Malta introduction gaming VAT exemption from October 2026

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Summary

From 1 October 2026, Malta significantly narrows its VAT exemption for gambling. Most remote gaming services are now taxable, while the exemption remains mainly for low-risk games, occasional approved junkets and certain on-site betting. Operators may also gain broader input VAT recovery rights.

Content

Malta has introduced an important change to the VAT treatment of gambling services from 1 October 2026. The previous broad VAT exemption has been restricted, meaning that a wider range of gaming activities, particularly remote and online gaming services, may now become subject to VAT when the place of supply is Malta.

The official source can be found here:

The change was introduced through Legal Notice 86 of 2026 – Value Added Tax Act (Amendment of Fifth Schedule) (Amendment No. 2) Regulations, 2026, published in the Government Gazette on 1 April 2026. It amends item 9 of Part Two of the Fifth Schedule to Malta's Value Added Tax Act, Chapter 406.

Previously, Maltese legislation contained broader wording covering government lotto and lotteries, related agency services and other gambling-related supplies approved by the Minister. The new wording refers more narrowly to “betting, lotteries and other forms of gambling, as may be approved by the Minister.” As a result, activities that do not fall within the approved exemption categories may now be taxable.

Which gaming activities remain VAT exempt?

According to the guidance issued in connection with the new rules, the exemption is generally maintained for three main categories.

The first category covers low-risk games as defined under Malta's Gaming Authorisations Regulations. The second covers junket events that require approval and are held only occasionally. An event is considered occasional where it is not organised routinely and, because of its scale or nature, requires specific planning and organisational arrangements.

The third category concerns facilities for gambling on the outcome of a real-life sporting event or competition, where the betting facilities can only be physically accessed at the place where the event itself takes place. This may include bookmakers, betting exchanges and equivalent betting facilities.

Gaming services that fall outside these categories may therefore lose the previous VAT exemption.

Online betting, online casino games, poker based on random number generation and online bingo are treated as electronically supplied services for VAT purposes under the revised approach. For B2C electronically supplied services, the place of taxation is generally determined by where the customer is established, has a permanent address or usually resides.

This means that a gaming operator established in Malta does not automatically charge Maltese VAT on every online transaction simply because the operator itself is located in Malta.

For example, where a Maltese gaming business supplies qualifying online gaming services to a private customer residing in another EU Member State, VAT may instead be due in the customer's country. Operators may therefore need to consider the One-Stop Shop (OSS) or other relevant VAT registration mechanisms.

The rules for live casino services also deserve attention. Malta's guidance treats live casino services as streamed or virtual entertainment activities where the dealer or presenter is located in a physical studio but customers participate remotely. For B2C supplies, the customer's location is therefore important for determining where VAT is due.

One day before the new regime became applicable, on 30 September 2026, the Malta Tax and Customs Administration issued detailed guidelines explaining how businesses should handle supplies and costs that cover both periods before and after the VAT change.

The guidelines are particularly relevant where a supply changes from VAT exempt without credit to taxable. They explain how businesses should allocate revenues and costs where contracts, invoices or services span the transition date.

The central principle is that the period when the service is actually performed is relevant for determining the VAT treatment, while the normal VAT tax-point rules still determine the VAT return in which the transaction must be reported.

For continuous supplies, a contract covering periods before and after 1 October must therefore generally be divided between the two VAT treatments.

The MTCA gives an example of a service contract invoiced in advance for €100,000, covering May to December 2026. Assuming that the service is provided evenly over eight months, €62,500 relates to May to September and remains exempt, while €37,500 relates to October to December and becomes subject to 18% Maltese VAT.

Even if the full invoice was already issued before October as VAT exempt, the business may have to issue a corrective invoice for the taxable portion.

The change does not only create additional output VAT obligations. It may also create an important financial benefit. Under the old exemption, many gaming operators making exempt-without-credit supplies could not deduct VAT incurred on costs related to those activities.

Once their services become taxable, those services may give the operator a right to deduct related input VAT.

Where goods or services are used entirely for taxable activities after the transition, the related input VAT may generally be recoverable

This means operators cannot simply assume that all input VAT becomes fully deductible from 1 October. The actual use of the goods or services remains important.

Capital goods could create additional VAT recovery

Operators should also review capital expenditure made in previous years.

Where an operator acquired capital goods while carrying out exempt activities, a change in the use of those assets for taxable activities may allow additional input VAT recovery through Malta's Capital Goods Scheme.

The adjustment period is generally five years for most capital goods and 20 years for immovable property.

For operators with significant investments in IT systems, gaming infrastructure, equipment, offices, studios or other property, this can create potentially significant VAT adjustments over several years.

The practical impact could therefore be positive for some businesses even though their services are now taxable: additional output VAT obligations may be partly offset by improved recovery of VAT incurred on business expenditure.

In our view, the most important aspect of this reform is not simply that more gaming services are becoming taxable. The change fundamentally alters the VAT position of many Malta-based gaming operators because it affects both VAT payable on sales and VAT recoverable on costs.

For remote gaming operators, the biggest compliance challenge will probably be correctly determining where customers are located and therefore which country's VAT applies. At the same time, businesses that previously had very limited input VAT recovery should carefully assess whether the new taxable status creates a meaningful opportunity to recover VAT on operating expenses and existing capital assets.

The transitional rules are especially important because businesses cannot determine the correct treatment only by looking at the invoice date. Contracts and costs spanning 1 October must be analysed according to the period in which the underlying service is actually supplied or used.

Implementation impact and what the business should do:

Gaming operators should first classify each gaming activity and determine whether it remains within one of the approved VAT exemptions or becomes taxable from 1 October 2026.

Businesses providing remote gaming should review their customer-location rules, VAT registrations and OSS arrangements, because the customer's country may determine where VAT is payable.

Operators should also identify all contracts and invoices covering periods before and after 1 October 2026. The consideration may need to be divided between the exempt and taxable periods, and corrective invoices may be necessary for invoices already issued.

On the cost side, businesses should separate expenditure relating to the pre- and post-transition periods, calculate any required partial attribution for 2026, and review whether previously non-recoverable VAT can now be deducted.

Finally, operators should review their capital goods registers, VAT configuration, invoicing procedures, accounting rules and ERP systems to make sure the new VAT treatment is applied correctly.

For businesses affected by the reform, the change should therefore be viewed both as a new VAT compliance obligation and a potential VAT recovery opportunity.

Malta introduction gaming VAT exemption from October 2026

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