Author: Mel Chamber

The Facts: In accordance with Article 168 of the VAT Directive, a taxable person is entitled to deduct input VAT to the extent that goods and services are used for taxable transactions. However, this right is subject to national limitations and exclusions provided under domestic VAT legislation.

The Malta VAT Act imposes restrictions on input VAT recovery, particularly on expenses categorised as entertainment, receptions, or hospitality. As specified in the Tenth Schedule of the Malta VAT Act, input VAT incurred on such expenses is classified as a blocked item, meaning it is not deductible, except where the said provision is made for consideration in the normal course of that person’s economic activity.

A business meal falls within the scope of entertainment expenses, which are explicitly disallowed for VAT recovery purposes under Maltese VAT law. Therefore, where a business treats its clients to a meal, the input VAT incurred on such expenses cannot be reclaimed.

Conclusion: Input VAT incurred in the furtherance of a business meal may not be claimed as this constitutes a blocked item.

Verdict: False

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Authors: Brandon Gatt, Partner, Zampa Partners & Valentina Bruno, VAT Associate, Zampa Partners

Bank rolls our more flexible opening hours in the Southern Region of Malta

Bank of Valletta continues to prioritise customer service excellence through its retail network, with Managers and Team Leads across its retail network discussing ongoing improvements in service quality, accessibility, and financial guidance. BOV’s retail conferences ensure that front-line teams remain aligned with the Bank’s strategic objective to deliver a superior banking experience, making it easier for customers to manage their finances with confidence and convenience.

During the most recent retail conference, Simon Azzopardi, the Bank’s Chief Personal and Wealth Officer, reaffirmed the Bank’s commitment to supporting individuals and families in achieving their financial goals, not only through its suite of products and services but also through the support and guidance offered by its people.  He also emphasised the Bank’s growing investment in wealth management services, ensuring that customers have access to expert guidance in securing their financial future. By way of example, the introduction of dedicated Savings & Investment Bankers in Gozo is part of this ongoing effort to enhance customer experience across Malta and Gozo.

Head of the Bank’s Personal Banking Channels, Geoffrey Ghigo spoke about the importance of seeking and listening to customer feedback, ensuring that every interaction with customers, whether in-branch, through digital channels, or via the Bank’s Customer Service Centre, meets the highest standards. He highlighted improvements in branch operations, ATM availability, and reliability, as well as reduced waiting times in branches.

Adjustments to opening hours in selected branches are being piloted to better accommodate customer needs and preferences. Following the successful pilot that ran between November and December in Gozo and the Central Eastern Region, the Bank has recently rolled out more flexible opening hours on Tuesdays and Thursdays in the Southern Region of Malta, including Fgura, Marsaskala, Paola, Żejtun, Ħaż-Żabbar, Marsaxlokk, Cospicua and Birżebbuġa. The Bank is keeping priority cash service for the elderly to continue improving the in-branch experience. This service is available Fridays & Saturdays at main branches and Fridays at Satellite Branches. Cashiering services remain open daily from both the Main and Satellite Branches until 11:00. For further information about the Bank’s opening hours customers can visit the BOV website on wwwbov.com.

HSBC Malta Foundation is proud to announce its support for the Karl Vella Foundation’s (KVF) latest initiative, ‘Embrace – Navigating Pain in Times of Illness.’ This innovative online programme is designed to offer critical psychotherapeutic support to young patients aged 5 to 17 who are undergoing treatment for serious or life-limiting illnesses, both in Malta and abroad.

‘Embrace’ provides a safe space for children to express their emotions and develop coping strategies. Utilising arts, crafts, narrative therapy, mindfulness, and clay as therapeutic techniques, the programme fosters creative expression and emotional healing. It aims to help young patients manage the physical and emotional challenges of illness, encouraging them to process their experiences in a supportive, interactive environment.

HSBC Malta’s commitment to this initiative aligns with the bank’s broader corporate social responsibility (CSR) vision, which focuses on improving the well-being of vulnerable groups and investing in mental health and emotional care. By partially sponsoring ‘Embrace,’ HSBC Malta is reaffirming its dedication to making a meaningful difference in the lives of those who need it most.

This initiative also touches on several United Nations Sustainable Development Goals (SDGs), particularly SDG 3: Good Health and Well-being, and SDG 4: Quality Education. By promoting psychological resilience and emotional growth among young patients, ‘Embrace’ supports holistic development and mental health.

Michel Cordina, Head of Business Development at HSBC Malta emphasised the importance of this partnership: “We are honoured to support the Karl Vella Foundation’s work, which aligns with our commitment to building a more compassionate and supportive society. ‘Embrace’ is not just a programme; it is a lifeline for young people and families facing extraordinary challenges. At HSBC Malta, we believe that investing in the emotional and mental well-being of our community’s most vulnerable members is crucial, and we are proud to play a part in this impactful initiative.”

PwC Digital has released the findings of its AI Business Survey 2024, shedding light on the current state of AI adoption among businesses in Malta. Conducted by the PwC Digital Services team, the survey provides valuable insights into the key drivers, barriers, and challenges faced by local businesses in integrating AI technologies.

The survey reveals that a significant 56% of organisations reported not having a dedicated team for AI use case assessment, highlighting a gap in strategic planning for AI implementation. An overwhelming 75% of organisations lack an AI governance framework, underscoring the need for structured oversight to ensure ethical and responsible AI deployment.

Furthermore, 41% of businesses identified the greatest impact of AI on internal operations, indicating a focus on enhancing operational processes through AI. Interestingly, only 15% of participants are considered AI Explorers, with none scoring as AI Novices, suggesting a cautious yet progressive approach to AI adoption.

This survey is grounded in extensive research and aligns with PwC’s broader studies on AI’s business impacts such as PwC’s Global AI study, which found that AI has the potential to contribute up to $15.7 trillion to the global economy, and an increased 26% boost in GDP for local economies by 2030.

 The report delves into how businesses in Malta are embracing AI technologies, examining usage, perception, and implementation trends. It also explores the structures and frameworks employed to oversee AI projects, ensuring ethical and responsible AI implementation. It provides insights into the financial commitment of businesses towards AI, reflecting budget allocations and prioritisation of AI initiatives, while also capturing general views and expected benefits from AI technology, including increased efficiency, improved decision-making, and enhanced customer experiences.

“Through this report, we aimed to understand how businesses locally are approaching the topic of AI based on four thematic areas: strategy and adoption, governance, investment, and market perspective. Based on the findings of the survey, our report recommends next steps for organisations to ensure they are leveraging AI technologies to enhance their service offerings and internal operations, consistently working towards a human-led and tech-powered future for our businesses,” said Michel Ganado, PwC Digital Partner and Digital Services Leader.

The online self-administered survey consisted of 20 questions covering four AI thematic areas, providing respondents with a maturity score at the end. Local businesses were invited to participate through various channels, resulting in 59 participants completing the survey between March and September 2024.

For a detailed analysis and comprehensive insights, download the full PwC Digital AI Business Survey Report 2024 from here.

HSBC Malta is pleased to announce the extension of its agreement with the Malta Development Bank (MDB) to continue offering loans to small and medium-sized enterprises (SMEs) under the SME Guarantee Scheme (SGS) and the Guaranteed Co-Lending Scheme (GCLS) until the end of 2027. This renewed partnership reinforces HSBC Malta’s commitment to supporting local businesses with tailored financial solutions that drive growth, innovation and job creation.

The schemes, backed by the European Investment Fund (EIF) under the EU’s InvestEU Programme, are designed to provide SMEs with access to vital funding for sustainable investment and long-term development. Through the renewed agreement, businesses can now apply for loans of up to €1 million under the SME Guarantee Scheme (SGS) and for loans exceeding €1 million up to €10 million under the Guaranteed Co-Lending Scheme (GCLS).

“We are proud to continue our partnership with the Malta Development Bank, which enables us to provide SMEs with the financial support they need to thrive in today’s competitive market,” said Joyce Grech, Head of Commercial Banking at HSBC Bank Malta. “These schemes are a testament to our ongoing commitment to fostering innovation, sustainability, and economic growth in Malta.”

HSBC Malta’s SME clients can benefit from these schemes to address a wide range of business needs, including expansion, investment in new technologies and long-term capital projects. Businesses interested in learning more about the SME Guarantee Scheme and the Guaranteed Co-Lending Scheme are encouraged to contact their Relationship Manager or reach out to Business Banking Direct on 2380 8000 or via email on  business.banking.direct@hsbc.com

As the name implies, the triangulation simplification provisions set out in Council Directive 2006/112/EC (the “VAT Directive”), provide for the application of an exempt intra-Community acquisition in the country where the transport of goods ends. It is effectively a simplification which avoids a VAT registration for party B which makes an acquisition of goods followed by a domestic supply in the country where the transport ends. Subsequently, the VAT liability on the domestic supply taking place in that country, shifts onto party C.

The triangulation simplification applies in the context of a chain transaction, specifically where three independent parties, A, B, and C, identified for VAT purposes in three different Member States transact with one another in a supply of goods between A and B, and B and C, with the goods being dispatched/transported from A’s Member State and ending in C’s Member State. As can be noted, a basic triangulation scenario entails two supplies with only one intra-community transport. In this article we will be surveying the pertinent VAT Directive provisions and how to apply them in practice as well as pointing out any pitfalls that may impact our conclusions.

As stated above, the triangulation simplification is applicable insofar as three separate taxable persons are identified for VAT in three different Member States, carry out two consecutive supplies with one cross-border transport. The transport, in the context of this tripartite transaction must be ascribed to one of the supplies and in order for the triangulation simplification to apply it must be ascribed to the first supply.  As a result, the cross-border transport is carried out either by A, B or any person acting on their behalf (such as a logistics company). If the IC transport were to be carried out by party C, the simplification cannot be applied.

It follows that, Article 141 of the VAT Directive sets out the conditions that must be met for the simplification to apply. Let us examine the following typical scenario in the context of these conditions:

• Acquisition of goods in MS 1 is made by B, a taxable person not established in MS 1 but identified for VAT in another MS, MS 2;
• Acquisition of goods by B is made for the purpose of a subsequent supply in the MS where the transport ends, MS 3;
• The goods acquired by B are dispatched/transported from a MS other than the one where B is identified to the MS of C, MS 3;
• C, to whom the subsequent supply is made is another taxable person who is identified for VAT purposes in MS 3;
• C is designated by B as the person liable for the payment of VAT in MS 3 on the supply carried out by B (who is not established in MS 3).

Under the triangulation simplification:

• A will be carrying out an exempt intra-Community supply to B with the transport ending in MS 3, with A being required to submit a recapitulative declaration in MS 1;
• B is considered to be making an acquisition in the Member State where the transport ends (MS 3), which insofar as the acquisition is made for the purposes of a subsequent supply taking place in that Member State would be treated as an exempt intra-Community acquisition in terms of article 141 of the VAT Directive.[1]
•  For the purposes of the domestic transaction taking place in MS 3, C becomes the person liable to pay the VAT on the supply accounting for it by reverse charge and deducting the input VAT in accordance with and to the extent of his right of deduction.

As already mentioned, the triangulation simplification is rendered inapplicable if the cross-border transport from the Member State of origin is carried by or on behalf of a third party. It is also to be ensured that at the point in time of the acquisition of the goods in the Member State of origin, the intermediary party already knows that he will be making a subsequent supply to the third party in the third Member State.

In conclusion, whilst the triangulation simplification and its application in practice may appear straightforward nevertheless some complications may arise where seeking expert advice, would be highly recommended.

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[1] It is worth noting that some Member States do not allow the Article 141 exemption on the intra-Community acquisition by the middle party if the latter, notwithstanding not being established there, holds a VAT registration number in that Member State.

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Author: Brandon Gatt, Partner, Zampa Partners

Bank of Valletta is marking the first anniversary of its employee voluntary leave program with an impressive achievement. Over 430 employees collectively contributed more than 3,500 hours to community and environmental causes in 2024. This initiative forms part of the Bank’s ongoing commitment to upholding its Corporate Social Responsibility, underscoring the strong link between teamwork and positive impact on society.

The program offers Bank employees the opportunity to dedicate one day during the year to engage in voluntary work. This resulted in an encouraging number of employees participating in diverse initiatives during 2024, ranging from tree planting and environmental clean-ups to supporting vulnerable individuals and assisting animal sanctuaries. These activities were organised in collaboration with the Bank’s CSR team, with employees dedicating their time to causes that align with the Bank’s core values of inclusion, sustainability, and excellence.

Ray Debattista, Chief People & Culture Officer, reflected on the impact of the program stating, “This initiative is about fostering a culture of connection and collaboration amongst BOV employees. We are proud to champion this initiative and support our employees by granting them a day dedicated to voluntary service. The passion and commitment shown by our employees is inspiring and their collective efforts demonstrate the power that teamwork can have in making a meaningful impact on society.”

Chief Operations Officer, Ernest Agius, commented on the program’s success, saying, “The 3,500 hours contributed by our employees reflect the heart and spirit of our organisation. It’s a testament to our commitment to collaboration and our shared dedication to serving the community. I am particularly proud that this initiative was introduced as we celebrated the Bank’s 50th anniversary, building on our past legacy with new initiatives that propel the Bank forward to a brighter and meaningful future.”

With the start of 2025, Bank of Valletta is renewing its voluntary leave program, and inviting all its 2,500 plus employees to take advantage of the opportunity to contribute to its mission to strengthen community ties while adding a human layer to those CSR initiatives that drive positive change.