at the start is the one you live with through a bad year as well as a good one.

Sicily, and the 100,000 euro Union threshold

A Maltese contractor who takes work in another member state used to lose the exemption at the border. Since 2025, article 11A opens the cross-border half of the scheme: a Malta-established small enterprise can use another member state's own small enterprise regime, provided its Union turnover does not exceed 100,000 euro and its domestic turnover stays within the Maltese threshold. The host state applies its own threshold to the work done there.

It is not automatic. It runs on prior notification and on quarterly reporting of turnover, which makes it a decision to take before the first job abroad rather than a relief to claim afterwards.

What changes on the paperwork, the same day

The registration is not a bookkeeping setting; it is the difference between two kinds of document. Under article 10 you issue a tax invoice with the full particulars to a registered customer. Under article 11 you show no VAT at all — and showing it anyway is not a rounding error but tax you have stated and may be asked for. Which document goes to which customer is set out in The VAT book in Malta: fiscal receipt or tax invoice.

This is also where software usually gets it wrong. A document that shows 18 per cent for a business that is not registered to charge it will sit in a customer's file for months without anything complaining. In Zirko the registration sits on the business rather than on the document, so a switch is one change and every quote written after it is written the new way — while the documents written before it keep the treatment they carried on the day they went out. What Zirko cannot do is tell you which registration to hold; that is a fact about your customers.

The year a threshold is crossed, day by day

A painter — a bajjad — in Mosta, registered under article 11, with 29,800 euro of turnover in the twelve months to 13 November.

• 14 November. He issues an invoice of 4,100 euro for a stairwell in a block of flats. His rolling domestic turnover passes 35,000 euro on that invoice. Under item 3 of Part One of the Sixth Schedule, he stops qualifying as a small enterprise on that date.
• By 29 November. Fifteen days from 14 November: the application to cancel the article 11 registration is due under article 11(5)(b).
• The Commissioner's decision. Under article 11(8) the article 10 registration can take effect immediately on cancellation, so from that point every supply carries 18 per cent and every purchase carries deductible input tax.
• The invoice that started it. It went out before the change, under the treatment in force on the day it was issued. The next one does not.
• The following November. The twelve-month lock in item 2(1) of Part One has run. Only now does the question of going back even arise — and by then the input tax he has recovered on a year of materials is usually the reason he does not.

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Position as at 24 September 2026. This article describes the law and is not tax advice. The domestic threshold is a figure Malta notifies under Article 284(1) of the VAT Directive rather than a constant of EU law, and a member state may revise it; item 5 of the Sixth Schedule is where the number actually lives, so read it there before planning a year around 35,000 euro.

What Zirko does here: a quote and an invoice hold the VAT treatment that applied on the day they were issued, so a change of registration in November does not rewrite what went out in October. Zirko does not decide whether you belong under article 10 or article 11, and it will not warn you that you are approaching the threshold in someone else's books — the turnover it can see is the turnover you have written in it.