VAT on Gaming & Betting

 

In conformity with article 75(2) of the Value Added Tax Act (Cap. 406, Laws of Malta), the following guidelines shall apply:

 

Legal basis for these guidelines

 

Item 9 of Part Two of the Fifth Schedule to the Value Added Tax Act exempts from VAT “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”.

 

This provision implements Article 135(1)(i) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax which provides that Member States shall exempt without a right of deduction of input VAT “betting, lotteries and other forms of gambling, subject to the conditions and limitations laid down by each Member State”.

 

This guideline identifies those supplies related to gambling which, when supplied in Malta in terms of Part Two of the Third Schedule to the Value Added Tax Act, shall be treated as exempt without credit.

 

Supplies related to gambling

 

With effect from 1st January, 2018, the supplies related to gambling approved by the Minister for the purposes of Item 9 of Part Two of the Fifth Schedule to the Value Added Tax Act, and which (in addition to Government lotto and lotteries and the supply of agency services related thereto), shall therefore be exempt without credit for Malta VAT purposes, are the following:

 

i. The provision of any facilities for the placing of bets and wagers, including the services of book makers, betting exchanges and any equivalent facilities. The ‘placing of bets and wagers’ refers to gambling on the outcome of an event, which outcome is unknown at the time of the placing of the bet or wager. The term ‘event’ includes, but is not limited to: a sporting event, both real life or virtual; a competition; a lottery; the performance of an index; and a natural phenomenon. For the purposes of this guideline, ‘placing of bets and wagers’ shall exclude gambling on the outcome of: (a) casino-type table games such as blackjack, poker and roulette; and (b) any games of chance, the outcome of which is determined by a random generator.

 

ii. The granting of the right to participate in a lotto or lottery, including Grand Lottery, Super 5, scratch cards, keno and any other lottery-type games;

 

iii. The granting of the right to participate in a bingo game;

 

iv. The provision to players of devices or equipment for the playing of casino type games of chance, the outcome of which is determined by a random generator, including tables for the playing of roulette, blackjack, baccarat, poker when played against the house, and slot machines. The terms “devices or equipment” refers to game tables, machines and other similar objects which are physically located in such premises or location, including a studio, which is licensed, or otherwise recognised, by the Malta Gaming Authority, whether accessed by the player physically or remotely. For the avoidance of doubt, “devices or equipment” excludes “amusement machines” as defined in Chapter 438 of the Laws of Malta, and “remote gaming equipment” as defined in S.L. 438.04; and

 

v. Supplies which are strictly required, related and essential to, and which form part of an underlying gambling or betting transaction falling within paragraphs (i) - (iv) above, as shall from time to time be determined by the Malta Gaming Authority.

 

The Commissioner may substitute, alter or withdraw these guidelines at any time.

 

21st November, 2017

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Guidelines for the determination of the taxable value of gambling and betting services

 

In conformity with article 75(2) of the Value Added Tax Act (Cap. 406, Laws of Malta), the following guidelines shall apply:

 

Legal basis for these guidelines

 

This document provides guidance, for the purposes of article 18 and the Seventh Schedule of the Value Added Tax Act, on the determination of the taxable value of gambling and betting services that fall within the scope of article 4 of the Value Added Tax Act and which are not exempt pursuant to item 9 of Part Two of the Fifth Schedule of the Value Added Tax Act.

 

In terms of item 1 of the Seventh Schedule to the Value Added Tax Act: “…the taxable value of a supply shall be the total value of the consideration paid or payable to the supplier by the purchaser, the customer or any other person for the supply, including any subsidy directly linked to the provision of that supply, but excluding the value added tax chargeable under this Act on that supply.”

 

1. Taxable value of gambling and betting services

 

1.1 Consideration

 

For the purposes of determining the taxable value of gambling and betting services that fall within the scope of article 4 of the Value Added Tax Act, the term “consideration” shall be construed as follows:

 

(i) Where the supplier receives a commission or participation fee (typically referred to as the ‘rake’), the said commission or fee (including when the commission/fee is settled using bonus credit) shall be regarded as the consideration for the service, which shall be deemed to be inclusive of the VAT chargeable under the Value Added Tax Act.

 

(ii) In all other cases, the consideration received by the operator shall, for the purposes of determining the taxable value, be an amount equivalent to the revenue of the supplier, i.e. the total stakes/bets placed by players (including bets placed using bonus credit) less the winnings and other amounts paid out to players in connection with that bet (including bonus credit comprised within the bets placed - refer to section 1.2(ii) below). The consideration determined as aforesaid shall be deemed to be inclusive of the VAT chargeable under the Value Added Tax Act.

 

1.2 Exclusions

 

(i) Any amount of the commission or fee received by a supplier, or of the stakes/bets placed by the player, in relation to supplies which fall within the scope of article 4 of the Value Added Tax Act, which is immediately allocated by the supplier to a jackpot pool is to be deducted for the purposes of determining the taxable value.

 

(ii) Bonuses and other incentives which are provided by the supplier are considered to constitute a rebate or price reduction allowed by the supplier to the customer in terms of item 3 of the Seventh Schedule of the Value Added Tax Act, and as such should be excluded from the taxable value of the supply when such bonuses have been included within the consideration received by the supplier for the purposes of 1.1 above, by the aggregation of the amount of that bonus to the winnings and other amounts paid out to players in connection with that bet.

 

2. Periodic determination of the taxable value

 

In principle, the taxable value of a supply is to be determined on a transaction per transaction basis. However, the VAT Department acknowledges the particular nature of gambling and betting services, and the practical difficulties that could arise in the application of this principle. The taxable value of those gambling and betting services falling within the scope of article 4 of the Value Added Tax Act shall be determined on the last day of a given tax period, by reference to the aggregate taxable value of transactions during that tax period.

 

In other words:

 

(i) Where the supplier receives a commission or participation fee, the taxable value shall be the overall result of the commissions or fees from supplies falling within the scope of article 4 of the Value Added Tax Act generated during a VAT period, less any permitted deductions for that same period, as determined in accordance with section 1 above;

 

(ii) In all other cases, the taxable value shall be the revenue of the supplier determined in accordance with section 1.1(ii) above deriving from supplies falling within the scope of article 4 of the Value Added Tax Act generated during a VAT period, less any permitted deductions for that same period, as determined in accordance with sections 1.1(ii) and 1.2 above. Should, in a given VAT period, the taxable value determined pursuant to these guidelines result in a negative figure, that negative amount shall be carried forward to the subsequent VAT period or periods in succession and offset against the taxable value as determined pursuant to these guidelines for the subsequent VAT period or periods in succession. For the avoidance of doubt, a negative figure shall in no way be construed as an entitlement of the supplier to any refund of, or adjustment to, output VAT paid, or reported, in any prior period.

 

3. Issuance of fiscal receipts A person who makes supplies of gambling and betting services that fall within the scope of article 4 of the Value Added Tax Act and which are not exempt pursuant to item 9 of Part Two of the Fifth Schedule to the Value Added Tax Act is exempt from the obligation to issue fiscal receipts in terms of article 51 and the Thirteenth Schedule to the Value Added Tax Act.

 

These guidelines shall be applicable to the determination of the taxable value of gambling and betting services as from 1st January, 2018, and are restricted to the determination of the taxable value for the purposes of the Value Added Tax Act.

 

The Commissioner may substitute, alter or withdraw these guidelines at any time.

 

 

21st November, 2017

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