Anybody who has visited Malta will tell you the many fine things about the country. Whether it is the warm climate, golden beaches, the fresh local food or the wonderful local people, nobody has ever left Malta without wanting to go back. However, Malta has been drawing far more than just tourists and holiday makers in recent years, increasingly attracting businesses to its golden shores. The betting and gaming industry is one of the many blossoming sectors that is flocking to Malta from all over Europe and beyond.
To understand why Malta holds the key to success for sports betting companies, we need to understand what financial reasons there are for choosing Malta over other parts of the world. Once we take a deeper look at the Maltese tax arrangements, we can begin to understand what one of the initial incentives might be.
The system of tax in Malta was designed to balance EU compatibility with a business-friendly financial environment to entice EU investment. Companies that are owned by non-residents of Malta are subject to an effective 5% corporate tax on their profits, which, when compared to the corporate tax rates in other parts of the EU, can be confidently described as being remarkably competitive. The unusual structure manages to conform entirely with the “subject to tax” double tax treaties regulations that bind other countries. Essentially, if a company’s owners are residents of and domiciled in Malta, they will pay 35% and the recipient of dividends get 30%.
Another tax benefit that sports betting companies in Malta are enjoying is the EU Parent-Subsidiary Directive. This allows, subject to a few conditions, dividends of a subsidiary company to be paid to the parent company, even across borders, completely tax-free. The receiving parent company, perhaps in another country, then has a tax-free refund from that dividend.
Vitally, however, a legal entity is able to benefit from the residence without domicile. If an off-shore company decides to re-domicile to Malta, it will have a limited tax liability in Malta of income created inside the country, and no tax liability for income outside of Malta. This is perhaps one of the most crucially important elements in understanding the financial appeal of settling in Malta.
So there are several reasons why a sports betting company or any other organisation might find the tax arrangements of Malta to be to their advantage. But how do the arrangements work out for the individuals who run the company and are employed by it?
In Malta, it is generally accepted that foreigners do not have domicile status but do have residence status, and this has distinct tax advantages too. This means that they only have to pay tax on their income in Malta, outside of and remitted to Malta. Separate income and capital bank accounts will allow you to receive capital gains outside of Malta for remittance in Malta. Tax law also allows a corporation to the benefit from the residence without domicile arrangement, and therefore can only be liable to tax on their income earned in or remitted to Malta. This is specifically beneficial for what are described as “passive incomes” (such as dividends, interest or property income) which become essentially tax-free under this arrangement, as the payee is located elsewhere.
There are great tax incentives for EU and non-EU residents to transfer their residence too if they purchase real estate over €275,000 or pay rent of over €9,600 annually. Money earned outside of Malta and then remitted is set at 15%, with a minimum figure set at €15,000 annually. Highly educated and qualified people may benefit from a programme which sets their annual tax rate on money earned in Malta at just 15%. Because Malta is a member of the EU, all citizens of the EU are permitted a residence permit.
It is not just the tax arrangements and clement weather that are attracting so much interest in Malta. English is an official language of Malta and is widely spoken alongside Maltese, as well as a small mix of Sicilian and Italian. Birkirkara is the largest city in Malta located in the middle of the southern island, yet it displays all of the historical artefacts, beautiful architecture and embodies the charming feel of a postcard-perfect town. Birkirkara is also home to great places to eat, a water tower, civic centre and, of course, Birkirkara F.C (one of the most popular Maltese football teams who always put on a great home game).
North of Birkirkara lies St Paul’s Bay, named after the shipwreck of Saint Paul described in the Bible. Surrounded by beautiful vistas and natural landmarks, it has always been hugely popular with tourists and visitors from all over the world, tripling the population during the summer months. Relaxed, warm, sunny and with a generally relaxed pace of life, it could not feel any further away from London or any other large British city.
Many large sports betting, gambling and gaming companies have already made the leap and set up in Malta. Many are in the process of doing so right now. The industry there has become successful enough to launch its very own summit for iGaming, SiGMA, which is gearing up for its third consecutive year. As well as being a huge industry event and a chance to mix with the industry big players, it also hosts live music, sport, exhibitions, networking drinks, a sunset cruise, and – needless to say – some gaming, too. The Maltese Gaming Seminar also attracts some industry big hitters to discuss innovation and network, and has been about for a couple of years now.
As Silicone Valley, California has been for tech start-up companies, Malta is proving itself to be the home of the sports and game betting companies. As more of the larger companies establish themselves in Malta, the smaller emerging ones, lead by the same incentives, are following them. This growth leads to a real sense of excitement for the industry and an environment in which ideas, innovation and progress can flourish. This growth does not look set to diminish any time soon.