Is Your Gaming Operation Still VAT-Exempt? Malta's New Guidelines May Change Everything

‍New Guidelines Dramatically Narrow the Scope of VAT-Exempt Gambling Activities

On 31st March 2026, Legal Notice 86 of 2026 was published, amending Item 9 of Part Two of the Fifth Schedule to the Value Added Tax Act (Cap. 406) with effect from 1 October 2026. Today, 6th April 2026, the Commissioner for Tax and Customs has issued new guidelines setting out the gambling and betting activities that will benefit from the VAT exemption under the amended law.

It is important to note that these guidelines carry significant legal weight. Article 75(2) of the VAT Act provides that any guidelines issued by or under the authority of the Commissioner and made available to taxable persons in general "shall be read and construed as one with" the regulations and "shall have the same effect as the regulations", to the extent that they give a definition of any term, determine the manner in which any provision is to be applied, or determine any matter subject to the Commissioner's discretion. These guidelines are therefore not merely administrative guidance — they form part of the legislative framework itself and must be treated accordingly by operators and advisors alike.

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What Has Changed?

Under the previous guidelines, which have been in force since 1 January 2018, the VAT exemption applied broadly, but not universally, across the gambling and betting sector. All forms of betting were exempt, whether online or offline, and whether placed on real-life sporting events, virtual events, indices, or natural phenomena. Lotteries, scratch cards, keno, and bingo were expressly covered. Casino table games played on physical equipment in MGA-licensed premises, including live casino studios accessed remotely by players, were also exempt. Notably, however, RNG games were not exempt under the 2018 guidelines.

The new guidelines, effective 1 October 2026, reduce the exemption to just three narrowly defined categories. The Commissioner has notified that the supplies of betting, lotteries and other forms of gambling approved by the Minister for the purpose of the exemption shall be the following:

"i. Low risk games as defined in the Fifth Schedule to the Gaming Authorisations Regulations (Subsidiary Legislation 583.05 or 'SL583.05');

583. Junket events required to be approved in accordance with the Gaming Authorisations Regulations (SL583.05) held on an occasional basis. Junket events shall be considered as being held on an occasional basis where they are not organised on a routine basis and which, due to their scale and nature, require specific planning and organisational arrangements; and

iii. The provision of any facilities for gambling on the outcome of a real-life event, which facilities can only be physically accessed at the place where the event physically takes place, including the services of book makers, betting exchanges and any equivalent facilities. The term 'event' shall mean a sporting event or competition."

Two changes in particular merit close attention.

Live casino: under the previous guidelines, casino table games played on physical equipment located in MGA-licensed premises, including studios, were exempt from VAT even where the player accessed them remotely. This was the legal basis upon which Malta's substantial live dealer industry operated on a VAT-exempt basis. The new guidelines remove this exemption entirely. There is no longer any provision for games played on physical devices or equipment accessed remotely, meaning that live casino operations streamed from studios in Malta will not be treated as taxable. This effectively brings live casino into the same taxable treatment that RNG-based online casino games have been subject to since 2018.

Sports betting: previously exempt regardless of channel or location, will now only be exempt where the betting facilities can only be physically accessed at the place where a real-life sporting event or competition is taking place. This means that online betting, betting shops, and any form of remote or off-course betting will become subject to VAT. Betting on virtual events, indices, and natural phenomena is no longer covered at all.

As regards low risk games, as defined in the Fifth Schedule to the Gaming Authorisations Regulations (SL 583.05), these will remain exempt. However, this category is far narrower than might initially be assumed. It covers only small-scale non-profit games, commercial promotional prize draws, and limited commercial communication games operating within strict stake and prize thresholds.

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Our View: Greater Clarity for Operators

Whilst the narrowing of the exemption is undoubtedly significant in its commercial impact, it is our view that the new guidelines bring a welcome degree of simplicity and certainty to the VAT treatment of gambling and betting activities in Malta.

Under the previous regime, the boundaries of the exemption were often difficult to navigate in practice, operators and their internal accounting teams were frequently required to make fine judgments on whether a particular product or service fell within or outside the scope of the exemption, particularly in areas such as the classification of ancillary supplies.

This left considerable room for interpretation and, inevitably, for inconsistency. The new guidelines, by contrast, draw clear and unambiguous lines. The exempt categories are narrow and precisely defined, which means that for the vast majority of gambling and betting operators, the position is now straightforward: their supplies are taxable at the standard rate. For internal finance and accounting departments, this represents a material reduction in complexity, there is far less need to analyse and classify individual products against nuanced exemption criteria, and far greater certainty in how VAT is accounted for across the business. In short, what was previously a grey area has now become largely black and white.

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The Silver Lining: Input VAT Recovery

Operators whose supplies move from exempt-without-credit to taxable will now, in principle, be entitled to recover input VAT incurred on costs attributable to those taxable supplies. This is a material consideration. Under the previous regime, operators making exempt supplies were unable to deduct input VAT on their costs, which represented a real and often substantial hidden cost of doing business. The transition to taxable status opens the door to a full reassessment of input VAT recovery positions, potentially unlocking significant VAT savings on operational expenditure, technology costs, marketing, and other overheads.

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Next steps?

With the new regime taking effect on 1 October 2026, operators have approximately six months to prepare. We would strongly recommend that all gambling and betting operators licensed in or operating from Malta undertake a thorough review of their product offerings against the new guidelines, assess the VAT impact on pricing and margins, update billing and accounting systems to account for VAT where applicable, and critically, reassess their input VAT recovery position to ensure they are claiming the deductions to which they are now entitled.

Our team is available to assist operators in navigating this transition. For further information or to discuss the implications for your business, please do not hesitate to get in touch.