The ADT has issued a notice warning that foreign registered motor vehicles owned or used by residents of Malta will be taken off the road (impounded) if formal Malta registration is not regularised by 3 April 2006.

I advise owners of these vehicles to consider their options before rushing to pay the registration tax and VAT due.

If your vehicle is several years old, say four years or more, you will be asked to pay a registration tax and VAT on this tax, which would be well above the residual registration tax of similarly aged vehicles bought new in Malta. This is because the “minimum tax payment” provision of the Registration Tax Law for second-hand cars is such that it is similar to the tax paid on new, imported, popular car models. One will end up with an old car with inflated overall cost and with no chance of capital recovery if one decides to sell again. I advise these owners to re-export this vehicle and sell it abroad, leave it in another EU country with a friend to use when on holiday abroad or simply drive it across Europe, sell it, spend or save the proceeds and hop back home on a low cost flight.

In the case of newer vehicles, or vehicles which may be classified as luxury vehicles or with a large engine capacity, their owners should realise that it is very likely that their vehicle will end up costing more than a similar new one bought from a local car dealer. In such a case if they re-sell abroad the loss of capital from depreciation may be equal to the excess cost above the price of the new Malta purchase.

If, for what ever reason, the owners of these foreign registered vehicles decide to keep their vehicle in Malta and regularise their position with the authorities, I strongly recommend that payment of the registration tax and VAT on this tax is paid under protest. The owners should make it clear that they reserve the right to claim back all tax paid in excess of the amount that should have been paid if Article 90 of the European Treaty is invoked when it is proven that the Registration Tax Law provisions for second-hand car imports is not compatible with this EU regulation.

Vehicle owners who own a company can probably sell it to their company, add the cost of the vehicle and Registration Tax due as company expenses before paying company tax. It would work out cheaper just paying a bit more personal income tax on the use of the company car perk.

The rest of us mere mortals who do not have a company would have to earn the money to pay both the income tax on an amount and what’s left is set aside to pay registration tax and VAT.

Owners of foreign registered vehicles who are interested in seeing Article 90 become applicable in Malta can contact me by e-mail on [email protected]

Albert M. Bezzina

MOSTA