Revised VAT Treatment of Gambling Services — Legal Notice 86 of 2026 and MTCA Guidelines

Introduction

The publication of Legal Notice 86 of 2026 on 1 April 2026, which comes into force on 1 October 2026, marks a meaningful shift in how gambling services will be treated for VAT purposes in Malta. This reform comes generally anticipated, forming part of a broader, carefully considered policy initiative developed in close consultation with the gaming industry. In their joint press release of 1 April 2026, the MTCA and MGA confirmed that the reforms respond directly to feedback received through ongoing engagement with the gaming industry and follow a comprehensive assessment of the existing VAT treatment of gaming services.

What changes are being implemented?

Legal Notice 86 of 2026 introduced a substitution of Item 9 of Part Two of the Fifth Schedule to the Value Added Tax Act (Cap. 406) (the “VAT Act”). While appearing to be a minor modification on the face of it, the change has far-reaching implications for how gambling supplies are treated for VAT purposes in Malta.

Under the previous regime, the exemption extended to “government lotto and lotteries, the supply of agency services related thereto, and such other supplies related to gambling as may be approved by the Minister” — which, by virtue of its final limb, left room for a broad range of gambling-related supplies to fall within its scope.

The amendment replaces this with a new, simplified exemption, as follows: “Betting, lotteries and other forms of gambling, as may be approved by the Minister.”

What does the exemption now cover?

The MTCA has already moved swiftly, publishing its Guidelines dated 6 April 2026 in accordance with article 75(2) of the VAT Act, confirming which forms of gambling have been approved by the Minister for the purpose of the revised exemption. The Guidelines apply with effect from 1 October 2026.

The supplies approved for the exemption are limited to three categories:

1. low risk games as defined in the Fifth Schedule to the Gaming Authorisations Regulations (S.L. 583.05);
2. junket events required to be approved under S.L. 583.05 that are held on an occasional basis and which, due to their scale and nature, require specific planning and organisational arrangements; and
3. the provision of facilities for gambling on the outcome of a real-life sporting event or competition, where those facilities can only be physically accessed at the place where the event takes place, including the services of bookmakers, betting exchanges and equivalent facilities.

What does this mean for operators?

Operators whose supplies fall outside the approved exemption will become subject to Maltese VAT. Not only does this represent a fundamental change to pricing structures, contractual arrangements, and invoicing processes, but also, as expressed in the press release itself, the most significant commercial implication of the reform is the potential improvement in input VAT recovery for many gambling operators. Under the current regime, operators making largely exempt without credit supplies are restricted in the amount of input VAT they can recover on their costs. A narrowing of the exemption, meaning that more supplies become taxable, should, in principle, increase the proportion of input VAT that operators are entitled to recover.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.