Eco Contribution Tax

Environmental Contribution

As announced in the 2016 Budget, the Government has introduced an Environmental Contribution on stays at all types of accommodation as from June 20th, 2016.

The main objective of this Environmental Contribution is to improve quality along the tourism value chain. In fact, all revenue generated from this initiative will be directed solely and exclusively to upgrade and embellish the local infrastructure in touristic areas around the Maltese Islands.

Summarized information about this initiative is highlighted below:

BASIS OF CHARGE

The contribution is payable by all tourists who are 18 years or older irrespective of nationality (including locals).

It amounts to €0.50 per person for each night spent on the Maltese Islands at any type of accommodation such as hotels, guesthouses, hostels, resorts, apartments, farmhouses, villas, timeshare, and host families, amongst others.

The contribution is capped at a maximum of 10 days for each continuous stay. This applies also to twin-centre stays in Malta and Gozo.

CALCULATION

The periodic return will be calculated as follows:

A = Total number of nights occupied by all guests during the period

B = Total number of nights occupied by guests under 18 years of age

C = Total number of nights occupied by guests aged 18 years or over, above

        the 10-night threshold.

D = Total chargeable guest nights (A-B-C)

E = Total contribution payable (D x €0.50)

MECHANISM

The collection of this contribution has started on the 20th of June 2016.

The contribution must be charged separately on a separate invoice and must not be included in the room rate charged. This will ensure increased transparency and traceability and will avoid the charge being subjected to commissions, tour operator margins and VAT.

Collection will be administered by the Commissioner for Revenue as follows:

The 1st return will cover a 5-month period to 31st October 2016. The 2nd return will cover a 2-month period to 31st December 2016. From 2017, returns to be submitted quarterly every 3-months.

Accommodation providers will be refunded 15% of the total contribution, only for the period of 20th June till 31st October 2016.

RESPONSIBILITY

Any person or entity that provides tourist accommodation on a commercial basis will be obliged to collect the contribution and pass it on to Government.

Responsibility for collecting the contribution from guests and passing it on to the VAT Department will be vested with the accommodation services providers, i.e. the licensee or delegated third party operator.

All accommodation service providers will be expected to maintain information on the number of guests staying in each room for each stay as well as the ages of their guests. This information will enable the calculation of the charge as well for audit trail purposes.

REGISTRATION

The Office of the Commissioner for Revenue (OCFR) will use information available at the Malta Tourism Authority (MTA) to register taxpayers for the ECO on accommodation purposes.  Taxpayers who would like to change the information related to the VAT Registration, will also need to contact MTA such that both registers are aligned at source. 

MTA can be contacted on e-mail on [email protected] or by telephone on 2291 5000 during office hours (Gozo office 2291 5752/3). Subsequently MTA will inform the OCFR with these changes. 

Taxpayers who have an MTA License but do not have a VAT Number will need to apply for a VAT Number. Registration may be done on-line at:  https://cfr.gov.mt/en/Pages/Home.aspx/en/online-services/pages/online-vat-registration.aspx

The OCFR contacts are  Freephone: 153 or Telephone: 144   Email:  [email protected]    

HOST FAMILIES

Those persons who provide accommodation to students as Host families and who delegate their obligations to the Language school do not need to register for VAT purposes.  Their ECO on accommodation return and the collection of ECO on accommodation will be managed by their respective Language school electronically. 

On the other hand, those Host families that operate independently and do not delegate their obligations to the Language school, need to register for VAT purposes and submit and pay the respective dues online. 

The OCFR will make arrangements directly with the Language schools for the collection of the information and payment of ECO on accommodation due by the host families that already have an agreement with the Language school. The information required for the license holders associated with that Language school can be provided in one return and in one line.    

Language schools will provide full details of the ECO on accommodation collected from each host family to the OCFR.    

DELEGATION OF OBLIGATIONS IN TERMS OF THE ECO CONTRIBUTION ACT: 

An agreement can be reached between the license holders and operators where the premises licensed in the name of the License Holder will be operated by the Operator. The operator will then file the ECO on accommodation Return on behalf of the license holder. Such agreement is to reach the Malta Tourism Authority and is made by filling an on-line form.

The information required for the license holders associated with that Operator can be provided in one return and in one line.

ON-LINE FILING

The ECO on accommodation return will be submitted online and payment can be affected via Internet Banking or through the Government Payment Gateway (GPG).   

The On-Line service will provide a unique payment reference number for each return to be paid using Internet Banking. Payments may be grouped for a set of ECO on accommodation Returns, pertaining to the same ECO number (but covers multiple licenses).  Taxpayers need the e-ID to access the CFR website and submit the ECO on accommodation return. 

To be able to submit the ECO on accommodation Return on-line, please go to the “How to Register for the ECO Return Submission Service” section below.  The Office of the Commissioner for Revenue will provide specific facilities to Language Schools for online filing of the ECO on accommodation. 

Other operators who may need different facilities for on-line filing can contact the Office of the Commissioner for Revenue, through their association or representative body on [email protected].  How to Register for the ECO on accommodation Return Submission Service 

For the filing of the on-line ECO on accommodation Return a Taxpayer can opt for one of the following options: 

1.   Taxpayer can opt to file the ECO on accommodation return himself (if he is a sole proprietor).

2.   Taxpayer can opt to assign the filing of the ECO on accommodation return to his employees (including himself).

3.   Taxpayer can opt to assign the filing of the ECO on accommodation return to a tax practitioner through delegation.  

All representatives who will file ECO on accommodation returns shall have an e-ID account.   Filing of ECO on accommodation Return on-line, a return for each licensed premises is required.  In the case of all Language Schools, the data of the host families associated with any school will have to be summed up to make up one total for all the licenses and submit a one liner return with the totals.

The same applies to the Operators, whereby these must sum up the data of all the License holders they are responsible for and submit a one liner return with the totals.

In both these cases, the license numbers will not be displayed and instead a one liner with the word ‘various’ will be shown.  

NIL returns will be required where premises were not utilised during the period.  The Online service will have the facility to declare a NIL Return.  If one needs to change the details of an already submitted return, he can load the old return, make the changes and submit again. A new payment reference number will be provided. 

NOTICE TO GUESTS

A ‘Notice to Guests’ available in various languages has been drawn up in order to provide a summary of information about the Environmental Contribution. Printed copies need to be placed in a prominent position e.g., Notice Boards, Lifts, Reception Desks, Welcome Packs, etc.

MORE INFORMATION

You may also wish to consult the Frequently Asked Questions (FAQs) and the Guidelines issued by the Commissioner for Revenue in his capacity as the competent authority in terms of the Eco Contribution Act.

Further enquiries will be handled by the Malta Tourism Authority on telephone number 2291 5000 or email [email protected]