In 2000, the Maltese government ratified the law that enforced the regulations for online betting. In 2004, the Remote Gaming Regulations Law was enabled and its association with the dispositions of the Income Tax Act for foreign companies made Malta one of the most appealing countries in Europe for internet sports betting and casino games.
According to the Maltese Lotteries and Gaming Authority (LGA), there are four classes of licenses available to operators running remote gaming businesses:
- class 1 licenses are for operators who are in charge on their own risk of repetitive games, such as casinos and online lotteries. This type of operators is allowed to obtain a “class 1 on 4” license that enables them to manage games with software according to class 4 licenses.
- class 2 licenses are for operators who administrate online gaming operations on outcomes based on matchbooks. Class 2 licenses are used in fixed odds betting.
- class 3 licenses are for enterprises operating on commission from encouraging betting games. These licenses are usually employed in peer-to-peer gaming, online poker, betting and lotteries. These operators are also allowed to obtain “class 3 on 4” licenses for running gaming software on their machines.
- class 4 licenses are for gaming software retailers that want to offer maintenance and hosting services on their platforms.
Online gaming licenses are granted for a five-year period and operators are required to have their headquarters in Malta.
The tax rate for chargeable income in Malta is 35% and, according to the Maltese taxation system, there is also a corporate tax applied to Maltese companies and to foreign companies that conduct business operations in Malta. But due to the Maltese full imputation system, shareholders who receive dividends payments can ask for refunds that go up to 6/7 of the taxes paid to the Maltese authorities. For interests and royalties, shareholders can ask for up to 5/7 of the tax.
Online gaming benefits from special taxation that depends on the license class. Taxes apply in the following stages:
- for class 1 licenses, the tax is set at approximately 5,000 EUR for the first 6 months and then 7,000 EUR per month;
- for class 2 licenses, the tax is 0.5% on the gross sum of bets;
- for class 3 licenses, the tax is set at 5% on their income;
- for class 4 licenses, there is no tax for the first 6 months; for the following 6 month, the license holders must pay approximately 2,400 EUR per month and approximately 4,500 EUR after.
The maximum amount for payable income stops at 466,000 EUR per year for any type license.