Why do igaming operators and other businesses choose Malta to structure their intellectual property?

For years, Malta has been regarded as a world-renowned gaming hub with a prestigious reputation. While the licence provides Operators with high credibility, the jurisdiction has developed a thriving local gaming sector, providing start-ups and established Operators with a diverse ecosystem of ancillary services.

Located within Europe, the jurisdiction offers advanced IT infrastructure and technical capability, a skilled workforce from software development to customer services, and a network of legal and corporate support services. Many gaming companies flock to the jurisdiction to benefit from its igaming industry, stability, and reputation and even to obtain the licence to enter neighbouring regulated markets in the EU. 

However, there is another key reason why they chose Malta, which is often overlooked: Intellectual property.

Intellectual property is one of a business’s most valuable assets, which is why strategic planning is crucial to protecting and maximising its benefits. Like igaming, Malta has developed a very favourable environment for intellectual property. This is especially attractive for igaming software companies, who will have some form of intellectual property within their business.

Tax-schemes available

Malta has effective international tax-planning vehicles that are well-suited for the ownership of intellectual property. These structures can be helpful for companies in various industries such as igaming, investment activities, property ownership or e-commerce services and are appropriate for holding multiple types of assets and investments.

Companies that structure their IP in Malta and receive royalty income can take advantage of the numerous tax benefits. The most well-known one in Malta is the 6/7ths tax relief scheme, which is tax paid upon its distribution as a dividend, which reduces corporate tax rates to as low as 5%.  

Another scheme is the 5/7ths tax refund, available for a Malta Company whose income is derived from passive royalties. The royalties must not come from, directly or indirectly, a trade or business subject to foreign tax of less than 5%. This effectively reduces tax rates to 10%.

Lastly, the 2/3rds tax refund is applicable for a Malta Company that distributes dividends, receives royalty income, and has benefitted from double taxation, mainly treaty relief or unilateral relief. There is also the Flat Rate Foreign Tax Credit (FRFTC) if the other schemes are unavailable.

IP holding company benefits

The benefits of structuring intellectual property in a holding company include:

  • The IP is ring-fenced, which protects the asset
  • Centralised ownership and management of your IP assets are available
  • The IP holding company can generate revenue in low-tax jurisdictions
  • IP assets may be more easily sold or made available as security
  • It is more difficult for third parties to bring legal action against the original owner of the IP
  • An IP holding company gain recognition for its market value

Access to the EU

As an EU member state, Malta provides access to the European single market, making it easier to trade and protect IP rights across Europe.

Malta’s IP laws are harmonised with EU regulations, ensuring high standards of protection and enforcement. There are licensing agreements enabling the use of foreign IP rights within the EU and a step-up provision for migrated foreign IP, allowing valuation at a fair market price. In addition, tax exemptions on income and royalties from patented inventions researched and developed outside Malta are available.

Robust protection

Malta’s legal system is robust, offering strong protection and confidentiality for IP during development. Structuring IP in Malta can provide better protection against potential litigation and other risks.  It is also recognised as a reputable business and financial services jurisdiction, providing a stable and reliable environment for IP management.

How can Affinity Group help?

The decision to structure an IP is critical to a client’s strategy. At Affinity, we guide international entrepreneurs, performers, and businesses through the intricate world of intellectual property and royalty rights management.

Our comprehensive suite of services addresses the rising importance of intangible assets, including assets, personal image rights, trademarks, and sponsorships. Whether you’re navigating IP structuring, registration, or licensing and looking to optimise its benefits, our experienced team offers bespoke consultancy for your IP strategy.

We’re committed to maximising the value and impact of your intellectual assets, providing the assistance you need to manage them effectively.  

Our IP services

  • Bespoke IP consultancy
  • IP registration
  • IP corporate structuring
  • VAT, compliance and administration
  • IP strategy and licensing advice through trusted intermediaries

In addition to IP structuring, Affinity is a leading Corporate Service Provider in iGaming and assists B2B and B2C Operators with multi-jurisdictional licensing.

Contact Affinity today

If you would like to have a one-to-one conversation about your intellectual property or igaming business, please get in touch with us here.