VAT for iGaming Operators in Cyprus

The fundamental VAT position for gambling and gaming

Gambling and betting services are exempt from VAT across the EU under the VAT Directive. This means that the revenue a casino or gaming operator collects from players — stakes, entry fees, net gaming revenue — is not subject to VAT. Players do not pay VAT on their gambling activity and operators do not account for output VAT on player-facing revenue. This sounds beneficial but the other side of the exemption means iGaming operators cannot recover input VAT on their costs — creating significant irrecoverable VAT on technology, platforms, marketing and professional services.

What is and is not exempt for iGaming operators

The gambling exemption covers the core gambling activity — the placing and settling of bets, casino game play, poker rake, sports betting margin, lottery ticket sales and similar player-facing revenue. The exemption does not cover all activities of a gaming business. B2B services provided by one gaming company to another — software licensing, platform-as-a-service, managed services, data feeds, payment processing — are taxable at the standard rate. An operator that also provides technology services to other operators has a mixed supply position.

iGaming VAT treatment — activity by activity

Partial exemption for iGaming operators

Most iGaming operators in Cyprus have both exempt supplies — player revenue — and taxable supplies — B2B technology and services. This creates a partial exemption position where input VAT recovery is restricted. The standard method calculates recovery based on taxable turnover as a proportion of total turnover. For most operators player revenue dominates total revenue, producing a low recovery percentage — meaning most input VAT on costs is irrecoverable. Careful attribution of costs to specific activities — technology costs directly attributable to B2B taxable services may be fully recoverable — can improve the overall input VAT recovery position.

Place of supply considerations for online gaming

For B2C gambling services supplied online to players in EU countries the place of supply follows the digital services rule — where the player is located. However because gambling is exempt this does not create an output VAT obligation in the player's country. For B2B services — software, technology, platform services supplied to other operators — the B2B general rule applies and the place of supply is where the operator-customer is located. A Cyprus operator providing platform services to a Malta-based operator invoices without VAT with Malta reverse charge applying.

Affiliate marketing and VAT

Affiliate marketing is central to iGaming customer acquisition. When an affiliate is VAT-registered and invoices the operator for commissions the operator receives a VAT invoice for a marketing service. Whether that input VAT is recoverable depends on whether the marketing service relates to the exempt gambling supply — in which case it is irrecoverable — or to any taxable B2B services — in which case it may be recoverable. Most affiliate costs relate to attracting players to gambling services and are therefore attributable to the exempt activity. Input VAT on these costs is typically irrecoverable.

Cyprus as an iGaming hub — specific considerations

Cyprus is a significant iGaming licensing and operational jurisdiction. Many operators are incorporated and licensed in Cyprus with operational teams based here. The partial exemption position, irrecoverable input VAT and the treatment of intra-group charges within iGaming groups are all areas where specialist VAT advice is important. The interaction between Cyprus VAT, the gaming licence requirements and the corporate structure — which may involve Malta, Gibraltar or Isle of Man entities — creates a multi-jurisdictional VAT picture that requires coordinated advice.