Malta permits the establishment and operation of companies engaged in remote/online gaming activities (such as casino-style games, poker, sports betting, betting exchanges, P2P, skins, lotteries, and software vendors which take commissions on wagers) through all types of technologies (internet, mobile, telephone, fax and game devices). In addition remote/online gaming operators which are based in Malta also benefit from very attractive fiscal incentives.
Why Malta?
- an EU member state which welcomes operators in the remote gaming industry
- its reputation as a well-regulated jurisdiction which safeguards the interests of the operators and the players
- a very attractive fiscal regime
- an efficient and relatively inexpensive licensing process
- a stable political and economic climate
- established and well regulated financial services institutions (including payment gateways)
- support services by pro-active professionals who adopt a "can do" attitude
- highly qualified and skilled workforce fluent in various languages
- a state-of-the-art telecommunications infrastructure
- a Seal of Approval issued to all licencees
- the Malta Remote Gaming Council composed of licencees and service providers to liaise which the authorities on matters relevant to the industry
Licensing requirements
Any person engaged in the carrying on of remote/online gaming activities in or from Malta must be licensed to do so by the Lotteries and Gaming Authority. To qualify for a licence the applicant must:
- be a limited liability company registered in Malta;
- be fit and proper;
- show business and technical ability to carry out the operation; and
- demonstrate that the operation is covered by sufficient reserves or securities and can ensure payment of player winnings and deposit returns.
Licensing process
The application process to obtain a licence is divided into three stages and normally takes about twelve weeks.
- A fit and proper test must be satisfied by the applicant, each person having 5% or more controlling interest in the company and its officers.
- A business and technical ability assessment must be submitted.
- The licence is granted subject to the applicant obtaining a certificate of compliance.
License fees and duration
On submission of the application a one-time fee of €2330 is paid. On issue of the licence and for each year thereafter the following annual fee is payable:
- Class 1: €7,000
- Class 2: €7,000
- Class 3: €7,000
- Class 4: 0 - 6 months - €0
7 - 12 months - €2,330 per month
13th month onwards - €4,660 per month
Licences are issued for 5 years and are renewable for further periods of 5 years each.
Classes of licences
Applicants can apply for any one of the following four classes of licences:
- Class 1 – Operators who take a risk on repetitive games that are generated by random events (e.g. casino style games, lotteries, slots)
- Class 2 – Operators who create a market and take a risk by backing that market (e.g. sports betting)
- Class 3 – Operators who promote and abet gaming from Malta (e.g. P2P, betting exchanges, skins, tournaments, bingo)
- Class 4 – Operators who provide a control/gaming system to remote gaming licencees, excluding the operator itself
Taxation
Remote gaming/betting companies are taxed at the maximum tax rate of 35% on their taxable income but the shareholders, whether physical or corporate shareholders, may avail themselves of the refundable tax credit system available under Maltese law. Furthermore, due to the imputation tax system provided for under Maltese legislation, the shareholders will not pay further tax on the dividends received from the company. The tax refunds will generally be equal to 6/7 of the tax paid and in such case the tax suffered will be 5% [35%-30%], or, if the distributing company claims double taxation relief, the refund would be equivalent to 2/3 of the tax paid in Malta.
It may be opportune to interpose a Maltese holding company between the shareholders and the licencee, so that dividends and tax refunds are paid to such holding company instead of to the shareholders directly, thereby avoiding an immediate tax liability in the shareholders' country of residence. Such intermediate company can also be used as a vehicle for other investments.
The licencee may also avail itself of Malta's extensive double tax treaty network as well as from other forms of double taxation relief. In addition, the company is exempt from transfer duties, exchange control restrictions, as well as from capital gains on transfer of the shares.
Gaming tax
The Gaming Tax (which is capped at €466,000 per licence) is calculated as follows:
- Class 1 standalone: €7,000 per month
- Class 1 on Class 4: €1,250 per month
- Class 2: 0.5% on the gross amounts of stakes accepted
- Class 3: 5% on real income (revenue from rake less bonus, commissions and payment processing fees)
- Class 4: Months 0-6 - €0
Months 7-12 - €2,400 per month
Month 13 onwards - €4,800 per month
Key official
Every licensee must appoint a key official who shall be responsible to personally supervise the licensee's operations. Such person, who can be a citizen of any country but must be a director of the company, must be a resident in Malta and is to ensure that the licensee complies with all applicable laws and regulations. This position may be outsourced as long as all responsibilities are fulfilled.
About EMD
EMD is one of the leading firms in Malta which provides professional support services to operators in the remote gaming industry. Our multi-disciplinary team of professionals ensures that our clients' needs are not only met but exceeded in the most efficient and cost effective manner. We seek to achieve this by understanding our clients' needs and implementing the best solutions for their requirements. To this end, the partner responsible for the iGaming Department is the sole point of contact for the client in respect of all services provided by EMD. Through our fully fledged iGaming Department, we provide our clients with a comprehensive professional support service in most matters relating to their business requirements. Therefore, besides assisting clients to obtain their gaming licences in Malta and ensuring continued compliance with the licence conditions, we also provide clients with other advisory and support services which they may require to run their operations efficiently and effectively. These services include, company formation, local and international taxation, accounting, drafting and review of documentation, payroll services, work permit applications, recruitment, employment matters, corporate management and administration, and opening of bank accounts. We also assist operators who are relocating to Malta with their various needs in the relocation process. Through our network of associates we can also assist our clients in those services which EMD does not engage in directly, such as real estate, ICT, and payment gateway services. Our client portfolio includes several gaming operators licensed in Malta, including some of the world's major players in the industry.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.