Following a judgement by the ECJ in  C-94/19 San Domenico Vetraria SpA v Agenzia delle Entrate, we expect a change in the VAT treatment of certain supplies and the VAT Department’s approach to such supplies.

Scenario A – previously, the secondment of staff or the sharing of human resources between group companies at cost was not considered to be subject to VAT. Following this judgement, we expect that such secondment/sharing of staff carried out for consideration will typically give rise to a supply of services subject to Malta VAT, even when carried out on a pure cost basis (i.e. with no mark-up).

Scenario B – previously, an individual provided to a company to act as director, and the remuneration was not paid directly to the individual director but rather invoiced to the company by the entity providing the individual, was deemed to fall outside the scope of VAT. This will now become taxable. Accordingly, the provision by an entity of an individual to act as director or other officer of another company shall no longer be regarded as a supply falling outside the scope of Malta VAT and shall instead be liable to VAT.