Malta’s New Gaming VAT Framework: Costs and Recovery

A narrower, defined scope for the exemption

The MTCA guidelines adopt a restrictive scope for the exemption without credit, limiting it to a defined set of Minister-approved activities. Three categories are covered.

Low risk games

These are defined in the Fifth Schedule to the Gaming Authorisations Regulations.

Occasional junket events

These events must be approved in accordance with the Gaming Authorisations Regulations. Such events are not organised on a routine basis and, due to their scale and nature, require specific planning and organisational arrangements.

Betting facilities physically accessible at the location of real-life sporting events or competitions
 

This category covers facilities for gambling on the outcome of a real-life sporting event or competition that can only be physically accessed at the place where the event takes place, including the services of bookmakers, betting exchanges and any equivalent facilities.

These categories establish a defined boundary for the exemption. Operators should therefore assess whether their supplies meet the approved descriptions, rather than treating the exemption as the default position for gambling services.



 

What falls beyond the scope of the exemption?

The activities outside that boundary are equally significant. A wide range of remote gaming services, including online casino, RNG games, live casino, online betting and poker, are not listed among the approved exempt categories.

For many Malta-licensed operators, the revised scope means a material reclassification of supplies previously treated as exempt without credit towards taxable treatment. However, falling outside this particular exemption does not, by itself, establish that Maltese VAT must be charged. The applicable place of supply rules and other relevant conditions remain central to determining the VAT treatment of each supply.


 

Greater classification clarity, with commercial consequences

The narrowed and clarified provision provides a clearer basis for distinguishing activities covered by the exemption without credit from those falling outside it. This has two principal implications:

• Greater certainty in VAT classification, reducing interpretative ambiguity when assessing different products and verticals.

• Increased input VAT recovery on eligible costs linked to taxable activities, including technology, marketing and professional services.

The financial effect depends on each operator’s activities, the allocation of expenditure and the applicable recovery conditions. Greater clarity should support more informed commercial decisions, but it does not mean that every operator will automatically recover all input VAT.

Viewed commercially, the potential for reduced irrecoverable VAT is relevant to VAT neutrality, competitiveness and the sustainability of Malta’s gaming sector. These are also themes identified in the joint MTCA and Malta Gaming Authority announcement accompanying the reforms. The extent to which individual operators benefit, however, depends on how the framework applies to their business and how effectively they manage the resulting changes.



 

The impact on the cost base and VAT recovery

Historically, operators making predominantly exempt supplies faced restrictions on their ability to recover input VAT. VAT on expenditure could consequently become an irrecoverable business cost, increasing the underlying cost of operations and, depending on the expenditure involved, creating a substantial cost burden.

Under the new framework, a reduced proportion of exempt without credit supplies and a higher share of taxable activities should, where the applicable conditions are met, result in improved input VAT recovery rates. The potential benefit is therefore closely connected to the composition of an operator’s supplies and how its costs support those activities.

This is particularly relevant to expenditure on software development, IT infrastructure, marketing and outsourced services. These can be substantial areas of investment in gaming businesses, and restrictions on recovery could make the associated VAT an irrecoverable cost.

Improved recovery could reduce that cost burden and support cash flow. It could also inform decisions about technology investment, the use of professional services and the organisation of outsourced activities. Operators should nevertheless quantify the effect using their own expenditure and recovery position, rather than assuming that a change in classification will produce a uniform financial outcome.



 

Immediate priorities for operators

With the framework now effective, the focus moves to implementation and ongoing management. Operators should establish whether their classifications, cost allocation methods and recovery calculations reflect the revised rules.

Four priorities warrant particular attention:

• Reassess VAT classifications across products and verticals. Review how each activity fits within, or falls outside, the Minister-approved categories, taking account of the applicable place of supply rules and other conditions.

• Revisit cost allocation and VAT recovery calculations. Assess how expenditure relates to exempt without credit and taxable activities, and whether the revised supply mix changes the recovery position.

• Evaluate structures and supply chains. Consider whether existing arrangements remain appropriate under the new framework and whether changes could optimise VAT outcomes within the applicable rules.

• Quantify potential cash flow and cost benefits. Calculate the possible effect of increased recovery on expenditure and cash flow, using the operator’s actual activities and cost base.

These priorities should inform both immediate implementation and subsequent reviews. As products, expenditure and supply arrangements evolve, the assumptions underpinning VAT treatment and recovery calculations will also need to be reassessed.



 

Potential efficiencies depend on active management

Legal Notice 86 of 2026 provides the legislative foundation, while the MTCA guidelines give practical definition to the revised exemption. Together, they represent a change in the economic VAT model for Malta’s gaming sector, with potential consequences for operating costs, recovery rates and commercial decision making.

For many operators, the transition from a predominantly exempt without credit position towards greater taxability offers significant potential to unlock VAT efficiencies. The value of those efficiencies will depend on accurate classification, appropriate cost allocation and a clear understanding of the applicable recovery conditions.

From today, the opportunity lies in managing the framework as part of the business’s financial and operational decisions. Potential recovery benefits become commercially meaningful when they are assessed, quantified and actively managed.



 

How BDO Malta can help

BDO Malta supports gaming operators with VAT advisory, ongoing compliance and independent VAT health checks. These reviews can assess revenue stream classifications, input VAT attribution and recovery calculations, cross border VAT treatment, place of supply considerations and intra group arrangements.

With the new framework now effective, this support can help operators assess their VAT position, identify potential recovery opportunities and address compliance risks. The commercial value of any potential VAT efficiencies will depend on the operator’s circumstances and on accurate implementation and ongoing management.