Online Gaming Operations in Malta
By George Farrugia
25 October 2007
Licensing Requirements |
Basic Requirements |
Licence Fees
Taxation |Company
Registration |
Taxation of Online Gaming Companies |EU
Laws |
What Malta Offers
 Serious
gaming companies understand the importance of a reputable licence.
Being perceived by players as safe and credible will provide greater
credibility to online game sites and therefore assist in making
them more competitive on the market.
Malta offers the E-Gaming Industry a package that few other jurisdictions
can match. The Remote Gaming Regulations issued in early 2004 by
the Lotteries and Gaming Authority continue to enhance on the existing
rules and further enhances Malta’s reputation as a jurisdiction
to be trusted by both players and operators.
The Authority will grant licences to operate gaming offices to
such persons who have demonstrated “appropriate business ability
to conduct the betting office successfully”.
The new rules provide for four different classes of licences, namely:
Class 1 – Remote Gaming Licence for online gaming
Class 2 – Remote Gaming Licence for online betting office
Class 3 – Promotion and abet gaming from Malta
Class 4 - Hosting and managing only gaming operations, excluding
licences itself.
Licences are issued for a minimum period of five years and may
be extended for further periods of five years each.
Licensing Requirements
Obtaining a gaming licence in Malta is a serious affair and in
the interest of the consumers and the local reputation, the Authority
would require to know that the applicant can meet the licence obligations.
The licensing procedure is quite extensive but thanks to the professionalism
of the persons involved, this procedure should not take more than
5 to 6 weeks.
The application for a gaming licence requires the following documentation:
1. Detailed profile of the promoting company
2. A copy of the last audited accounts of the promoting company,
where applicable
3. A business plan indicating the economic activity – including
job creation if any – which will be carried out from Malta
4. A plan of the premises earmarked for adoption as a call centre.
5. Personal details of all shareholders having more than 5% interest
in the local operations.
Basic Requirements
• Both hardware and software involved in the operations must
be located in Malta, and there exist companies that can provide
this service without the need for the licensee to obtain its own
premises.
• The activities of the International Trading Company are
limited to those carried outside Malta. No Maltese resident is permitted
to place bets with such a company.
Licence Fees
On submission of application form – Lm1,000 (US$2,700) for
any class of remote gaming licence.
On Issue of any Remote Gaming Licence – Lm3,000 (US$8100)
per annum. Such a licence is normally issued for a 5 year period.
On application for renewal of any Remote Gaming Licence –
Lm500 (US$1,350)
Taxation
On online gaming – Lm2,000(US$5400) per month for first
six months and Lm3000(US$8100) per month for the entire duration
of the licence period.
On Class 4 Licences – Lm0.0 (NIL) per month for first six
months and Lm1,000(US$2700) per month for the next six months and
Lm2000(US$5400) per month for the remaining period of the licence.
Online betting operations – one half of one per centum (0.5%)
on the gross amounts of bets accepted
Online betting exchanges – one half of one per centum (0.5%)
on the sum of all net winnings calculated per player per betting
market.
Online pool betting – one half of one per centum (0.5%) on
the aggregate of stakes paid.
Provided that in no case will the maximum of tax payable per annum
by any licensee in respect of any one licence, exceed Lm200,000.
Company Registration
A Malta based gaming operation must be carried out by a Malta
registered company as specified in Regulation 4 of the Remote Gaming
Regulations (LN176/2004). Gaming companies are not subject to any
special tax regime. In fact, online gaming operations may be carried
out through a normal limited liability company registered in Malta
under the Companies’ Act.
Taxation of Online Gaming Companies
Companies registered on or after 1st January 2007 are taxable at
the rate of 35% however, shareholders are entitled to claim back
a 6/7ths refund of the Malta tax upon distributions of profits.
Alternatively, shareholders may claim a 2/3rds refund of the tax
payable in Malta.
In addition, Malta does not levy withholding tax on any outbound
distributions of dividends. The refund system and the absence of
a dividend withholding tax ensures that profits derived by gaming
companies are taxed and repatriated outside Malta in the most efficient
manner.
.
EU Laws
The EU presently does not regulate gambling and in accordance
with the EU principle of solidarity, EU member states are free to
regulate the matter at a national level. In fact the EU welcomes
Malta’s approach to attract and regulate the online gaming
industry.
In a number of test cases, the European Court of Justice has held
that the Treaty of Rome applies to the sector since online gaming
is classified as a service and therefore guaranteed by one of the
four freedoms enshrined in the treaty of Rome.
An important aspect to remember is that in order to benefit from
the application of the Internal Market Principles and provide cross
border services within the European Union one should be established
in the EU. Malta, being an EU member since 1st May, 2004, offers
such an opportunity which few other e-gaming jurisdiction can match.
What Malta Offers
Fiscal Benefits
• Low taxation on gaming operations in Malta
• Tax leakage in Malta may be as low as 5%
• A wide network of double taxation agreements
Other Advantages
• A sound legal and financial system
• A sound ICT infrastructure
• Legislation on betting and e-commerce
• Strong regulatory bodies
• A solid international reputation
• Skilled work force
• Low cost of doing business
• State of the Art telecommunications facilities
• An internal market of circa 500 million EU citizens.
Disclaimer
The above information is being provided
as a general guide only and should not be considered as a substitute
for professional advice.
George
Farrugia is the founding partner of MGI Malta. He can be reached
at
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