Malta has long served as Europe’s gold standard for online gaming regulation, built on decades of carefully constructed tax advantages that attracted operators from across the globe.
The Mediterranean island’s appeal rested on three core pillars: a broad VAT exemption for betting and gaming, a flat 5% gaming tax on gross revenue, and an effective 5% corporate rate achieved through shareholder refunds.
That foundation is now shifting significantly, as Legal Notice 86/2026 introduces sweeping changes to Maltese VAT and gaming tax taking effect on 1 October 2026.
The Malta Tax and Customs Administration has published clarifying guidelines to support the overhaul, which Valletta frames as modernisation but which many operators expect to mean higher costs or greater compliance complexity.
The most visible change is the narrowing of the VAT exemption for gaming and betting, with the general rule becoming that gaming and betting are taxable from October onwards.
The exemption is now limited to three defined cases: low-risk games, junket events authorised by the Malta Gaming Authority, and physical bets taken solely at the event venue.
Online betting, online access to gaming platforms, and online bingo have been expressly classified as Electronically Supplied Services, meaning the place of supply shifts to where the consumer is located rather than where the operator is based.
For operators with customers spread across Europe, that classification may significantly expand multi-jurisdictional VAT compliance requirements, whether through OSS registrations or local filings.
The flat 5% gaming tax on revenue is also being replaced with a tiered system organised by game type, which the authority describes as simplification but which delivers meaningfully different rates by product vertical.
As Malta tightens its framework, industry professionals are directing fresh attention toward Melilla, a Spanish territory in North Africa with a distinctive tax regime that has remained largely overlooked by the corporate mainstream.
Melilla operates outside the VAT territory while sitting inside the scope of Spain’s Gambling Law 13/2011, meaning an operator established there can hold a Spanish licence covering one of the EU’s largest regulated gaming markets.
The IPSI tax, which replaces VAT in Melilla, carries general rates between 0.5% and 10%, but since 2019 has applied a super-reduced 0.5% rate to key services that online operators consume most heavily.
General advisory, fraud-prevention services, data processing, and information supply tied to gaming operations all qualify for that super-reduced rate, compared with 21% VAT for equivalent services on the Spanish mainland.
The practical difference is substantial: a €10 million annual spend on qualifying outsourced operational services would cost approximately €2.1 million in VAT in mainland Spain, against just €50,000 of IPSI in Melilla.
Corporate tax benefits from a 50% rebate on income genuinely earned in the city under article 33 of the Spanish Corporate Income Tax Law, producing an effective rate of around 12.5% that can fall to approximately 10% with applicable R&D incentives.
The Tax on Gambling Activities applies at 10% on gross gaming revenue for operators with tax residence and effective establishment in Melilla, exactly half the 20% general rate under article 48.7 of Ley 13/2011.
There are meaningful caveats to acknowledge, not least that effective establishment in Melilla is a genuine requirement rather than a paper exercise, as confirmed in a binding ruling by the Spanish Directorate-General for Taxation dated 4 April 2019.
Half the material workforce, real management functions, operational processes, and genuine decision-making capacity must all be physically present, meaning the regime does not accommodate empty structures or opportunistic tax planning.
Malta retains significant advantages, including a 5% effective corporate rate and a well-developed professional ecosystem of lawyers, accountants, regtech specialists and skilled labour that Melilla has not yet replicated at scale.
The region is actively investing in educational programmes aimed at developing and attracting talent, and infrastructure projects such as the iMelilla Digital Hub signal genuine institutional ambition to grow its operator community.
Alberto López Gómez, Tax Partner and co-head of the Tax practice at EJASO, presented on Melilla’s iGaming fiscal regime at the NEXT.io Summit in Valletta, arguing that Malta’s reform creates a real window of opportunity for Spain’s special territories.
For operators willing to build genuine substance in Melilla, the combination of a Spanish regulatory framework, a major EU member state market, and a contained combined tax-and-labour cost may prove increasingly compelling after October 2026.
