Malta has passed new regulations in the years 2000 and 2004 relating to internet based betting offices and remote gaming respectively, which have made it possible and very attractive for foreign investors to use Malta as a base for these lucrative activities which in other jurisdictions are often burdened by high tax rates.

Malta has amassed more on-line betting and gaming companies than any other Western European offshore jurisdiction. The island’s excellent location, technical expertise and competitive tax incentives for on-line bookmakers who relocate to Malta, is rapidly putting Malta on the bookmakers’ map. Companies who have taken advantage of Malta’s incentives include Sunderlands, Stanley Leisure, William Hill, Ladbrokes, Firststake, Luvbet (Gary O’Halloran), Paddy Power, Wembley, Unibet, GC Sports, International Allsports, and Eurofootball.

As from 2004, activities such as online casinos, casino-style games, betting exchanges and lotteries are also permitted.

Under online betting regulations, the Director of Public Lotto will grant licenses to operate such betting offices to such persons having the appropriate business ability to conduct the betting office successfully. Licenses are issued for a minimum period of five years and may be extended for further periods of five years.

Malta is therefore an ideal location for the setting up of an internet based betting office due to the tax friendly regime by which these activities are regulated.

International Trading Company

Muscat Azzopardi and Associates shall set up an International Trading Company (ITC) for foreign operators - the principal advantage is the relatively low tax rate applicable. Although ITCs are liable to the normal corporate tax of 35% levied on all Maltese companies based upon their chargeable income for the year of assessment, upon a distribution of dividends by an ITC to its non-resident shareholders, certain fiscal incentives and tax refunds available to non-resident shareholders reduce the effective tax rate to merely 4.17%. Other advantages include an advanced IT infrastructure and a highly professional regulatory structure.

Types of License

The new Remote Gaming Regulations extend the licensing regime to cover general gaming, betting, betting exchanges and casino platforms. Four types of licenses are available and applicants may apply for either or all of the following licenses:

(a) Class 1 Remote Gaming License which is a remote gaming license.
(b) Class 2 Remote Gaming License which is a remote betting office license or an online betting exchange office license.
(c) Class 3 Remote Gaming License which is a license to promote and/or abet remote gaming from Malta.
(d) Class 4 Remote Gaming License which is a license to host and manage remote gaming operators, excluding the licensee himself.

License Fees

The licence fees payable to the authority are established by the new Regulations as follows:

The Application fee for a new licence of any class is Lm1,000 (Euro2,500). This fee is payable together with the submission of an application for the licence (licences are granted for the period of 5 years).
The fee for the renewal of a license is of Lm 500 (Euro 1,250)

The annual license fee for any category of license is of Lm 3000 (Euro 7,500)


Taxes

Apart from the above mentioned corporate tax, which effectively works out at 4.17% there is also a gaming tax which is to be paid to the Authority on behalf of the government. This varies depending on the type of estate.

Class 1 On all remote gaming(except betting and pool betting) a tax of Two thousand Maltese liri (Lm2,000) per month is payable during the first six months after the issue of the license and subsequently three thousand Maltese liri (Lm3,000) per month for the entire duration of the licence period.
The law provides further that licensees operating from the hosting platform shall pay
five hundred liri (Lm500) per month.

Class 2: On the gross amount of bets accepted in remote betting operations a sum equivalent to (0.5%) is the tax payable.

Class 3: On betting exchanges the tax payable is one (0.5%) on the sum of all net winnings calculated per player per betting market.
On pool betting - a sum equivalent to half of one per centum (0.5%) on the aggregate of stakes paid.

Class 4: The law provides that on remote gaming operated by a Class 4 Remote Gaming licensee, the licensee who operates the hosting platform shall not pay any tax for the first six months after the issue of the license, and pays one thousand Maltese Liri (Lm1,000) per month for the subsequent six months and subsequently two thousand Maltese liri (Lm2,000) per month for the entire duration of the license.


Provided that in all cases the total maximum of tax payable per annum by one licensee in respect of any one license is capped at two hundred thousand Maltese liri (Lm200,000) (Euro 500, 000)


As regards banking, card processing facilities for Visa, MasterCard and EuroCard for online internet merchants (local or foreign based) and other Payment and Banking Solutions are available through one of the local Banks. The bank can process all types of transactions even high risk, including lottery, casino, betting, travel, etc... except for adult internet sites. Authorisation on a card transaction may be obtained either manually i.e. through telephone, fax or e-mail or electronically i.e. through a leased line or dial-up connection to the Bank's authorisation system. This depends on the volume of transactions and the urgency in which confirmation is required. The Card Services Centre offers a manned 24-hour service, 7 days a week. Processing can be done in multi-currency and settlement will be effected on a 2-day value date basis from processing date. Settlement can be in any currency.


Muscat Azzopardi and Associates shall take care of all the necessary steps, and we assist our clients in applying for licenses, acquiring or renting property, back office requirements, and other services as required.

Please do not hesitate to contact us for more information.


Dr. James Muscat Azzopardi B.A., M.A., LL.D
jamesma@ma-advocates.com