Malta is a leading EU jurisdiction for internet and remote gaming 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, the submission of a written application form to the MGA, submission of supporting documentation, the 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, the certification of the gaming systems and other matters described in more detail below.
An applicant can apply for one or more types of licenses depending on the type of operation. Operations fall under 4 classes:
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 games which are carried out 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, such as poker rooms, portals, affiliates and P2P platforms.
Class 4– Software vendors provide management and hosting facilities on their platform. Granted to operators who earn a commission by operating e-gaming platforms (software vendors)
Licence Application Process
The application process was revised in June 2011 and 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. This is intended to expedite the licensing process; and
- 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
A formal licence is issued when the MGA obtains approval from the compliance certification entity. An MGA licence is valid for 5 years which may be renewed upon payment of a renewal fee.
A licensed Maltese operator is required to carry out a compliance audit by an independent firm 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 that will apply for the licence. For the purpose of MGA licencing, the applicant company will be required by the MGA to have a certain amount of share capital in proportion to the gaming business – the company may be registered with a low share capital but 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
A company is required by law to meet certain annual and ongoing obligations – the main ongoing / annual compliance matters to take into consideration are the following. A company is required to register for income tax purposes upon registration and required to submit a tax return every year. The company is required to submit an annual company return (containing information about the company, its shareholding, shareholders 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 is required to prepare interim financial statements every six months and submit them to the MGA
- A gaming company is required 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 is not entitled to recover input VAT but qualifies for a number of exemptions.
Official MGA costs
Licensed gaming companies are required to 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 is to be paid to the MGA simultaneously with the submission of the application. This fee may not be refunded irrespective of whether the licence is granted or not.
- ANNUAL FEES – a licence fee of Euro 8500 per annum per class is due to the The annual licence fee is to be paid 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 and a Compliance Audit fee of Eur3500 which is done after 1 year the License is granted and every 3 years thereafter.
A Gaming Tax is due to the MGA every month. Although this official charge is referred to as 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 (the Commissioner of
Inland Revenue) -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
- Class 1 on an existing class 4 licence – €1,165 per month.
- Class 2 – 0.5% of the gross amount of bets accepted
- 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
- Class 4 –0 tax for the first 6 months; €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
The maximum tax payable annually is capped at €466.000.
A Limited liability company registered in Malta is taxable on world-wide income. Companies are taxed at a flat rate of 35% on their chargeable income and capital gains. There is no separate capital gains tax or corporate tax. Gains realised from the transfer of shares, securities, intellectual property and certain other intangible property are treated as part of the income for the year and are taxed at 35%.
Upon a distribution of profits, the shareholders of the Maltese company are entitled to 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 out which the profits are paid (companies are required to 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 is reconciled 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)