Malta Remote Gaming Licence
With respect to remote gaming, a specific regime has been established by means of the Remote Gaming Regulations, 2004. There are four (4) types of gaming licences, and the applicable class will depend on the type of gaming activity that the prospective licensee will purport to carry out. The classes may be summarised as follows:
- Class 1: Operators who partake in gaming risk on games based on repetitive events (Random Number Generators) e.g. Casino / Lotteries / Slots / Arcade Games / Bingo;
- Class 2: Operators who partake in gaming risk on markets based on singular events (betting) e.g. Sports Betting;
- Class 3: Operators who promote games and in return get a commission in a P2P transaction. Typically includes multiplayer games and betting exchanges such as Poker rooms, Poker tournaments etc;
- Class 4: Operators who run a software platform to host the service of any of the above classes. Such operators are not involved in player management functions. They merely provide a host platform from which other licensees can operate.
Application Process for the Attainment of a Gaming Licence
First Stage – Pre-application stage
It is strongly advisable that the client and/or their representatives, set up a preliminary meeting with the Lotteries and Gaming Authority Malta, “LGA” and discuss the proposed project.
Secondary Stage – Application Process
Following this meeting, the applicant shall be asked to submit the following documents to the LGA for the Authority’s perusal:
1. Fit and Proper Test
The Lotteries and Gaming Authority shall carry out an evaluation of the candidate, and an assessment as to whether the applicant is a “fit and proper” person to carry out a remote gaming operation. The candidate’s expertise, experience, financial standing shall all be evaluated and ensure that the principles of player protection and the reputation of Malta, shall be adequately safeguarded by the applicant.
Filing of a Personal Declaration Form for every proposed director in the remote gaming company, as well as for every person with 5% or more interest (shareholding and/or voting rights) in the remote gaming company.
If one or more parties are another business entity, ownership and incorporation details need to be submitted. The application forms must be accompanied by the following documents:
- A true copy of the birth certificate;
- A true copy of the passport;
- Passport size photo;
- A conduct certificate;
- Statement of Affairs;
- Credit and Financial references;
- Bookmaker licences if issued in another country;
- A document issued by a legal entity stating that all documentation submitted is a true copy of the original.
Furthermore, an applicant shall only be licensed and continue to be licensed, if they can satisfy the minimum criteria of local presence, these being:
- The licence holder being a Maltese corporate entity, typically a limited liability company;
- The licence holder must have at least one resident director, called a key official, who acts as point of liaison between the LGA and the licence holder;
- The player database must be physically located in Malta;
- The game servers must be physically located in Malta.
Our specialised remote gaming unit, can advise and assist you in the preparation of these documents and liaise with the LGA on your behalf. Contact us to get a fee quote to start the licensing process.
2. Business Planning
Furthermore, the applicant must submit a proposed business plan of the gaming operation, which must contain:
- The objectives of the operation;
- The proposed company structure including business functions and human resources to be employed (Risk managers, odds compilers, financial officers etc;)
- The nature of games to be offered (e.g. betting, pool betting, casino etc;)
- The technologies used to conduct remote gaming (Internet, fax, mobile etc;)
- An overview of the application software to be used as gaming and control systems;
- A three-year business plan including:
- Marketing and sales plan;
- Forecast balance sheet;
- A financial plan showing sources of finance, distinguishing between shareholder funds and other funds.
3. Operational and Statutory Requirements
Following the pre-approval stage, the applicant shall be required to submit a number of detailed memoranda outlining all-encompassing details of the business and technical features of the remote gaming operation.
Documentation to be submitted at this stage:
• A Maltese Company registration certificate;
• Memorandum and Articles of Association of the Maltese Company;
• Business Entity Information Form;
• Information Security Policy;
• Incident Response & Asset Removal Policy;
• User Management Policy;
• Human Resources Roles & Responsibilities;
• System Access Control Procedures;
• Financial Accounting Procedures;
• Business Continuity and Disaster Recovery Plan;
• Data Backup Procedures;
• Change Management Procedures;
• Fraud Management Procedures;
• Application Architecture;
• System Architecture;
• Network Infrastructure;
• Details of the Random number generator( if required);
• Name of the owner of the software;
• Name of the organisation that did the testing;
• Online text / content;
• Contracts with Business Partners
This stage is the most voluminous part of the licensing procedure and the memoranda must be all-encompassing, and allow the LGA to appraise the business and technical setup of the applicant. Our specialised remote gaming unit, can advise and assist you in the preparation of these memoranda.
For a better understanding of the information to be included in each memorandum, please view Operational and Statutory Requirements Documents
4. System Audit
Following the submission of the aforesaid documents, the LGA shall put forward any recommendations and any enhancements to the business model of the applicant.
Thereinafter the applicant shall request the applicant to submit to a technical and system audit before going live. A compliance audit firm shall be engaged to assess the integrity of the applicant’s business by means of a thorough assessment of the applicant’s live feed data. The compliance audit shall include, but not be limited to an assessment of:
- The Service Provider Authorisation Form, including the equipment hosting provider in Malta outlining clearly the functions and responsibilities to be carried out by such provider. A site plan of the data floor indicating the location of the equipment must be attached to the agreement. Serial numbers for all equipments installed are to be attached;
- The Control System - Sample reports and tests shall be made from the live system will be requested to show how the management of the betting system is conducted;
- The information management in the operations. Recommendations may be made to improve security of the players’ data;
- The backup and disaster recovery procedures. Change management procedures will also be reviewed;
- The online website via a test account to verify that the site operates in accordance with the Regulations and with the operator’s declared procedures (including notifying changes). The Player Protection measures required by the LGA will be confirmed;
- Bank account balances. A comparison shall be made with online player account balances to ensure that the liabilities are sufficiently covered;
- Routine data submitted on a monthly basis to LGA. Any anomalies will be investigated with the operator to ensure that correct data is available to LGA and rules relating to test data are observed. Spot checks on odd, payout ratios and randomness as applicable may be made;
- Any agents acting for the operator will be scrutinised for probity. Copies of all relevant agreements and national licences will be required by LGA for review and filing.
- Staff lists and duties will be checked against the records held at LGA.
Focus Business Services will be glad to assist you in the full processing of the application from the preliminary to the attainment of the licence and advise on any ancillary issue related to gaming thereafter. Contact us to get a fee quote to start the licensing process.
The submission of an application form is subject to a non-refundable fee of €2,330 payable to the Lotteries and Gaming Authority
Upon receipt of notice that the class or classes of licences applied for will be granted for a period of five (5) years, renewable for further periods of five (5) years. A licence fee for any class of Remote Gaming shall be charged by the LGA for €8,500 per annum, per licence.
Upon application for the renewal of a licence, a renewal fee for any remote gaming licence shall be charged at €1500.
All licensed gaming companies are subject to taxation on two levels:
- Corporate Taxation
- Gaming Taxation
The remote gaming company shall be subject to income tax on company profits at a rate of thirty-five percent (35%). However, this is subject to Malta’s full imputation tax system, wherein tax paid by a company in Malta is, on the distribution of a final dividends, imputed to the shareholder as a tax credit against the shareholders’ tax liability. Therefore, a shareholder will, upon a distribution of the dividend, be entitled to a refund in part or in full of any advance tax levied on the distributing company. The default tax credit for remote gaming companies, is a 6/7ths refund on active trading income, thereby the effective tax leakage can be lowered to just five percent (5%), and possibly even less.
A licensed company shall pay to the LGA on behalf of the Government of Malta, the following rate of taxation:
- Class 1- €4660 per month (first 6 months) and €7000 per Month thereinafter;
Operating on a Class 4 Licence €1200 per month
- Class 2 – 0.5% on gross amount of stakes accepted;
- Class 3 - 5% of Net Income (revenue from rake less bonus, commissions and e-commerce fees);
- Class 4 – The gaming tax payable by a hosting platform is nil for the first six (6) months of operation, €2,330 per month for the subsequent six (6) months (month 7 to month 12) and €4,660 per subsequent month (month 13 onwards) for the entire duration of the licence.
The maximum gaming tax payable annually by one licensee in respect of any one licence is €466,000.
VAT Treatment of Maltese Gaming Companies
Presently, all Maltese-licensed gaming companies are exempt with credit on supplies. Maltese licensed companies receiving a service shall suffer VAT on these supplies, insofar as these services are outside the blanket exemption from VAT under Item 9 of Part Two of the Fifth Schedule of the VAT Act, Chapter 406 of the Laws of Malta, which provides an exemption from VAT on, “Government lotto and lotteries, the supply of agency services related thereto, and such other supplies related to gambling as may be approved by the Minister.”
The reverse charge mechanism is applicable solely to the Supplier of the service, but not to the Maltese Company. Effectively, this means that any service which is received by a Maltese gaming company, which is outside the scope of the aforesaid Item 9 of Part Two of the Fifth Schedule of the VAT Act shall not be recoverable by the Maltese gaming company.
However, it is possible, through careful tax planning and the exercise of the shared conduct agreement, to mitigate the possible far-reaching consequences of such VAT treatment, through the adoption of a shared conduct agreement.
Our specialised Gaming Unit can assist you in all aspects of Remote Gaming, including but not limited to the following services:
- Licensing requirements, application processing and liaison for any Gaming applications with the LGA;
- Company Incorporation;
- Thorough and Effective Tax Planning, tax advisory and tax compliance services to minimise taxation;
- Key Official, Directorships and Company Secretarial Services;
- Accountancy services, including preparation of management accounts, statutory financial statements and VAT compliance payroll services for employees;
- Office support services;
- IT Contract Drafting;
- Copyright and Trademark Protection;
- Electronic Commerce Contract Drafting;
- Web-design, search engine optimisation and affiliate management solutions through our specialised in-house ICT team.
Contact one of our officers to initiate the licensing process for a Maltese registered gaming company and start reaping the full benefits of an onshore, low-tax, reputable, EU jurisdiction. Simply fill in the contact box below or contact us by email on firstname.lastname@example.org or by calling at +356 2338 1500
We are committed to providing you with a swift solution best suited to your needs.