Reduced VAT for Sports Facilities 

Earlier this year saw the introduction of a reduced 7% rate of VAT (Value Added Tax Act Ch. 406, Laws of Malta) “applicable on the use of sporting facilities in terms of item 11 of the Eighth Schedule to the Value Added Tax Act”, after being announced in the Government Gazette in November last year. This reduced 7% rate shall also apply for sporting facilities consisting of movable equipment which is used exclusively for physical activity. Such a measure is clearly intended to encourage sporting activity in Malta (which regretfully tops the list of child obesity amongst EU countries) by assisting sports operators and associations. This follows a similar move for the regulation of commercial activities within sporting venues.

Commercialisation of Sports Facilities 

By virtue of subsidiary legislation 455.12 entitled ‘Commercialisation Of Sports Facilities Regulations’ the Government of Malta brought into force a set of rules intended to assist sports clubs and sports associations in developing their venues for the ultimate benefit of their respective sports and athletes.

Regularisation and Maximisation of Sports Facilities

Until recently most sports clubs were restricted in the manner they could utilise their venues, given that the vast majority thereof lie on public land granted on temporary concessions by the Government. This meant not only that clubs had restricted use of their venues, and that they were potentially in breach of their grant conditions, but also that such facilities, a number of which lie in optimum locations in Malta & Gozo, were not being utilised to their maximum potential. These regulations now allow for the commercial exploitation of such sporting venues under strict conditions overseen by SportMalta, the Government sports agency.

Scope and aims of the Regulations

It is hoped that these Regulations will succeed in strengthening clubs and national sports associations financially, thereby improving facilities and opportunities for Maltese athletes.

  • To establish the type of commercial activity that may be conducted;
  • To establish the type of investor who is approved to offer financial backing;
  • To establish monitoring & enforcement procedures to prevent misuse;
  • To establish the procedures that allow commercial activity to be conducted;
  • To establish a regulator to approve such projects for the commercialisation of sports facilities.

Commercial Activity

The Regulations allow any type of commercial activity to be carried out from within a sports facility, save for some obvious exclusions such as nightclubs and gambling shops. Of particular relevance is the possibility of providing accommodation in the form of hostels which should encourage sport tourism.

Commercial Sports Facilities Commission

Without a permit issued from the Commission no commercial activity may be carried out within a sports facility. The Regulations establish the Commercial Sports Facilities Commission entrusted with the evaluation of applications for the development of sports facilities, the monitoring the performance of the commercial activities within the facilities, and ensuring the objectives of the Regulations are being achieved.

Application for permit to carry out commercial activity

The manner in which an application is to be prepared and submitted, the documentation required, as well as the manner in which it is to be assessed and reported on by a specifically appointed Technical Committee, is all laid out in the Regulations. The Regulations allow for the development of the sports facility to be executed by a third party, as well as for the management of the commercial activity within the sports facility to be also carried out by a third party.

Deed of recognition between SportMalta and sports organisation

Once a development is approved, the sports organisation shall enter into a deed of emphyteusis with SportMalta over the sports facility for a maximum of 65 years, thus giving the sports organisation security of tenure, and investors peace of mind, thereby further facilitating the success of the development. Such a deed shall formalise the agreement between the Government and the organisation, containing inter alia all the conditions upon which the permit would have been granted, such as the designation of specific areas for commercial and sports use, which the organisation shall be bound to observe.

Contributed by :  Dr. Simon Galea Testaferrata, E: sgt@iurismalta.comW: