A member of the EU since 2004 and of the eurozone as of 2008, the Maltese islands, comprising Malta, Gozo and Comino, lie midway between Sicily and North Africa. The official languages are English and Maltese and a number of other languages are widely spoken.

Over the last two decades, Malta has built on its strategic location and its highly educated, multi-lingual, flexible and cost-effective work force to become one of the most attractive ICT centres and investment locations in the region, having a sound regulatory regime, a resilient infrastructure and enjoying an excellent reputation internationally.

Malta was the first EU jurisdiction to regulate igaming making it one of the most competitive locations for the establishment of remote gaming operations with the benefit of both legal certainty and economic advantages.

Malta can today boast one of the highest broadband penetration rates in Europe and a modern technological infrastructure, making Malta a regional centre of excellence in ICT.

The various local infrastructural investments together with a favourable gaming legislative environment make Malta the ideal igaming jurisdiction.

Malta is also well on its way to increase its offerings as an important location for ICT business, with the new SmartCity Malta project (a US$300 million investment by Dubai’s Tecom Investments and the Government of Malta) currently underway expected to accelerate the process with its first tenants moving in early 2010. This project is also earmarked to create the first igaming knowledge and service cluster.

Furthermore, there is a firm political commitment to make Malta a global ICT centre of excellence by 2015.

Why Choose Malta?

There are many other reasons for considering Malta as the base for gaming operations. These include:

Remote Gaming in Malta

Malta’s remote gaming sector is a success story, having grown at an exorbitant rate since its launch in the late 1990’s. Malta was the first EU Member State to start licensing remote gaming operations within the context of a well regulated sector and has, accordingly, become a secure base for an increasing number of igaming operators.

Remote gaming in Malta is regulated by the Lotteries and Gaming Authority (LGA). The Remote Gaming Regulations that came into force in 2004 place Malta right in the middle of the igaming revolution, making Malta the best jurisdiction within the EU, and Europe generally, for the establishment of an igaming operation.

License Classes

There are four different gaming licences offered by the LGA to Malta based igaming operators:

Class 1: Applicable to operators who offer games which are based on repetitive events and the gaming risk is managed by the operator. This type of licence covers casino table style games, lotteries and slots.

Class 2: Applicable to operators who manage risk based on a singular event using markets. This licence covers the traditional fixed odds betting and some forms of pool betting.

Class 3: Applicable to operators who organise player to player games but do not partake in the risk and receive only a commission. A class-3-licence is suitable for betting exchange providers, pools and poker rooms.

Class 4: Applicable to software vendors and platform operators who intend to host and manage remote gaming operators having any class of the above. They cannot partake in the gaming risk and can only receive a commission.

The Application Process

The application process for a Maltese gaming licence is essentially split into three stages on completion of which the applicant is awarded a Letter of Intent.

First stage: The first stage is the conduct of a fit and proper test on the applicant including an assessment of the competence of the persons involved to carry out gaming activities. The applicant must submit an application for a remote gaming licence and this shall include a personal declaration form for each person having a five percent or higher interest in the license. Furthermore, the applicant is also obliged to submit due diligence information (passport copies, bank references etc.) to the satisfaction of the regulator. The LGA will also require sight of the proposed business plan of the applicant for its review and approval.

Second stage: At this stage the LGA carries out an examination of the various building blocks of the operation including the incorporation documents, the games to be offered, the business functions, the gaming rules, player rules, application of the game systems and the control system amongst others.

Third stage: Following successful completion of stage two, a temporary licence, a so-called “Letter of Intent” or “LOI”, will be granted. The Letter of Intent gives the applicant the right to operate remote gaming from Malta with the condition of obtaining a certification of compliance within six months. The applicant may then establish the business, conclude all agreements, find a service provider to host its equipment, acquire office space, set up the operation and carry out testing.

Once the system is operating and live, the applicant may request to be certified and, if successful, a five year licence will be issued once the authority receives a positive report from the auditors.

It usually takes between four to eight months for the whole process but this also depends on the level of preparation of the applicant. One has to note that the LGA first issues the Letter of Intent which allows the company to go live with their website. A licence will be issued once the company passes a compliance audit which will have to take place during the six months after the Letter of Intent has been issued. The company will have to start operations three months, at the latest, after the LOI is issued.

Licensing Fees

Apart from the Gaming Tax, an application fee and an annual licence fee is to be paid to the LGA.

A processing fee of Euro 2330 is to be paid to the LGA simultaneously with the submission of the application. This is a one-time-only fee and will not be refunded, irrespective of whether the licence is granted or not. If the licence application is successful and a licence is granted, a licence fee of Euro 6990 per annum is charged by the LGA. (After the expiry of the initial 5 year period, a renewal fee of Euro 1165 is payable for a further 5 year period.) The audit fees for the audit of the gaming system during the certification process is approximately Euro 2330.

Gaming Tax

Malta has a very competitive gaming tax system depending on the type of licence held.

Class 1: Euro 4660 per month during the first 6 months after issue of the licence and subsequently Euro 6990 per month for the entire duration of the licence period. However, in case where a Class 1 licensee (a casino operator) operates from a host with Class 4 licence the gaming tax payable by the casino operator is reduced to Euro 1165 per month.

Class 2: 0.5% on the gross amount of bets accepted.

Class 3: 5% on the sum of all net winnings calculated per player per betting market.

Class 4: No tax for the first 6 months of operation; Euro 2,330 per month for the subsequent 6 months and then Euro 4,600 per month for the entire duration of the licence.

Gaming tax in Malta is capped: The maximum gaming tax payable per annum by one licensee in respect of any one licence will not exceed Euro 465,900.

An Attractive Corporate Tax Regime

A convenient, tax efficient vehicle for carrying out gaming activities from Malta is a Limited Liability Company.

Basis for taxation: Companies ordinarily resident and domiciled in Malta are subject to income tax on their worldwide income and on some chargeable capital gains.

Companies that are either resident or domiciled in Malta but not ordinarily resident and domiciled in Malta are chargeable to tax in Malta on (a) income and chargeable gains arising in Malta, (b) income arising outside Malta and remitted to Malta.

Residence: A company incorporated in Malta is considered to be resident and domiciled in Malta. A company incorporated outside of Malta is considered to be resident in Malta only if the management and control of its business is exercised in Malta.

Tax Rates: The standard rate of tax on income and chargeable gains is 35% (in line with the highest personal tax rate) - flat rates of tax are payable, by way of exception, on certain categories of income such as investment income and certain transfers of immovable property in Malta. The amount of tax payable by a company may be reduced via one of the forms of double tax relief, such as the Flat-Rate Foreign Tax Credit providing relief at a rate of 25%.

Malta operates a full imputation system of taxation: When a company distributes dividends out of profits on which it had paid tax, no further tax is due by the shareholders and a credit for the tax paid by the distributing company is available to the shareholders.

Allocation of profits: Companies are required to allocate their distributable profits to one or more of 5 tax accounts, depending on the nature/source of the profits concerned: Foreign Income Account (FIA), Maltese Taxed Account (MTA), Final Tax Account (FTA), Immovable Property Account (IPA), and Untaxed Account (UA).

Tax Refunds: Distributions of profits from either of the FIA or the MTA trigger refunds of Malta tax paid by the company. The effective tax rate after refund will generally range from 0% to 10%. The standard refund, generally applicable to the business profits of an igaming company, is 6/7 of the Malta tax (grossed up with any relieved foreign tax – subject to certain conditions – in relation to the MTA), going up to 100% in the case of profits derived from a participating holding and down to 5/7 on profits derived from passive interest and royalties. Where the company has claimed double tax relief on profits allocated to the FIA, a tax refund of 2/3 of the Malta tax paid (grossed up with any relieved foreign tax – subject to certain conditions) on the distributed profits may be claimed. Tax refunds are Malta tax exempt and payable within a statutory deadline of a few weeks.

Participation Exemption: Income deriving from a participating holding (generally a 10% equity holding or partnership interest or alternative tests) in a non-resident entity or from the disposal thereof are exempt from tax (alternatively they may be taxed at 35% and the shareholder may, following distribution, claim a full refund of the Malta tax paid by the company thereon) – subject to certain anti-abuse provisions being satisfied.

Withholding Tax (WHT): There is (a) no WHT on outbound dividends, (b) no WHT on interest payable to non-residents (subject to certain conditions being satisfied), (c) no WHT on royalties (subject to certain conditions being satisfied), (d) no branch remittance tax.

Personal Taxation

Basis of taxation: Persons ordinarily resident and domiciled in Malta are subject to income tax in Malta on their worldwide income and some chargeable gains. Persons who are resident or domiciled but not ordinarily resident and domiciled in Malta are chargeable to tax in Malta on (a) income and chargeable gains arising in Malta, (b) income arising outside Malta and remitted to Malta.

Tax Rates: Individuals are charged to tax at progressive rates of 0%-35%. A reduced flat 15% rate on remitted foreign sourced income (capital gains being exempt) is available to certain residence permit holders.

Setting up a Gaming Company

Maltese companies used for remote gaming must clearly state in their Memorandum of Association that their main object is the conduct of remote gaming operations.

Insofar as the incorporation of Maltese Companies is concerned, the following information would be required for the purposes of the setting up of a Maltese company:

Name: The proposed names of the Company. Please note that we would need to be provided with a minimum of three company names, in order of preference, for reservation of same at the Registry of Companies. Company names are reserved within 24 hours for a period of three months.

Description: A description of the activities of the Company.

Registered Office: A Maltese company is required to have a registered office in Malta. Please note that we are in a position to provide our clients with a registered address in Malta.

Share Capital: A Maltese Company must be set up with an amount of share capital, minimum of which is Euro 1,165 of which at least 20% of the nominal value must be paid up on subscription. However, prior to going live and following the review of the business plan, the LGA usually requests remote gaming operators to increase the issued share capital to:

Class 1: Euro 100,000
Class 2: Euro 100,000
Class 3: Euro 40,000
Class 4: Euro 40,000
Class 1 on 4: Euro 100,000

Company Secretary: In accordance with Maltese law, the company secretary is an officer of the company. His/her duties relate to the administration of the company and to ensuring that the company remains in good standing. This includes amongst others, making sure that all statutory forms, copies of resolutions and returns are prepared and delivered to the Registry of Companies. Indeed under Maltese law, the company secretary has considerable responsibilities and hence it is advisable to appoint an individual who is familiar with Maltese law. In all cases, the company secretary must be an individual.

Directors: A private company must have at least one director. This director may be resident, non-resident, individual or corporate and has the duty to act in the best interest of the company. The law imposes on the directors the responsibility to promote the well-being of the company and to ensure its proper administration, management and supervision of its affairs.

Key Official: Remote Gaming companies have to appoint a Key Official who also has to be a director of the company and who has to be resident in Malta. The Key Official has a number of responsibilities including:

The Key Official must be a natural person resident in Malta, familiar with IT systems and laws and regulations governing remote gaming and knowledgeable of gaming operations.

Accounts

A Maltese company must file annual audited accounts with the Maltese Registrar of Companies. The books of the Company may be kept overseas. Nonetheless, the Company's accounts must be audited by a local auditor annually.

Time Frame for Incorporation

Once all the requisite documents have been made available to us and matters such as the company's Memorandum and Articles of Association and the share capital transfers have been settled, it generally takes a couple of days to register the company.

Registry Fees

There is a minimum government registration fee, effective 1st January 2009, payable to the Registry of Companies of €296. This increases in proportion to the amount of authorised share capital of the company.