Transcript VAT RELATED REMOTE GAMING APPLICATION Regulations The regulatory body in Malta for Gaming is the Lotteries and Gaming Authority (LGA) and specifically for iGaming.

VAT RELATED
REMOTE GAMING
APPLICATION
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
2004. Remote gaming is regulated by the Remote Gaming Regulations
S.L.438.04, 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.
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
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 2015
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’
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.
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.
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.
The LGA sets out the following
activities:
Services that are considered to be strictly
required, related and essential and which
form part of the on-line gaming transaction
itself and in respect of which transaction the
company is licensed in terms of the Remote
Gaming Regulations, 2004
1.0 Fraud Prevention
1.1 Idenitification & Verification of Players
Guidance
Note
Services that are not considered to be
strictly required, related and essential
and which form part of the on-line
gaming transaction itself and in respect
of which transaction the Company is
licensed in terms of the Remote Gaming
Regulations, 2001
1.0 Marketing
1.1 Advertising
1.2 KYC Service
1.2 Age Verification
1.3 Integrity Checks
1.2 Promotional Material
1.5 Player Collusion Management Services
1.6 AML Procedures
1.7 Payout Management Services
2.1 Hosting
2.2 Connectivity and Teleccomunication
2.3 DRP and BCP provision
2.4 Hire of IT Equipment
2.5 Maintenance and Support Services
2.0 Game
2.1 Integrity Checks
2.1.1. Game Logic & Integrity Check
2.1.2 RNG Testing
2.1.3 Sport Integrity Checks
2.2 Software
2.2.1
Gaming
Software
Licensing
Fees/Purchase Cost
2.0 Technical & Hardware Supply
Services
3.0 Telecommunication
3.1 Telephone costs
3.2 Mobile costs
3.3 Office Connectivity costs
Guidance
Note
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
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
4.2 Responsible Gaming Measures
2
5.0 Intermediaries
3
5.1 Intermediaries Commission
5.4 Welfare Services
6.0 Administration
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
4
VAT in the Remote Gaming Regime

Changes to the VAT rules as from 01.01.2015
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.
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.
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.
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
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
http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2013:284:0001:00
09:EN:PDF
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.
http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/how_v
at_works/telec om/one-stop-shop_guidelines_en.pdf
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