Malta regulator clamps down on false start-ups with licensing changes

The Malta Gaming Authority (MGA) will change its licensing fees structure from January 2020 in a bid to clamp down on companies wrongly claiming licence fee reductions by calling themselves start-ups.

From January, all licence applicants classifying as start-up businesses will be required to show their business has not generated more than €10m in revenue during the previous 36 months.

The MGA has said it was aiming to ensure businesses classified as start-ups are truly start-ups and not attempting to pay reduced licensing fees.

In addition, the new rules target corporate groups that were previously in business and are looking to benefit from fee-related incentives relating to restarting their business.

Under current Maltese regulations, start-up firms are excused from paying the compliance contribution for regulated activities during the first 12 months following their licence issue.

The compliance contribution currently paid by Maltese licensed firms is between €15,000 and €375,000 for type one licensed operators and between €25,000 and €600,000 for type two gaming. The amount payable is determined by the revenue generated by the operator within a specific licence period.

Individuals can operate as a start-up business if they have not operated a business within a related sector within a five-year period, while corporate entities can similarly do so if they have not yet distributed profits.

In order to be classified as a start-up under the current rules, operators must show they have not generated more than €10m in revenue during the previous financial period, which will now be increased to 36 months under the new rules.

Earlier this month, the MGA released its first post-Brexit guidance notes for licensed operators, requiring UK firms to transfer their Maltese licences to corporate entities based in the European Economic Area following Brexit.