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.

Remote Gaming    

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.

Licence Types

 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

Other Requisites

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.

Compliance Audit

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.

Gaming Tax

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.

Corporate tax

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.

Our services     

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)

 

Contact us on +356 20103020 or by mail at info@ellulschranz.com to find out how E&S can help you in ‘making things happen’.

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