Authors: Ramona Cassar, Joselyn Teuma - WH Partners
On the 30 September 2026, the Malta Tax and Customs Administration issued new guidance dealing with situations where a supply stops being considered as VAT exempt without credit and becomes VATable . While the guidance is not limited to gambling, its relevance to the industry is clear. In fact, the guidance note specifically provides for an example of an online gaming operator whose sports betting activity transitions from exempt without credit to taxable from 01 October.
The guidance also reinforces the importance of looking beyond the invoice date as the VAT treatment during the transition may also depend on when the underlying service is performed and how the related costs are used. This makes the 01 October cutover both a compliance exercise and a potential VAT recovery opportunity, bringing several practical considerations into focus for gaming operators, particularly:
Revenue streams
Have all gaming verticals and other revenue streams been mapped under the new rules?
The review should not stop with B2C gaming revenue. B2B supplies, revenue-share arrangements, ancillary income and intra-group transactions may also need to be revisited, together with the relevant customer location and place-of-supply analysis.
Contracts and invoices spanning 1st October
This is likely to be one of the most immediate practical issues.
Where a continuous service covers periods both before and after 01 October, the consideration for VAT purposes may need to be split between the two periods, with the appropriate VAT treatment applied to each.
An operator should therefore think about:
- annual or quarterly agreements;
- advance invoices and payments;
- recurring and revenue-share arrangements;
- software and platform agreements;
- marketing and sponsorship arrangements; and
- intra-group services.
An invoice issued before 01 October does not necessarily mean that the old VAT treatment applies to the entire supply. Equally, an invoice issued on or after 01 October may still relate partly or wholly to the period until 30 September (the pre-transition period). Some invoices already issued by or to the operators may therefore need to be revisited.
Input VAT recovery
This is important as the output VAT changes.
Businesses which carried out exempt activities may historically have been unable to recover some or all of the VAT suffered on their expenses. As those gambling and betting services now become taxable when made in Malta, the input VAT recovery position will also change.
For costs incurred before 1 October 2026, recovery may not simply depend on when the supplier’s invoice was issued. Operators may need to consider the period to which the cost relates and how and when the underlying service was actually used.
This could be particularly relevant for:
- software and IT;
- platform costs;
- marketing and advertising;
- sponsorships and endorsements;
- professional services;
- general overheads; and
- overseas services subject to reverse charge.
Partial attribution
For operators carrying on a mixture of taxable and exempt-without-credit activities in 2026, particular attention needs to be given to the application of the partial attribution ratio.
The transition may change the proportion of input VAT that can be recovered. Operators should therefore consider the impact on their provisional and definitive partial attribution calculations and any subsequent VAT adjustments. The 2026 year-end exercise should thus reflect the changes in VAT treatment during the year and should not simply follow the same approach as the year before.
Cross-border costs
Gaming businesses often procure significant services from overseas suppliers. Where Malta VAT is self-accounted for under the reverse-charge mechanism, the transition can affect both the VAT that must be reported and the amount that can ultimately be recovered. Again, invoices covering periods on both sides of 01 October may require a closer look.
Capital expenditure
The review should not necessarily stop at costs incurred from 01 October. The new guidance also highlights the capital goods adjustment mechanism. Operators with qualifying capital expenditure that remains within the relevant VAT adjustment period should consider whether the change in their VAT recovery position could create an adjustment in their favour.
With the new rules taking effect as of today, it is imperative forgaming operators to fact-check how the changes have been implemented across their business.
Before filling the first VAT return after the changes, gambling operators should consider the following questions:
- Have we mapped all our revenue streams under the new rules?
- Have we identified contracts and invoices spanning 01 October?
- Have we reviewed advance payments and recurring arrangements?
- Have we considered our supplier and reverse-charge costs?
- Have we revisited input VAT recovery and partial attribution?
- Have we reviewed capital expenditure still within its adjustment period?
- Are our VAT codes, invoicing and reporting systems configured correctly?
- Do we have appropriate documentation supporting the approach taken at each transition?
If you would like to discuss how the 1st October changes may impact your business or fact-check your approach to the transition, please feel free to reach out on [email protected]