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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
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.
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:
- Monthly PSP statements;
- Monthly operational and players’ bank account statements;
- Back end reports;
- Revenue invoices;
- Purchase invoices;
- Player liability reports as submitted to the MGA;
- Agreements entered into, including but not limited to, purchase of software agreements, service level agreements with third parties.
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;
Player liability is usually calculated as follows ; [ a – b – c + d + e ]
Player movements should;
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;
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.
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;
|Taxable Supplies||Exempt without credit supplies|
|Casino games not on a device (i.e. online RNG casino excluding live casino)||Betting on events such as sports betting|
|P2P Games (e.g. poker)||Lotteries and lottery type games|
|Games of Skill||Bingo|
|Casino games on devices (including land based casino and online live casino)
|Qualifying supplies in connection with the above
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.
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.
Senior Manager - Client AccountingContact
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"We have worked closely with CSB Group since February of 2015. They have been instrumental in helping us establish our Malta office and continue to aid us with their stellar legal and accounting services. Malta has proven to be an excellent location to establish our business, however, setting up a company with many international shareholders has been a complicated task. CSB Group has guided us along this process and we are quite satisfied with the results."
CSB Group have been our service providers for the last few years and have assisted us in a range of services including accounting, payroll, legal and corporate services. In our experience, CSB has proved to be of great use.
As foreigners having our business located in Malta, it did not take long until we realised the importance of local know-how and the value of having the presence of a professional partner that could take care of juridical and financial matters. We can honestly say that choosing CSB as our advisor is one of the best decisions we have made. CSB always delivers great results in a timely fashion and we would give them the best recommendations to anyone that considers starting up their business abroad.
"I would recommend your service to any gaming company planning to set up a Maltese company as well as apply for a Malta gaming license."
LEADING LIVE DEALER CASINO COMPANY SET UP IN MALTA
I have been using CSB Group in Malta to register our company and our ship under the Malta flag, and have always been completely satisfied with their performance. They do an excellent job, are always punctual, and offer the most competitive rates in Europe! A young and Smart team! We have also involved them on occasion for extra legal jobs, and recently I am using their accounting service to fulfil the VAT requirement and to complete our balance sheets. I'm happy to recommend the services of CSB Group.
Kite Investimenti Limited of Cyclos II
In 2018 we took the decision to use CSB Group to help set up a company and apply for a B2B licence in Malta. After contacting a number of different organisations CSB stood out in terms of their pre-sales response, it was timely informative and presented in a manner which showed that they understood us and our needs. Thankfully the focus on Price, Quality and Service still continues today and the team at CSB are more like an extension to our team, than just a trusted partner or supplier.
I have worked with CSB for several years, and have always found them highly professional and courteous. They are always happy to help.
GAMING MEDIA GROUP
We’ve been using CSB services for four years and they have been a great asset to our business. We’ve been very impressed with their friendliness and responsiveness and with the staff constantly producing quality work in every aspect of their business – from book keeping to tax preparation. We’re glad to have CSB as part of our team.
Carousel Group partnered with CSB back in 2018 when we began this venture and they have guided and supported us through every step of the process. Despite how arduous and complex licensing a gaming business has become in recent years, we were lucky to have CSB in our corner to ensure success and build the foundations for a high-growth international business.
Mr. Daniel Graetzer
We are truly glad to have CSB Group as a business partner! Their expertise and careful support have made a huge impact and yielded great value. CSB Group has greatly contributed to making such a challenging year like 2020 go by pretty smoothly, with record-breaking results! We confidently recommend CSB Group to anyone looking for the finest partners!
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