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Gambling license and services of our law firm

Resumen breve sobre el tema fundación de un banco

Gambling License- Sports Betting- Online Casino:  Services of our law firm

Our tax and law office assists clients from the European Union and European Economic Area (EU / EEA) as well as in many other couries (e.g. Switzerland, Russia, U.S.A, China) with the realization of their online gambling.

On behalf of our clients we incorporate companies with gambling-licences in many countries such as Malta, Gibraltar, U.K., Costa Rica, Antigua and Barbuda and Kahnawake.

Further, we advise you in tax planning and tax-free routing of dividends e.g. by setting up a holding.

In the process of incorporating gambling company and obtaining a gambling licence we offer all relevant services:

  • Incorporation of the company, including Registered Office proper place of business
  • If necessary or ordered: Trustee Director (place of establishment in terms of place of taxation)
  • Apply for licence, business-plan, profit and loss statement
  • On request: connection to software company for gambling-software
  • Gambling regulation, draft of general terms of trade according to national Gambling Act
  • Server hosting in the jurisdiction at your place of business of the company
  • Connection to tax advisory firm at the place of business (bookkeeping, annual account & return, advance return for VAT, matters on gambling taxes)

Choosing the right jurisdiction, several key factors are important. Depending on these factors we kindly ask you to answer the following questions in order to reduce the number of possible jurisdictions:

  • Where do you reside, where do you usually live?
  • Where do the shareholder(s) of the proposed Gambling Company reside, where do they usually live?
  • To which customers in which countries shall the gambling be offered?
  • Shall the gambling be offered to residents in the European Union also?
  • Which kind of gambling shall be offered (Poker, betting, Bingo, Casino etc pp)?
  • Will the gambling be offered on you own hosted platform o rare you going to offer it as a reseller /affiliate ie. will your games would be hosted by a company that already has a gambling licence?
  • I fit is a reseller program, of which country does the licence origin?
  • If Lottery of goods or real estate: where is the real estate located?

The following has its focus on EU-legislation respectively on gambling-licences within the European Union. But further, we have the experience with the application of gambling-licences outside the EU and EEA or from clients abroad (e.g. Switzerland, Russia, U.S.A, China).

Please, have close look at the following:

  • By offering gambling the legislation of the country applies where the company has its proper place of management but also the laws of those countries, to where the gambling is addressed.
  • In most countries – such as China, Switzerland or China – gambling is prohibited, reserved to government bodies or regulated.
  • Within the EU and the EEA the Freedom of Establishment and verdicts of the European Court of Justice apply. By this, companies on Malta holding a gambling-licence may offer its range of games to all European Union without a new licence in those other countries in the EU abroad Malta. This fact about a Maltese licence is also important and very interesting to clients from other countries.

To offer our clients from non EU/EEA-countries with strict gambling-legislation an attractive way to implement a gambling-licence, we have several arrangements. Please have a look at our remarks below.

Gambling Licences – Gambling Law

Addendum to the Subject of Real Estate Raffles- Raffling of Tangible Assets over the Internet

Gambling and Betting Licences: General Legal Principles

In many countries, gambling and/or online gambling is banned or the preserve of state bodies. In the field of gambling, the law of the country where the gambling company has its registered office applies, as a matter of principle, and the law of the other “state or states providing the service”. Example: The gambling company has its registered office on the Isle of Man and the gambling service offered is also aimed at clients in Spain, Germany and Switzerland, for example. Consequently, the gambling law of the Isle of Man and the gambling law of Spain, Germany and Switzerland come into play.

However, there are possible solutions through the EU freedom of establishment and judgements of the European Court of Justice concerning the freedom of establishment or “Gambling Judgements” of the European Court of Justice: If a company within the European Union has a gambling licence, its services can be aimed at participants throughout the EU.

Thus, with a licence from Malta, the United Kingdom or Gibraltar gambling can be offered throughout the EU, as the national bans on gambling or gambling regulations would breach the EU freedom to provide services, if a licenced provider of the service were to be prohibited from offering a service in another EU member country (cf. European Court of Justice ruling of 09.09.2010 – C-316/07 inter alia). It must be borne in mind, in this connection, that Gibraltar does not belong to the VAT area of the EU.

Incidentally: The Isle of Man and Alderney are autonomous crown property and not members of the EU.

If what is involved is simply a “reseller service”, Cyprus is an additional possibility, as offering such a service is feasible in Cyprus without a licence.

Moving to a non-member country such as Belize, the Isle of Man or Costa Rica is also possible.

It must be assumed, as a matter of principle that such an “offshore licence” only gives the right to execute the service within the country where the company has its registered office, such as in Belize, for example, but not in other countries and/or in the EU. However, this raises the question as to how other countries will wish to impose sanctions, as these countries, as a rule, do not have any agreement providing for mutual judicial assistance with other states.

Costa Rica adopts a special position: provided that the gambling service is only directed at clients outwith Costa Rica, no gambling licence is required, only a trading permit.

What preconditions are required to provide proof that the business premises of the gambling company are located in the country where it has its registered office ?

“The location of the senior management of the business” centrally defines the location of the business premises – also on the basis of Article 5 of the double taxation agreement: Either the client or an agent relocates his normal place of residence/abode to the country in which the gambling company has its registered office (that is, to Malta, for example) and appears himself as the director of the gambling company, or our partner legal office in the country where the company has its registered office appoints a trustee director or full-time director. In addition, having a purely “post-office box company” must be prevented. So simply having a “registered office” is, under any circumstances, not sufficient. However, offices do not always have to be large. Actually, within the EU, in most cases, having a virtual office (company sign, your own telephone number, the ability to take calls in person using the name of the company, a fax service) in a business centre is sufficient. Gibraltar is a special case: Due to domestic law, having a business set up and operated in a commercial way has been a requirement for some yearsa now, that is, there must be at least one office and one full-time employee.

Gambling Licences and Tax-Law Aspects

What is also crucial within the context of a gambling company is the prevention of the approval of an illegal intermediate company. Due to the EU freedom of establishment and judgements of the European Court of Justice on the freedom of establishment, this problem can be solved relatively easily within the EU. Unlike when setting up companies in so-called offshore states (countries with low rates of taxation or with a zero tax rate and without a double taxation agreement with the country in which the registered office of the client is located, outside the EU): the approval of an illegal intermediate company can, actually, only be prevented by putting a business operation in place in the country in which the company has its registered office (that is, Belize, the Isle of Man and Costa Rica, for example) that has been set up in a commercial way and the senior management of the business can be proved to be operating from the country in which the company has its registered office, that is, there is a full-time director and not simply a nominee director. Of course, there are appropriate structural possibilities and/or approaches to solving problems.

Fiscal Structural Possibilities

First of all, a so-called gambling or betting tax is due in almost all countries. In addition, the profits of the gambling company are taxed. In Malta, there is the possibility of reducing the final tax rate imposed at company level through the Malta holding company model to 4.75%.

Taxation of Dividends

The profits after tax (dividends) are due to the shareholder/owner of the company. Most countries are familiar, in this connection, with a tax at source in the case of dividends flowing out of the country. Such a tax at source can, in principle, only be limited or cancelled through two measures:

  • The country is not familiar with tax at source in the case of dividends flowing abroad (Example: Cyprus)
  • An existing double taxation agreement (DTA) limits the tax at source
  • The aplication of the EU parent company-subsidiary company directive: collection of the dividends free of tax at source in the case of affiliated companies within the EU
  • The interposition of an EU holding company. Cyprus, in particular, is a possibility in this case: Application of the EU parent company-subsidiary company directive (provided that the subsidiary company/gambling company are located within the EU), Cyprus does not tax proceeds that are purely from holdings(holding privilege), and there is no tax at source in the case of the distribution of the dividends to non-Cypriots.

Apart from the tax at source, the dividends are taxed at the recipient of the dividends end in accordance with domestic law. In Germany, for example, at a withholding tax rate of 25%, and in many other countries according to the half-income system. If a double taxation agreement exists between the country of the recipient of the dividends and the country of the base company, and the possibility of using the credit method exists, tax paid at source can be deducted from the tax on dividends.

If, in the case of the dividend recipient, it involves a public limited company, then, in most cases, the dividends are collected tax-free. In addition, in the case of EU companies, the EU parent company-subsidiary company directive comes into play.

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