[WATCH] In the EU big countries try to blame the small ones, Edward Scicluna laments

Finance Minister Edward Scicluna reacts to EU infringement proceedings on VAT for yachts

Malta's low VAT regime for leased yachts was modelled on Italy's and had received approval from Brussels 10 years ago, Finance Minister Edward Scicluna said.

However, the European Commission last week only opened infringement proceedings against Malta, Cyprus and Greece, ignoring similar VAT regimes in Italy and France.

Scicluna's explanation as to why Malta was singled out was quite simple: "European politics is what it is. The big countries try to lay the blame on the smaller ones."

The Finance Minister was asked about the Commission's actions after attending the opening of the new offices of Western Union, a money trader, in Birkirkara.

Scicluna said the unfair targeting of Malta was evident from the first time that European Commissioner Pierre Moscovici, a Frenchman, wrote to the Maltese government on the matter. The letter had been leaked to French newspaper Le Monde.

"After I had gone public with the unfair treatment, Moscovici told me the Commission would also be writing to Italy and France. I do not know whether those letters have been sent or not and whether those countries will also face infringement proceedings," Scicluna told MaltaToday.

Scicluna said the Commission's actions can harm Malta's reputation in the yachting industry. He said if any changes to the rules will be contemplated, they should apply to all countries across the board.

Owners of yachts longer than 23 metres pay a reduced VAT rate of 5.4%. That rate is charged instead of 18% if the vessels are used for leasing. The reduced VAT rate is based on the estimated time the superyachts spend in EU waters. France adopts a flat 50% cut in VAT rates, while Italy has a regime that is like Malta's.

Read also: Brussels opens infringement against Malta over lucrative yacht lease VAT system