IN441 - Online Gaming in Malta - An Interview with Sean Dowden, Managing Director of Dixcart in Malta
In 2000 the Maltese Government passed legislation permitting online betting centres to operate from the island. Since then Malta has become one of the leading jurisdictions for online gaming with over four hundred licences having been issued, representing approximately 10% of the global online gaming market.
Sean Dowden, Managing Director of Dixcart Management Malta Limited has extensive experience regarding the various online gaming licences, compliance rules, tax legislation and accounting associated with this industry in Malta.
An Interview with Sean Dowden, MD of Dixcart Management Malta Limited
- Malta has been able to create a niche for itself over the years in the gaming industry. What attracts foreign companies to this jurisdiction?
Credit must go to the authorities for their attitude in creating a firm but flexible regulatory approach to online gaming activity, cutting red tape to a minimum in order to attract leading companies, whilst also being rigorous in protecting Malta’s reputation by only providing licences to companies with a sustainable and workable business plan.
Malta is also an attractive jurisdiction for foreign gaming companies to consider due to the low levels of gaming tax and a wide network of double taxation agreements. An e-gaming company may be able to take advantage of Malta’s extensive double tax treaty network, as well as other forms of double taxation relief, by setting up or relocating their company to Malta.
Malta companies are also exempt from transfer duties, exchange control restrictions and capital gains tax on the transfer of shares, in most cases.
Additionally, Malta is a full member of the EU, which provides significant fiscal benefits for both EU companies and the executives of those companies.
- What are the Different Classes of e-gaming Licence in Malta?
Each online gaming company must hold a licence. These are issued by the Lotteries and Gaming Authority (LGA).
There are four classes of licence in Malta and each class is subject to different rules.
- Class 1: a remote gaming licence (examples of Class 1 licences would include casino-type games and online lotteries) whereby operators manage their own risk on repetitive games. It is also possible to have a “Class 1 on 4” licence whereby a Class 1 licensee operates its games on the software and, in certain cases, through the equipment of a Class 4 license or licensee;
- Class 2: a remote betting licence (an example of a Class 2 licence would include fixed-odds betting) whereby operators manage their own risk on events based on a matchbook. It is possible to have a “Class 2 on 4 licence” whereby the Class 2 licence operates its games on the software, and in certain cases, through the equipment of a Class 4 license or licensee;
- Class 3: a licence to promote and/or assist remote gaming in or from Malta (an example of a Class 3 licence would include poker networks, peer-to-peer (P2P) gaming and game portals). It is also possible to have a Class 3 on 4 licence whereby the Class 3 licensee operates its games on the software, and in certain cases, through the equipment of a Class 4 license or licensee;
- Class 4: a licence to host and manage remote gaming operators, excluding the licensee itself, whereby software vendors provide management and hosting facilities on their platform. In essence this is a business to business (B2B) gaming licence or licensee.
- Which specific tax benefits are available to companies in Malta?
Malta’s headline rate of corporate taxation is 35%. The Maltese authorities, however, provide generous refunds to the shareholders of Malta companies, limiting the net exposure to 0-10% in most circumstances, depending on the nature of the income. This ranks Malta as a premier low taxation jurisdiction within the European Union.
In addition to corporate tax, online gaming companies in Malta are required to pay gaming tax. The tax payable is dependent on the Class of licence held and is generally a tax on revenue generated. For example, a Class 2 licensee would pay a sum equivalent to 0.5% on the gross amount of bets accepted.
- Does an individual need to be physically present in Malta in order to base a company there?
While individuals are not required to be physically present in Malta in order to form and manage a Malta company, the idea of “substance” or “real commercial activity” is very important and is a major reason why Dixcart has invested heavily in serviced office facilities.
Each licence holder (licensee) is required to appoint a Key Official (KO), however, who has to be physically present in Malta. The KO acts as the director of the licensee and liaises between the licensee and the Malta Gaming Authority. This individual is also responsible for supervising the operations of the licensee, ensuring that the licensee complies with the applicable laws and regulations as established by the Authority and follows any directives that the Authority may issue to the licensee.
- How significant an industry is online gaming in Malta?
The online gaming industry accounts for over 10% of Malta’s GDP and is growing continuously. It therefore has a significant role to play in the continued success of Malta as a financial services jurisdiction.
- How many people are employed in the gaming industry in Malta?
There are now over two hundred companies, employing over 8,000 people, directly or indirectly, in the e-gaming industry in Malta, with some of the world’s biggest brands choosing Malta as their home.
Fiscal benefits are obviously one of the reasons that companies choose Malta; it is important to be able to attract experienced staff, and these can be sourced locally in Malta. Availability of legal and accounting support, as well as IT professionals, further enhance Malta’s attractiveness to the gaming industry.
- Are there incentives for attracting talented executives?
Malta has attracted individuals from around the world through the availability of various residence schemes. These individuals typically enjoy a “resident non domicile” basis of taxation; whereby income earned outside of Malta is not taxed in Malta. Capital gains are not taxed even if they are remitted to Malta.
There is also a “Highly Qualified Persons” Scheme specifically for executives of financial services, aviation and gaming companies. These individuals (subject to qualification and authorisation from the authorities) pay a flat rate of 15% on salary income earned (please see Dixcart article: Malta – Attractive Residence Programmes and Tax Benefits for Expatriates).
- What is the general outlook for the e-gaming industry in Malta moving forward?
The industry and regulation surrounding it are changing rapidly and it is therefore both regulators and major industry players must adapt to the ever changing environment, but the future looks increasingly bright. The Executive Chairman of the Malta Gaming Authority, Mr. Joseph Cuschieri, shares a similarly positive view and in a recent article in the ‘Malta Today Publication’ indicated that in “ten years” time he wanted to see Malta established as a hub for all the ancillary industries that complement and support the gaming industry; his vision is for Malta to become the “Silicon Valley of the industry”, and I think we are getting there.
How Can Dixcart Help?
We have assisted numerous clients in successfully obtaining licences to operate their online gaming companies in Malta. For both existing and new clients, Dixcart can provide:
- Assistance with licence applications
- Establishment and management of online gaming companies
- Advice regarding compliance rules
- Advice regarding tax legislation
- Management and regulatory reporting assistance
- Accounting facilities
- Company secretarial support
If you would like further information, please speak to Sean Dowden at the Dixcart office in Malta or to your usual Dixcart contact.