Reshaping the VAT Treatment of Gambling in Malta

The Malta Tax and Customs Administration (MTCA) has issued updated guidelines clarifying the application of the VAT exemption for gambling activities under Item 9 of Part Two of the Fifth Schedule to the VAT Act. These guidelines follow the introduction of Legal Notice 86 of 2026, which formally amended the scope of the exemption. Together, these developments represent a significant shift in how gambling activities will be treated for VAT purposes in Malta.
The latest update introduces a more structured interpretation of the exemption and significantly narrows its scope. As a result, operators may need to reassess the VAT treatment of their activities.

Clarifying the Scope of the Exemption: A Before-and-After Analysis

Legal Notice 86 of 2026 amended Item 9 of Part Two of the Fifth Schedule to the VAT Act which replacing the previous wording with:

“betting, lotteries and other forms of gambling, as may be approved by the Minister.”

Before the amendment

Since the last guidelines issued by the Malta VAT Authorities in 2018, Malta has not applied a wholly exempt VAT regime to gambling activities, but rather a mixed VAT treatment has been applied depending on the classification of the underlying activity.

In general terms:

• RNG-based gaming has been regarded as a taxable supply for VAT purposes
• Player-to-player gaming models, including poker platforms deriving income through rake or commissions, have also been treated as taxable
• Conversely, certain activities, particularly sportsbook betting and live casino, which have generally continued to fall within the exemption without credit, based on administrative practice.
• The key development arising from the updated guidelines is that the exemption is no longer interpreted broadly. Instead, it applies only to specific categories of gambling activities.

After the amendment
The revised guidelines introduce a more structured and restrictive approach, limiting the exemption to a clearly defined set of activities.

• The exemption now applies only to:
• Low-risk games, as defined under the Fifth Schedule of the Gaming Authorisations Regulations (Subsidiary Legislation 583.05)
• Occasional junket events, provided these are approved under SL 583.05 and organised on an occasional (non-routine) basis
• Betting on real-life events, where participation is strictly limited to physical access at the location where the event takes place. This specifically includes the services of bookmakers, betting exchanges, and equivalent facilities.

Consequently, a broad range of remote gaming services, including online casino, RNG games, live casino, online betting and poker, are likely to be treated as falling outside the exemption.

Practical Implications for Operators

The narrowing of the exemption is expected to have a significant impact on gambling operators, particularly those offering remote gaming services.
Operators will need to undertake a comprehensive review of their activities to determine whether they fall within the revised scope of the exemption. This will require a detailed analysis of:

• The nature of each gaming product
• The applicable regulatory classification
• How and where the service is accessed by players

In many cases, activities that were previously treated as exempt may now need to be reclassified as taxable supplies.

Unlocking Input VAT Recovery Opportunities

While the restriction of the exemption may increase the number of taxable supplies, it also presents an important opportunity.
Under an exempt model, input VAT is not recoverable. A shift towards taxable treatment may therefore allow operators to recover VAT incurred on costs, including:

• Platform and software development
• Marketing and advertising
• Operational and administrative overheads

This could result in a more efficient VAT position, depending on the operator’s business model.

What Should Operators Be Doing Now?

With the new framework taking effect from 1 October 2026, operators should begin assessing the impact on their VAT position without delay.

• Reviewing product classification – Identify which activities will remain exempt and which may now be subject to VAT.
• Identifying exposure across revenue streams – Identify where VAT may start to apply and how this will impact overall income.
• Revisiting digital service classification – Consider whether certain services may fall within the scope of electronically supplied services, particularly for cross-border supplies.
• Evaluating VAT recovery – Review how much input VAT can be recovered, particularly if more activities become taxable
• Assessing commercial impact – Consider how VAT will affect pricing, margins and overall profitability.

Conclusion

The introduction of Legal Notice 86 of 2026, together with the updated guidelines, marks a significant development in Malta’s VAT framework for gambling activities.
By restricting the exemption to a defined set of approved activities, the MTCA has introduced a more targeted and controlled approach, moving away from the broader interpretation previously adopted in practice.While this may result in an increased VAT burden for certain operators, it also creates opportunities for improved VAT recovery and greater certainty in the treatment of different gaming activities.
Operators should take proactive steps to assess the impact of these changes and ensure readiness ahead of the October 2026 implementation date.

How Can Finanzi Help?

At Finanzi, we can support gaming operators in preparing for the upcoming VAT changes and assessing their impact.
Our services include:

• Reviewing VAT treatment of gaming activities
• Assisting with classification of products and revenue streams
• Evaluating input VAT recovery opportunities
• Supporting implementation and ongoing compliance in line with the revised framework.