1. VAT RELATED REMOTE GAMING APPLICATION

2. Regulations
The regulatory body in Malta for Gaming is the Lotteries and Gaming Authority (LGA) and specifically for iGaming the Remote Gaming Regulations issued in Remote gaming is regulated by the Remote Gaming Regulations S.L , which are issued under the Lotteries and Other Games Act . CAP 438 of the Laws of Malta (LOGA). In order to provide remote gaming services in Malta, a licence is needed covering the specific gaming operations. Licensees are expected to operate in compliance to the LOGA and the Regulations, as well as the anti-money laundering legislation, electronic commerce legislation and any other relevant law.

3. Classes of license Classes of License
There are four classes available, which a license may be obtained under the Maltese jurisdiction:
Class 1; For operators managing their own risk on repetitive games. This class covers casino-type games
Class 2: For operators managing their own risk on events based on a matchbook. Under this class falls fixed odds betting.
Class 3: For operators taking a commission from promoting and/or betting games. This class included P2P games, poker networks, betting exchange and online lotteries.
Class 4: To host and manage remote gaming operators, excluding the licensee himself. This is intended for software, vendors who want to provide management and hosting facilities on their gaming platform.

4. Anti-Money Laundering Policy
Objective of the AML Policy
A licence holder must be fully committed to be constantly vigilant to prevent money laundering and combat the financing of terrorism in order to minimise and manage risks such as the risks to its reputation and that of Malta as a robust jurisdiction, legal risk and regulatory risk. It also has to be alert to prevent serious crimes and not to allow its systems to be abused in furtherance of these crimes.
A licence holder has to ensure to keep abreast of developments both at national and international level on any initiatives to prevent money laundering and the financing of terrorism.

5. VAT in the Remote Gaming Regime

6. VAT in the Remote Gaming Regime
VAT Treatment of Maltese Gaming Companies
Gaming Companies require determining which services are considered to be VAT exempt and which are not. Not all forms of online gaming are exempt in all member states and different member states apply different rules as whether a service is exempt or not. This will have a major impact from 1st January when new rules will come into force.
The Lotteries and Gaming Authority (LGA) sets out the basis for defining ‘services that are strictly required, related and essential, which form part of the online gaming transaction itself and in respect of which transaction the company is licensed in terms of the Remote Gaming Regulations 2004’

7. VAT in the Remote Gaming Regime
Methodology
The criteria used to establish which services are ‘related to gambling’ were determined on the basis of whether the particular service is:
Strictly required, related and essential; and
Forms part of the online gaming transaction itself; and
In respect of which transaction the company is licensed in terms of the Remote Gaming Regulations 2004.
A number of services typically acquired by gaming companies have been identified and each service was appraised against each part of the definition. Any services which fall within the on-line gaming itself are considered to fulfil all three parts of the definition. A gaming transaction necessarily involves the cycle covering the activities where the player registers with a gaming company, funds the accounts, plays the game and cashes out.

8. VAT in the Remote Gaming Regime
Conversely, services that do not form part of the gaming transaction itself but support the gaming infrastructure that acts as the delivery mechanism of the game to the remote player and the administrative operations of the gaming company do not meet the above criteria. The lists are intended to cover a significant part of the typical services acquired by remote gaming companies. However, it is not exhaustive. There may be services which do not clearly fall under the headings contained in the two lists. In such cases, remote gaming companies may present to the LGA the specific characteristics of the particular service, the circumstances in which it is required, and how and why it meets the above criteria resulting in it falling within or outside the definition. Where the LGA considers that this service may also be acquired by other operator, reference to the type of service may be made in the appropriate list.

9. VAT in the Remote Gaming Regime
Current Rules
On 1st January 2010, a number of amendments were introduced in relation to the Place of Supply of Services rules. These distinguish between a Business to Business (B2B) or Business to Client (B2C) transaction. In the former, the place of supply is determined where the Customer is established, whilst in the latter the place of supply is determined where the supplier is established.
As from 2010, gaming operators who receive services for which they are liable to pay Malta VAT under the reverse charge mechanism are obliged to register with the VAT Department under Article 12. Prior to 2010, gaming operators did not need to register unless they made intra-EC acquisition of goods exceeding €10,000 in a calendar year.
Services which are exempt from VAT directly relate to the gaming transaction.

10. The LGA sets out the following activities:

11. 2.2.2 Purchase Cost/Licensing Fees of software that processes information related to all game/player interaction
4.0 Professional Fees
2.2.3 Software Maintenance and Support Services
4.1 Legal Fees
2.3 System Integration Costs
4.2 Consultancy Fees
2.4 Game Collusion Management
4.3 Management Services
4.4 Accountancy & Audit Fees
3.0 Risk Management
4.5 Administration, Rent/Hire
3.1 Event Management
4.6 Key Official Support Services 4
3.2 Odds Management/Odds Purchase
3.3 Results Management
5.0 Staff Costs
3.4 Risk Management Services
5.1 Staff Recruitment Fees
5.2 Retention
4.0 Player Support
5.3 Training
4.1 Player Support Services 1
5.4 Welfare Services
4.2 Responsible Gaming Measures 2
5.0 Intermediaries 3
6.0 Administration
5.1 Intermediaries Commission
6.1 Office Rent
6.2 Repairs and maintenance
6.0 Payment Solutions
6.3 Cleaning costs
6.1 Payment Services Provider Fees
7.0 Other Costs
7.1 Research and Development
7.2 Travel and Entertainment
7.3 Attendance to Conferences, Seminars etc

12. VAT in the Remote Gaming Regime
Changes to the VAT rules as from
With effect from 1 January 2015, every business that sells e-services to final consumers within the European Union (EU) will experience a dramatic change in VAT compliance.
The VAT legislation will change the place of supply and the country of taxation of e-services (telecommunications, broadcasting and electronically supplied services including Online Gaming services) when supplied to non-taxable persons (B2C) who are resident in the EU. In summary, the place of supply of these services shall no longer take place where the supplier is established but shall shift to where the customer is established, has his permanent address or usually resides.

13. VAT in the Remote Gaming Regime
2015 Changes
As of 1st January 2015 the place of B2C supplies of electronic services by any supplier will shift to the country where the customer is established or usually resides. Non-EU and EU-established iGaming operators having customers in different EU Member States will have to determine whether VAT is chargeable in the Member State of their customer. If so, they will need to charge such VAT at the rate applicable in the customer’s EU Member State.
From 2015, in order for a remote gaming company to be able to determine whether VAT is chargeable in the member state of consumption or not, it must first determine where the customer is located. If that customer resides in a jurisdiction where gambling is no longer VAT exempt, an operator will have to collect VAT from its players and pay VAT there.

14. VAT in the Remote Gaming Regime
Not all forms of online gaming are exempt in all member states and different member states apply different rules. This is why it is imperative to determine whether VAT is chargeable in the member state of the customer.

15. VAT in the Remote Gaming Regime
VAT Registration
Gaming Operators have two options:-
Register for VAT in the Member State of their customer. This means that the Company might have to do multiple registrations in respective member states where the Company is provide its services.
Opt to register in only one Member State ‘Member State of Identification’ and report the VAT due in other Member States in one single electronic declaration (under the so-called ‘mini one-stop-shop’ scheme). The suppliers will have one VAT Identification number and they will have to deal with one VAT authority.
As a result of the VAT changes, it would be crucial for iGaming companies providing B2C supplies to identify
The status of the Customer, whether is taxable or non-taxable person
Whether the Customer is established, that is, the location of the customer

16. VAT in the Remote Gaming Regime
Guidelines
The EU Commission has amended the Implementing Regulation 282/2011 to further supplement additional information relating to place of supply of services.
The updated rules can be accessed at
09:EN:PDF

17. VAT in the Remote Gaming Regime
Following the publication of legislation on Mini One Stop Shop (MOSS) for businesses making B2C supplies, Guidelines have not been published by the EU Commission aimed at providing a better understanding of the legislation
The Guidelines cover the registration and deregistration process, the return process, the payment process, record keeping and other matters.
at_works/telec om/one-stop-shop_guidelines_en.pdf

18. VAT in the Remote Gaming Regime
Impact on iGaming operators
The 2015 changes could have a major impact on EU and non-EU iGaming operators.
Pricing – as the VAT rates within the EU differ VAT will have an influence on the price charged by the operators as well as their revenue.
Administrative impact and the systems including those for invoicing will be required to cater for the changes