Malta’s revised VAT exemption for gambling is now in force. From 1 October 2026, most remote gaming taking place in Malta is subject to VAT. The exemption is generally limited to low-risk games, occasional approved junkets, and on-site betting on real-life events.
For many operators, taxable supplies create a right to recover input tax, including where those supplies take place outside Malta and no Maltese VAT is charged. The changes could therefore improve your VAT recovery position, although the outcome will depend on your specific activities and cost base.
On 30 September 2026, the Malta Tax and Customs Administration (MTCA) published Guidelines on the treatment of supplies and costs spanning the change. We summarise the key points and highlight some practical steps you should consider.
Sales When the service is performed matters, not just the invoice
The tax point continues to determine the VAT return in which a supply is reported. However, the applicable VAT treatment depends on when the service is performed.
For example, where a contract was invoiced in advance in May 2026 for services continuing to December, the consideration must be allocated between the two periods. The portion relating to October to December is taxable, even though the invoice was reported in an earlier VAT return. A corrective invoice may therefore be required for those three months.
In practice, you should identify contracts that span 1 October, document a reasonable allocation of the price between the exempt and taxable periods, and determine where corrective invoices are required.
Input tax An opportunity, with limits
The guidelines set out three broad outcomes in respect of costs and recovery of input tax:
Costs used wholly for taxable supplies from 1 October: input tax is fully recoverable.
Costs used wholly before 1 October: input tax is not recoverable, even if the invoice arrives, or the tax point falls after the transition.
Costs spanning both periods, including general overheads: input VAT may be recoverable through the partial attribution mechanism.
Costs spanning both periods, including general overheads: input tax may be recovered through the partial attribution mechanism.
The key factor is the period in which the cost is used—not the invoice date. Partial attribution therefore remains relevant for 2026, even if all your supplies are taxable from 1 October onwards.
Capital goods Recovering past VAT
If you acquired capital goods while making exempt supplies, you may now be able to claim annual adjustments under the Capital Goods Scheme. The adjustment period is generally five years for most capital goods and twenty years for immovable property.
For businesses holding significant equipment, IT infrastructure or property, these adjustments could result in meaningful VAT recoveries over several years. Reviewing your capital goods register can help identify the potential benefit.
For businesses holding significant equipment, IT infrastructure, or property, these adjustments could result in material VAT recoveries over several years. Reviewing your capital goods register can help identify the potential benefit.
What should operators do now?
To prepare for the change and identify potential VAT recovery opportunities, you should:
Identify contracts and invoices that straddle 1 October, and issue corrective invoices where needed.
Separate costs relating to the periods before and after the transition, including invoices received in arrears.
Prepare provisional and final partial attribution calculations for 2026.
Review your capital goods register and quantify any available adjustments.
Review your capital goods register and quantify any possible adjustments.
Confirm that your VAT registration, invoicing processes, and ERP systems reflect the new VAT treatment.
How can we help?
The guidelines include worked examples, but their application will depend on your contracts, supply chains, and cost base. We can help you assess the impact, quantify potential input VAT recoveries, and determine the appropriate treatment for transactions not specifically addressed in the guidelines.
The guidelines include worked examples, but their applicability will depend on your contracts, supply chains, cost base, and other realities. We can help you assess the impact, quantify potential input tax recoveries and help you in determining the appropriate treatment for transactions not specifically addressed in the guidelines.
To discuss how the changes may affect your business and the steps you should take, please contact our team.
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