Malta and Digital Gaming Malta is a globally renowned remote (online) gaming jurisdiction but likewise importance is also given to its ancillary sector of digital gaming. In April 2012, the Maltese Government launched a Digital Gaming Strategy with the aim of making digital gaming a significant contributor to the Maltese economy. The strategy seeks to attract global games companies to Malta as well as to encourage company start-ups in this sector. What’s up for grabs for Digital Gaming Companies in Malta?
availability of a digital gaming fund providing finance to digital gaming companies seeking to develop new projects
100% tax credit relating to expenditure incurred in developing eligible digital games
tax credit for research and development of digital gaming projects
co-financing of wages of employees, leasing of equipment and amenities in the case of SMEs
co-financing up to 50% of costs incurred for market development to encourage more digital gaming enterprises to internationalise
employees could benefit from a reduced flat tax rate of only 15% on their employment income
Professionals working in the Digital Gaming Individuals working in innovation and creativity, in particular in digital gaming, are now entitled to a highly beneficial tax treatment on their income. In fact, income derived from qualifying employment (of an eligible office nature) in a role directly involved in the development of innovative and creative digital products could be subject to a flat tax rate of only 15%. The applicability of this requires the satisfaction of the following conditions: employment income shall be derived from a qualifying contract bearing a minimum income of Euro 45,000 p.a. (excluding the value of any fringe benefits); employment income shall be derived from an eligible office; the employee shall be an individual who: 1) is protected as an employee under Maltese law; 2) proves to the satisfaction of the respective
authority that he is in possession of a qualification or relevant experience to the eligible office;
© 2014 KSi Malta, a member firm of the KS International an association of independent member firms. All rights reserved. No one should act or rely on information prior to seeking appropriate professional advice on his/her specific situation.
3) proves to the satisfaction of the respective authority that he performs activities of an eligible office; 4) is in receipt of stable and regular resources which are sufficient to maintain himself and the members of his family without recourse to the social assistance system in Malta; 5) resides in accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in force in Malta; 6) is in possession of a valid travel document; 7) is in possession of sickness insurance in respect of
all risks normally covered for Maltese nationals for himself and the members of his family; and 8) is not domiciled in Malta.
Additionally, if the income to be derived from such qualifying contract would exceed Euro 5,000,000 no tax at all will be levied on the amount of income in excess of Euro 5,000,000 derived from such contract. 100% Tax Credit
Malta’s favourable treatment of intellectual property Correlated with the gaming sector would generally be the implications vis-à-vis Intellectual Property (IP) and Royalty income. If the Maltese gaming company pays royalties to foreign IP holders no Maltese tax is levied on such outbound royalty payments. When the Maltese company holds IP and derives royalty income therefrom, the tax implications of such income vary according to whether the income is of an active nature or of a passive nature. If the royalty income in question is of an active nature (derived directly or indirectly from trade) this would be subject to an effective corporate tax rate of only 5%. On the other hand, if the royalty income is of a passive nature (not derived directly or indirectly from trade) this would be subject to an effective corporate tax rate ranging between 0% and 6.25%. Notwithstanding the above, if the Maltese IP Company derives royalty income from IP which is patentable or copyrightable under Maltese law, this income would be fully exempt from any Maltese tax.
This scheme grants a 100% tax credit of the total subcontracted costs incurred during the development of an eligible digital game, up to a maximum of €15,000.
Contact us
Our Office
Bernard C. Gauci Senior Advisor bgauci@ksimalta.com
Villa Gauci Mdina Road Balzan BZN 9031 Malta Tel: (+356) 21226176 Fax: (+356) 21226019
Benjamin Griscti Senior Advisor bgriscti@ksimalta.com
www.ksimalta.com
A member of KS International
© 2014 KSi Malta, a member firm of the KS International an association of independent member firms. All rights reserved. No one should act or rely on information prior to seeking appropriate professional advice on his/her specific situation.