New VAT rules for iGaming operators

2015 saw the introduction of new VAT rules for iGaming operators. Has this been a smooth transition, and what have been/ are the main issues?

The iGaming industry has seen substantial fiscal changes in recent times. 2015 brought a new mechanism for VAT, whereby VAT is to be charged in the member state where the players are established, unless an exemption applies in such member state.

These rules essentially dictate that such services shall no longer be subject to VAT in the jurisdiction where the supplier is established but rather in the jurisdiction where the customer is established, has her/his permanent address or usually resides. Therefore, rather then being subject to one fixed rate, such suppliers are potentially exposed to VAT in 28 Member States. 

Previously the status quo was that gaming operators would be subject to VAT based on the rules of the country in which their services were based.

While the new VAT rules affected online gaming operations differently depending on the residence of their main market audience, the transition to this new regime has not been smooth, with many operators having to implement new systems and processes to comply with the new rules.

Our Research on Local iGaming operators

In an attempt to gauge the effect of such changes on local gaming operators, Mazars Malta has independently carried out market research via one-to-one interviews with key players in the gaming market. 

From this study, it emerged that:

  • For suppliers carrying out activity subject to VAT, the taxable base was generally being calculated as stake less hold less bonuses;
  • The VAT cost is more often than not being borne by the gaming operators. 

Local legislation was updated to allow for input VAT on purchased incurred by the gaming operator, which are directly related to taxable gaming supplies carried out outside Malta, to be claimable in full. On the other hand, input VAT incurred on general costs is partially claimable. Very few respondents have changed their VAT registration type to be in a position to benefit from such rights to claim input VAT. Those who have made such a change have found it to be beneficial.

We are pleased to share the results of this research in the downloads section.

Mazars Malta iGaming VAT Research (.pdf - 620.23 kB)                   

Mazars Malta iGaming

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