Accountancy for iGaming Operators

Once an iGaming operator obtains the applicable gaming license and a company is up and running, one might ask, “What’s next from a regulatory point of view?” With over 10 years of experience in the gaming industry, CSB Group’s team of professionals will not only assist in the setting up of the gaming operation but also in meeting regulatory obligations including iGaming accountancy requirements applicable to iGaming operators.

Accounting in iGaming

Authorities in Malta, including the Malta Gaming Authority (MGA), impose a number of regulatory requirements applicable to MGA licensees, mainly the submission of the below;

• Yearly audited accounts
• Interim management accounts
• Tax returns
• VAT returns
• MOSS returns

Yearly audited accounts

Audited set of financial statements need to be prepared and audited in accordance with the International Financial Reporting Standards (IFRSs), including a Directors’ report. These are to be submitted to the MGA within 180 days of the company’s financial year end. For instance, a company with a 31 December year end, must submit audited financial statements by end of June of the following year.

The same financial statements must be approved within 10 months from the accounting year end and must be submitted to the Malta Business Registry (MBR) within 10 months plus 42 days from the accounting year end. Similarly, a company with a 31 December year end, must submit audited financial statements to the MBR by 12 December of the following year (Approval on 31 October plus 42 days for submission).

At the audit stage, the auditors will perform audit procedures on material financial statement line items, according to the International Standards of Auditing.

At CSB Group, our iGaming accountants ensure a smooth audit process with minimum inconvenience to our clients. The auditor will receive timely and accurate management accounts, together with all the supplementary information that is required during the course of the audit.

Interim accounts

Management accounts covering the first 6 months of a company’s financial year are to be submitted to the MGA by the end of the 8th month of its financial year. This means that, a company with a 31 December year end, must submit its interim accounts covering January – June by August of the same year. These need to be signed by the key compliance function holder of the company.

Documents needed in preparation of management accounts

These documents include:

Reliability of operating systems and completeness of data are a must to ensure accurate accounting records and proper reconciliation amongst the different reports submitted. A challenging area is undoubtedly the reconciliation of the player liability held at a period end.

Main components of player liability include; 
a) Deposits;
b) Withdrawals;
c) Bets;
d) Wins;
e) Bonus.

Player liability is usually calculated as follows ; [ a – b – c + d + e ]
Player movements should;
a) Reconcile;
b) show the results of the operation (at gross gaming revenue level);
c) be reported on a monthly basis to the MGA;
d) impact the compliance contribution computation to be paid to the MGA;

Tax Returns

Gaming companies can also avail themselves of Malta’s efficient tax system and the number of applicable tax treaties.

In addition to the standard corporate taxation system, gaming companies licensed as B2C are required to pay compliance contributions which are variable fees depending on the type of license held by the operators. B2C operators are charged 5% gaming tax on the gross revenue generated from Malta-based players. B2B clients are exempt from gaming tax. Both B2C and B2B licensees are required to pay a non-refundable fixed annual license fee to the MGA.

Tax return is to be electronically submitted by 28 November following the end of the company’s financial year.

VAT Returns

It is very important to understand the type of activity involved and what the company’s intentions are. This will help to identify the place of supply considerations of gaming. Naturally, gaming activities, whether land based or online, carry VAT implications.

The latest VAT guidelines affecting gambling activities came into effect on 1 January 2018, whereby gambling verticals which fall under taxable and exempt without credit supplies, are outlined;

When the B2C activity consists solely of the above vatable supplies, the company would be registered under Article 10 and is able to claim back all its input VAT incurred on Malta expenses.

When the B2C activity is solely made up of the above exempt without credit supplies, the company would be registered under Article 12, and is not able to claim back input VAT incurred on Malta expenses. Furthermore, the company will need to pay VAT in Malta on any supplies it procures from EU and non-EU suppliers.

When the B2C activity consists of mixed supplies, then the company would need to differentiate between the vatable and exempt supplies and only charge VAT on the portion that is vatable. The company would still be registered under Article 10. The company is able to claim back input VAT in relation to the vatable supplies in full and apply partial attribution in respect of the general expenses that cannot be linked to any particular supply, such as professional fees incurred.

In respect of B2B activity, one would need to assess the type of activity of the B2C for which the software is being provided by the B2B and apply VAT rules accordingly.

VAT returns for Article 10 registrations must be submitted within 6 weeks following the end of each VAT quarter. VAT notices for Article 12 registrations must be submitted by not later than 45 days after the end of the month up to which the VAT notice is being drawn up.

The team can assist the company through the VAT registration process and compile and submit the necessary VAT related documents.

MOSS Returns

When taxable persons provide electronically supplied services (ESS) to non-taxable persons (players) in the EU (including remote gaming), the place of supply is shifted to where the customer is established.

Conditions for a service to qualify as an ESS in Malta:

• The service must be delivered over the Internet or an electronic network;
• The nature of the service must be such that it renders its supply essentially automated and involving minimal human intervention;
• The nature of the service must be such that it renders its supply impossible to ensure in the absence of information technology. In cases where the taxable person providing the services is not, or would like to avoid being, registered for VAT in the country where the player is established, they may opt for the MOSS scheme to facilitate the payment of VAT in the respective EU jurisdictions where their players are established. This scheme is available to taxable persons established both inside and outside the EU.

Maltese VAT would be chargeable when the player is established in Malta.

The company is required to submit a MOSS return electronically on a quarterly basis, to the Member State of identification within 20 days from the end of the relevant quarter. The payment of any VAT is also required by this date.

CSB Group can assist with MOSS registration, as well as with the submission of the periodic MOSS returns.

Benefit from CSB Group’s Accounting firm & Tax team expertise for the preparation of the Accounting and Coordination of obtaining the necessary documents to ensure meeting statutory requirements and adhering to MGA deadlines.