Sailing from Sicily to Malta involves sailing into international waters. Has anyone heard of using this to reset the 18-month Temporary Admission to avoid the VAT and whether or not it would be technically correct?
The EU rules do not define what leaving EU waters means. They are written from the perspective of arriving from outside the EU state of first entry. It is left to states and their customs to assess whether the requirements are met. Once you have entered the EU you are free to move to any other state in the EU so in theory sailing from one EU Island to another would not be entering from outside, but some states accept just leaving territorial waters as entering from outside.
So the only sure way to find out is to ask customs in Malta or employ an agent to advise.