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European Offshore Gambling Jurisdiction: Old World's Comprehensive Guide

Back in the twentieth century, certain countries to attract investors to their jurisdictions offered a very tempting product for companies and people of All kinds of backgrounds: financial shelter without any further questions. The tax haven concept was created. Because many of these nations were located in the Caribbean paradise, the term offshore was the keyword for them.

EU flag

Even though the offshore business model was created in the Caribbean, many European countries in need to take a modern switch (mostly ex-URSS) embraced it with great results. To add more spice (and revenue) to the formula, licensing of online gambling in Europe was included.

This doesn't mean that these jurisdictions are bottom tier. Despite being more attractive to operators thanks to its tax rates and laxer licensing requirements, some rival against the powerhouses when it comes to protecting customers and preventing criminal activities.

Alderney (Guernsey)

The States of Guernsey is a UK dependency located in the British Channel. Alderney, its greater island, has been a key enclave for communications and transport, and still boast its position thanks to the hosting of key internet servers.

Alderney also hosts one of the best tax jurisdictions in Europe thanks to their low caps, and zero levies over capital gains, inheritance, & capital transfer taxes. The combination of these features has attracted companies and iGaming operators that found in the Alderney rock their ideal home.

Alderney Gaming Control Commission

The main objective of the Commission is to provide a regulatory environment that meets world-class standards.

The Commission is open, and receptive while still providing a regulatory environment that is likely to attract the increasing number of operators who understand the need for a comprehensive and tightly controlled regime. This approach supports the development of the e-gambling industry worldwide, with many jurisdictions recognizing the Alderney license or certificate as evidence of the necessary standards to allow access to their gambling markets.

License

Depending on their proposed operations, an organization may apply for one or both types of license

  • A Category 1 Licence authorizes the organization and preparation of gambling operations, namely the registration and verification of players, the contractual relationship with them, and the management of player funds.
  • A Category 2 Licence authorizes the effecting of the gambling transaction including operational management of a gambling platform located within an approved hosting centre.

Applicants are required to form an Alderney registered company and along with the Commission mandatory requirements, an initial £10,000 fee must be paid.

License fee renewal varies according to operators annual yield and can have a maximum cap fee of €400.000 for earning over €30M. Roughly, an attractive 1,3% of their income.

Gambling responsibility

The Commission takes its role of protecting the player seriously and continues to work with its licensees to develop further measures to minimize the risks associated with e-gambling supporting its procedures with advice from the UK Gambling Commission.

Additionally, to prevent financial criminal activities spawning allowing gamble with PayPal pokies (safest payment method for gambling), the Commission also maintains links with bodies such as Guernsey Financial Services Commission (GFSC), the Guernsey Financial Intelligence Services, the Guernsey Police, Credit Bureaux and Dixon Wilson, a London-based firm of accountants with particular experience in the gambling field.

Cyprus

Located between Egypt and Turkey in the southeast Mediterranean, Cyprus combines the best of western and eastern cultures thanks to the several power nations that enriched its culture across history. Its economy pivots around tourism and is making the transition from agriculture to an emerging services industry being the financial sector its best asset.

While no longer considered a tax haven, its low flat corporate tax rate, and its participation in the Eurozone makes the island a pearl for business and sports betting operations.

The National Betting Authority

Established under the Betting Law 2012, the Authority is the sole responsible for the drafting of prevention and protection measures for players, young people and vulnerable groups of the population against addiction to betting. Being the welfare of customers and citizens a priority, the strategic direction of the Authority is based on the following four main pillars,

  • Enhancement of the Authority's operation
  • Improvement of the regulatory and legislative framework
  • Protection and empowerment of the players and the public
  • Fair, safe and transparent gambling activities

It's strictness and the Authority's adaptability to consider the ever-changing conditions of the gambling industry, and technological developments to achieve its mission, has allowed the Cyprus license to be trusted all over the world.

License

Interestingly, despite being land-based gambling widely practised, online sports betting is the only license available for iGaming ventures from the following

  • Class A authorizing the provision of carrying out betting services within licensed premises excluding Class B betting services and horse racing betting;
  • Class B authorizing the provision of electronic betting services excluding slot machines, online casino games of chance provided with a direct link and electronic horse racing

Both licenses have a cost of €30,000 for one year and €45,000 for 2 years. Taxes over incomes have 10% levy with other add-ons broken in the following:

  • 3% of the net proceeds from bets as a contribution to the Authority
  • 1% for strengthening the protection of vulnerable groups such as problem gamblers and children.

Gambling Responsibility

In its fight against the addiction and dependence on betting the Authority promotes the importance of the "Responsible Gaming" thanks to its continuous and direct contact with the public, putting special emphasis on ensuring clear communication channels with young people and vulnerable social groups.

This has been such a prevalent posture that only +21 years old non-resident of Cyprus can be targeted as potential customers. while those illegally providing and using online betting services under this jurisdiction must face severe penalties, as the Authority is actively monitoring and punishing any derailment in this regard.

Estonia

As one of the smallest Baltic nations, Estonia is home for 1,5 million people and at least 150 casinos and gambling rooms. Gambling is such a popular activity that in 2010 Estonian welcomed the inclusion of online gambling with open arms.

Operators looking for a better deal won't be disappointed as this ex URSS country offers the lowest income taxes possible, a license that will last for two decades and access to the European market.

Estonia Tax and Customs Board

The board is part of the Minister of Finance and regulates all and issues the licensing of aspiring operators. it makest convenient because all activities related to taxes and gambling are addressed to this single body.

The Board only allows operation from its own licensees and has an extensive registry of blacklisted unlicensed sites (8 operators and at least 800 casinos to date), showing how serious is its commitment to protecting its citizens.

License

Licensing in the Estonian jurisdiction is a two-step process. Before you buy a server for operations and enjoying a whopping 5% gambling yield tax fee you will need both of the following:

  • Activity license for organizing gambling entitles a person to apply for an operating permit for organizing gambling. Activity licenses are issued for an unspecified term and are not transferable.
  • Operating permit, except the operating permit issued for organizing a lottery and for organizing a Toto for a non-profit association, it shall be issued only to the holder of an activity license. Operating permits are not transferable.

According to the type of organization rate fees for a license are:

  • €37,940 for organizing games of chance
  • €31,960 for organizing Toto
  • €3,200 for organizing games of skill

Gambling Responsibility

Because the Estonian gambling regulatory body is the same one in charge of taxes, laws concerning the protection of customers are laxer because of its lack of development.

Besides established player limits and caps for bets and prizing, the Estonian gambling responsibility is mostly limited to the essential needs of not encouraging gambling over vulnerable people or the underage. Those who fail do not receive the hardcore fines from Sweden or the United Kingdom but the possibility of losing the license is always present.

Gibraltar

As the second UK dependency in this list, Gibraltar is a British overseas territory near Spain in the Iberian peninsula. Back in the days, the country was an important port for the Royal Navy who controlled the strait with the same name for several centuries.

Today Gibraltar. is a business supportive, but well-regulated jurisdiction. Its special tax treatment for international business, (no capital gains tax, wealth tax, sales tax or value-added tax) along with its political stability, a strong commitment to transparency and the rule of law, has made the island one of the most attractive and respected jurisdictions in the world.

Gibraltar Regulatory Authority

The 2005 gambling act gave birth to one of the most prestigious certifications any operator can have: the Gibraltar license.

With strict regulations that only the UK matches, the Authority only issues its license to experienced blue-chip companies or startups with well-defined ethics and business. A High standard is the least to expect and onñ

License

One license covers all forms of gambling but the requirements are a larger s along with the fee that has a solid setback.applicant with £100,000 and takes between 3-6 months to process.

For some operators, All that initial hassle is deterring. For others, it does pay a lot.

Once applications are approved, all licensees can have overwhelming low taxation of 0.15% on operations yielded after their first £100.000 payment.

Responsible Gambling

Customer protection is the biggest pitfall for any applicant and the reason why Gibraltar is a top jurisdiction. Because The Authority can be strict and extremely picky at the moment to issue a license. Operators must be wary about the wellbeing of their customers and provide all the necessary resources to prevent them from falling to gambling's addictive nature,

Because the financial sector is in much mature shape, gambling operators in Gibraltar must be able to provide audits on-demand and absolute obedience to all the laws concerning AML/CFT controls (anti-money laundering/countering the financing of terrorism).

These and other measures make it mandatory for any license holder to cooperate with the Licensing Authority to establish and refine techniques to identify and discourage problem gambling and financial crimes.

Ireland

The Emerald Isle has always been an attractive destination for tourists. With its rich history behind every ageless castle, green hills, and pubs, visitors looking to have a good time won't get disappointed.

Until 2001, only Irish non-residents were allowed to gamble online. Finally, in 2013, gambling was totally legalized. This change of events turned Ireland and especially its capital, Dublin, into a digital hub for local and international operators wanting to organize legally licensed businesses in Ireland.

Local Regulatory Authority

Gambling legislation has undergone several changes. the 1931 Act still holds its relevance with several amendments updating it and fit a modern context. Online gambling has been a game-changer and after a certain delay, the 2015 Betting act allowed Irish Licensees and even legit offshore operators to address their service to every age fitted (+18) user.

License

Before applying for a license aspiring operators must first obtain a "personal fitness" certificate from the police of Ireland.

Once obtained, operators can solicit an international online license remote bookmaker license fee is €10,000 EUR or 10% of the turnover of the licensed betting company earned from its activity.

Also, licensees are required to pay €10,000 (maximum €500,000) every two years for renewing a license to operate outside the country.

Gambling Responsibility

The Ireland jurisdiction's promotion of a healthy and responsible industry offers certain mirroring with the British approach.

Year after year, new laws and regulations brought beneficial changes to keep offering strong player protection and allowing the best conditions for operators to grow with their business. As long as they obtain the proper licenses and are competent to provide safer gambling conditions to its customers and awareness to the general public, they are welcome.

Isle of Man

The final British possession in this list, the tiny island between Ireland and the United Kingdom can only be defined as epic. Formerly possessed by Celtic and later the Vikings, its rich history, and breathtaking natural beauties of the Isle of Man have made it a key stop for tourists. Those looking for an adrenaline rush won't be disappointed as the isle posses take one of the world's top motorcycle courses.

Those in search for a business hustle can greatly benefit from its low taxation and the possibility to make the Island of Man their new operations centre.

The Isle of Man Gambling Supervision Commission

The significant growth of online gambling demanded the regulation (Online Gambling Act 2001) of all online gambling activities. Licensing is only available for fit operators that can provide their services under strict control and ethics, helping the jurisdiction to achieve its current reputation.

However, this is one of the most amicable jurisdictions. Interested gaming investors can access a great license once they manage to comply with all ethical and Know Your Customer requirements

License

The Commission offers a single license for all forms of gambling. A submission fee of £5,000, is required at the beginning of the application process. Once approved, the maintenance of the five-year license is:

  • £50,000 plus supplementary charges (£5,000 per network

partner) for a network services license,

  • £35,000 for a standard license; and
  • £5,000 for a sub-license

Yield tax is even more generous as these are ranked according to the operator's earnings.

  • 1.5% tax on gross gaming yield up to £20,000,000
  • 0.5% tax for gross gaming yield of £20 million p/a, but not exceeding £40 million
  • 0.1% tax for gross gaming yield exceeding £40 million per annum

Gambling responsibility

Is in this regard that the Isle of Man jurisdiction has earned the approval of its peers. The core principles the Commission upholds are:

  • To keep the gambling industry crime-free as regulated entities, Licensees must adhere to obligations placed upon them by law to combat money laundering and terrorist financing.
  • To protect the young and those at risk license holders must have a proven record of their customer's finances to prevent any exploitation of them and detect problem gambling patterns (constant deposits in single sessions). They also must have a solid system to validate identification to skim the underaged and self-excluded from their services.
  • To ensure that the services offered by license holders are fair and that players receive their true winnings licensees must have a system in place which fully protects all player funds, taking any deposits or winnings secured and enforced by law.

Malta

Blessed with the sunny Mediterranean, Malta is becoming one of the advanced and respected online gaming jurisdictions in the world. As the country wants to be relevant to iGaming as London and New York are to finances, the last sector being another perk for those willing to settle and succeed.

Malta Gaming Authority

The authority encompasses the Maltese spirit being completely accessible to help and provide the necessary aid to new operators willing to settle business. However, it's strictness is paired with its generosity, the Authority takes very seriously the protection of customers and the industry from problem gambling and financial fraud. Thereby, leaving no place for wrongdoings.

License

Even if one license covers all forms of gambling, operators must be specific toward the type/class of gaming services they are going to offer. these are classified as:

  • Type 1 - Casino-type games, skill games and online lotteries
  • Type 2 - Fixed-odds betting, pool betting and spread betting
  • Type 3 - Promotion of P2P, poker networks, betting exchange and game portals
  • Type 4 - Controlled skill games such as fantasy sports

if licensees need to offer additional gaming services a permit must be requested to be approved before the offers of new services.

The cost of licensing can go up to €25000 with a maximum taxation cap of €600,000 per year.

Gaming responsibility

The prevention of problem gambling along with the promotion of a wider awareness of its causes has been a focus of the Maltese Authority. In conjunction with the Responsible Gaming Foundation subscribed operators are promoting a more fair and responsible manner of addressing gambling to new and old customers.

Thanks to its experiences with financial services, the Maltese government has instructed the Authority to make operators comply with the several prevention measures the country has to subscribe to be an active member of the Eurozone.

How the authority has supervised all its licensees and the transparency of their operations are reasons enough to trust in this jurisdiction.

Montenegro

The Montenegro nation is one of the land-based offshore jurisdictions you will ever find Located in the stunning Balkan Peninsula the former Yugoslavian nation has put an admirable effort to provide a greater and differentiated financial industry that has been the envy of is more western counterparts, with several accusations to try to tarnish this small but beautiful country.

If Montenegro's strategy is an aggressive one or not, it has attracted several investors thanks to its unique corporate tax of 9%. And by unique it means the only tax. Capital gains, sales tax, VAt, and even bets are levied at 0% rates.

Games of Chance Administration

Because of its attractive fees, the Montenegro jurisdiction becomes a very good option for a startup. However, when it comes to players' interests, some of these advantages can be perceived as disadvantages.

The GCA is a very strict body supervising the land-based casinos but it has little regard towards how regulations must be enforced when it comes to the remote context. Still, further evaluations of the legislation and its updates will provide the necessary framework to make Montenegro a more reputable and competitive jurisdiction.

License

Any operator holding a land-based gambling concession can apply for an online license.

The price, a monthly fixed fee of €10,000. or a flat €2M single payment for 10 years.

Gambling responsibility

Licensees must be aware that while land-based gaming is strictly regulated online legislation is not yet clearly defined which lessens market participation because of the undeveloped reputation. Operators are not obliged to make available to players any gambling management tools, such as betting limits, time outs, or similar.

As concern for the problem, gambling increases and better ways to regulate the gambling industry to make it fair and transparent are enforced, those who don't keep up will risk getting shut down and losing all the privileges the Montenegro license can offer.

Romania

Originally a source of dispute between western and easter powers trying to control the area, Romania has made a name for itself thanks to the steady reputation of the top destination for tourists, and digital startups.

Not precisely an offshore destination, its lowered taxation rivals with other jurisdictions on the continent. With an open economy, very affordable living costs, top communications and love for the flutter, there is no doubt that Romania is the perfect spot to start any iGaming business. If you manage to swing through its bureaucracy.

National Gambling Office (NOG)

The NOG is the specialized body of the central public administration subordinated to the Romanian Government. Is the sole responsibility of managing the State's legal monopoly and is the one entitled to grant licenses and authorizations.

But complains about the levels of corruption in Romania and the fact that its legislation is outdated compared to the current situation of the industry has diminished the reputation of the license, and even making other jurisdictions blacklist its licensees

Licensing

Depending on the final user of your services you can opt for the following licenses

  • Class 1 license B2C operators offering gambling services on the Romanian market. The license is valid for both land-based and online gambling.
  • Class 2 license – B2B providers specialized in the gambling industry which are supplying products/services to B2C operators licensed in Romania. his license type holds several more categories such as manufacturers/distributors of gaming components; software providers; providers of hosting services; among others.
  • Class 3 license –This one is exclusive to the Romanian National Lottery, which has a legal monopoly over the organization of land-based and online lottery games.

Cost of licenses are

Class 1:depending on the operator's turnover, the cost ranges from €6,000 to €120,000 a year. Additionally, there is a 16% tax over gambling yields with a minimum payment of €100,000 plus an annual €5000 contribution.

Class 2:a €6,000/licence plus an annual responsible gambling contribution of €1,000

Gambling Responsibility

Operators are obligated to pay an annual responsible gambling contribution to a public activity whose main purpose is to finance programs and activities aimed at ensuring a responsible gambling environment and preventing gambling addiction cases.

Is worth noting the strictness of the NOG to enforce its regulations. operators and those unregulated are equally prosecuted. However, the notoriety of the Romanian jurisdiction's reputation has demanded a major effort to clean corruption from the industry and establish trust and fairness again.

Conclusion

Moving to an offshore jurisdiction does have certain advantages. Lowered requirements, fees, taxations and even barriers to access global markets compared to more regulated and standard jurisdictions gives them an upper hand.

Of course, there is always a tradeoff for all those benefits. Reputation. Even with zero tax impositions, a jurisdiction that does nothing to protect vulnerable customers and prevent criminal activities has the same value as a glitched game. Once people are aware of it, they will pass from you.

On the other hand, there are still countries with committed governments to change the stigma. Adapting their laws and schemes to make themselves competent in making a healthier gambling industry while delivering an opportunity to operators and players that have faced a wall in their homelands.

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