Malta has set out transitional VAT rules for operators whose supplies move from exempt without credit to taxable, after Legal Notice 86 of 2026 took effect on 1 October 2026.
Malta’s tax authority published guidelines on 30 September 2026 explaining how VAT applies when a supply changes from exempt without credit to taxable. The Malta Tax and Customs Administration issued the guidance a day before most gambling and betting operators became taxable for VAT purposes.
The change follows the enactment of Legal Notice 86 of 2026, which came into force on 1 October 2026. A few very narrowly defined exceptions keep their status as exempt without credit. The guidance is therefore especially relevant to the online gaming and betting sector.
What the legal notice changes
Legal Notice 86 of 2026 is titled the Value Added Tax Act (Amendment of Fifth Schedule) (Amendment No. 2) Regulations, 2026. The finance minister issued it under Article 75 of the Value Added Tax Act (Cap. 406). It is to be read and construed as one with the Fifth Schedule to that Act.
The regulations amend the VAT exemption covering government lotto and lotteries, related agency services and other gambling-related supplies. Regulation 2 replaces Item 9 of Part Two of the Fifth Schedule with the wording: “Gambling. 9. Betting, lotteries and other forms of gambling, as may be approved by the Minister.”
Determining VAT treatment and reporting
For services that span the transition period, the VAT treatment depends on when the services are performed or used, regardless of the invoice date. The normal tax point rules still decide when VAT must be reported. Continuous supplies that straddle the transition must be apportioned between the pre-transition and post-transition periods.
Input VAT recovery and partial attribution
Taxpayers moving from exempt without credit to taxable status may recover input VAT on costs linked to their newly taxable supplies. This is subject to the normal recovery rules under the tenth schedule to the VAT Act. Input VAT on costs wholly used for exempt supplies before the transition cannot be retroactively attributed to taxable supplies.
Capital goods adjustments
Affected taxpayers should also assess whether capital goods adjustment rules may apply to them.
Reverse charge obligations
Reverse charge requirements continue to apply to supplies received from suppliers not established and/or not registered for VAT in Malta. The same transitional principles apply in these cases.
Operators in the gaming and betting sector should review their contracts, invoicing and input VAT positions against the new rules, as the guidance applies from the first day of the changed treatment.
