Malta is a leading EU jurisdiction for internet and remote gaming (Igaming) operations. This achievement is largely due to a comprehensive regulatory framework and tax planning opportunities for online gaming operations.
Internet and remote based casino and gaming operations require a special licence issued by the Malta Gaming Authority (MGA). In brief, the application for a remote gaming licence is split into 3 sections as described in more detail below. The application procedure mainly involves:
- The carrying out of a know-you-client procedures by the MGA:
- Submission of a written application form to the MGA together with supporting documentation.
- Opening of a Maltese company (that will be the licensee) and a local bank account.
- The evaluation by the MGA of technical matters relating to the proposed gaming activities. Lastly the certification of the gaming systems and other matters described in more detail below.
Maltese Igaming Licence Types
An applicant can apply for one or more types of licenses depending on the type of operation. It follows that operations fall under 4 classes namely:
Class 1– Casino type games, online lotteries
Granted to operators who assume the risk on repetitively generated games, such as casinos, lotteries and bingos.
Class 2 –Fixed-odds betting
Granted to operators who assume the risk on playable games that are played by means of bets on singular events. These include fixed odds betting and pool betting.
Class 3 –Poker networks, peer-to-peer (P2P) gaming, game portals
Granted to operators who earn a commission from the sale of remote gaming services. Examples of such are poker rooms, portals, affiliates and P2P platforms.
Class 4– Software vendors provide management and hosting facilities on their platform. Thus granted to operators who earn a commission by operating e-gaming platforms (software vendors)
Igaming Licence Application Process – Malta
The application process, last revised in June 2011, is broadly split into 2 phases:
- A pre-application phase whereby the MGA will run a check to ensure the application is correctly developed and all the key elements are present. The Purpose for this is to expedite the licensing process:
- Followed by a second stage whereby applicants submit all the required information at one go. The MGA will assess whether the applicant is:
- Fit and proper’ to conduct gaming business.
- Correctly prepared for a business strategy perspective.
- Possesses the operational and statutory requirements to meet the legal obligations.
- has the required technical specifications in place.
The Remote Gaming Regulations stipulate that licenses are to have all their servers and equipment, which control the gaming operation, located in Malta. Also, the operator must appoint a company director to the key official for the licensee. The key official must be resident in Malta and is to act as a liaison for the operator with the Authority.
Issue of licence
The MGA issues a formal license when it obtains approval from the compliance certification entity. An MGA licence is valid for 5 years which is renewable upon payment of a fee.
A Licensed Maltese operator needs to carry out a compliance audit within one year from the Licence date. Moreover, the MGA requires a second audit of the operation halfway through the lifespan of the licence.
Setting up a Maltese company
In order to apply for a licence, it is necessary to set up a Maltese limited liability company. This is the vehicle that will apply for the licence. For the purpose of MGA licencing, the MGA requires that the applicant company have a certain amount of share capital in proportion to the gaming business. The company may thus incorporate with a low share capital. However immediately prior to the licence issue, the MGA will request an increases in share capital. The level of minimum share capital required by the MGA depends on the licence type.
Company compliance and company maintenance
The law requires that a Gaming Company meets certain annual and ongoing obligations. As a result, the main compliance matters to take into consideration are the following:
- The Gaming Company must register for income tax purposes upon registration. and required to submit a tax return every year.
- Submit an annual return (detailing the company, its shareholding and officers) with the Maltese Registrar of Companies.
- It is also required to prepare annual financial statements in accordance with the International Accounting Standards and to have the financial statements audited.
- An MGA licenced gaming company must prepare interim financial statements every six months and submit them to the MGA.
- A gaming company needs to register for VAT and pay Maltese VAT on certain supplies procured from Malta or from abroad. This may involve the submission of official
- VAT forms. As a rule, a gaming company cannot recover input VAT but qualifies for some exemptions.
Official MGA costs
Licensed gaming companies must pay certain fees to the MGA in relation to their licence and gaming operations. The application costs, licence fees, MGA audit fee per application, are as follows:
- PROCESSING FEES – A one-time processing fee of Euro 2330 per class payable to the MGA simultaneously with the submission of the application. This fee is not refundable irrespective of whether gaming authority issues the license or not.
- ANNUAL FEES – a licence fee of Euro 8500 per annum per class is due to the Igaming authority. The annual igaming licence fee is payable within 15 days from the issue of the MGA licence and due every year.
- RENEWAL FEE – Upon expiration of the licence (5years) a renewal fee of €1,500 is due per class.
- SYSTEMS REVIEW FEE (COMPLIANCE FEE) – €2500 paid in advance for the execution by the Authority’s approved third party certifiers / reviewers. There is also a Compliance Audit fee of Eur3500, done after 1 year the of the gaming License is granted and every 3 years thereafter.
Malta IGaming Tax
A Gaming Tax is due to the MGA every month. Although the reference given to this official charge is a ‘tax’ it is different and separate from the income tax on profits due by the operator/gaming company payable to the Maltese income tax authorities. See below for information about income tax due by a limited liability company. The gaming tax depends on the applicable class:
- Class 1 licence – €4600 per month for the first 6 months, thereafter, €7000 per month.
- while a Class 1 on an existing class 4 licence – €1,165 per month.
- Class 2 – 0.5% of the gross amount of bets accepted
- Similarly a Class 2 on 4 – 0.5% of the gross amount of bets accepted in remote gaming betting operations
- Class 3 –5% of real income
- Class 3 on 4 – 5% of real income
- Finally a Class 4 –0 tax for the first 6 months. Followed by €2330 per month for the next 6 months and €4660 per month for the remaining period
- Class 4 licensee hosting and managing an operator which is not in possession of the relevant Class 1, 2 or 3 licence in terms of the regulations, however hosting an EEA licensed Business to Consumer operator – €1,165 per month per operator, paid by the Class 4 Licensee
Notably,the maximum igaming tax payable annually is €466.000.
A Limited liability company registered in Malta is taxable on world-wide income. Companies suffer tax at a flat rate of 35% on their chargeable income and capital gains. Indeed, there is no separate capital gains tax or corporate tax. Gains realised from the transfer of shares and intellectual property and certain other intangible form part of income. These are thus taxed at 35%.
The shareholders of the Maltese Gaming company can claim a refund of tax paid at corporate level. The extent of the refund depends on the nature and source of profits and on the account that pays these profits (companies allocate profits to various tax accounts). For further information about Tax Refunds and Participation Exemption regime please contact us.
We can assist clients who wish to set up remote gaming operations in Malta by providing a full range of initial and ongoing legal and support services –
- Applying for Remote Gaming license and liaising with the MGA throughout all stages
- Preparation of a Business Plan
- Tax and VAT optimisation and planning
- Company compliance
- Key Official Services & MLRO Services
- Sourcing IT infrastructure support
- Advice on and overseeing B2B arrangements including all IT and IP use and licencing aspects
- Comprehensive Legal Back Up
- License Acquisition from other Jurisdictions
- IT Services (including General IT Consulting, IT Security Consulting, Managed IT Operations & Outsourcing, Application Programming, Hosting, Server Maintenance)
- Accounting (including Financial Reports, Monthly Reports, Monthly Management Accounts including monthly journals, General Bookeeping procedures, Treasury management (includes payments from banks) , Payroll, Processor Reconciliations (Making sure every deposit and pay-out reconciles to Processors) and Bank Reconciliations, Budgeting and Forecasting
- Full Corporate & Banking Solutions with Gaming Friendly Banks
- PaymentSolutions/Payment Processors and Specializing in Integration of Payment Solutions with Software
- Affiliate System Software
- Multi Language Web Portals (Casino Management System)