Ceuta&Melilla: requirements for reduced gambling tax rates

Authors: Alberto Lobato & Elisa Lorenzo 

With the aim to promote gambling companies to be based in the Spanish Territory – particularly in the territories of Ceuta and Melilla-, the Spanish Government introduced an amendment to the Spanish Gambling Law (Law 13/2011 on gambling activities) in 2018 establishing a 50 percent reduction in the applicable gambling tax rates (except for Sport Betting organized at a State level) for operators with tax residence and actually established in the Autonomous Cities of Ceuta and Melilla.

Of course, in order to be eligible for these reduced tax rates, the operator must be tax resident in the Autonomous Cities of Ceuta and Melilla. However, Spanish Gambling Law does not define the requirements in order to be deemed to be actually established (realmente radicado) in the Autonomous Cities of Ceuta and Melilla and be therefore subject to these lower tax rates.

For this reason, the Spanish General Directorate of Taxes has recently issued a public ruling clarifying this concept. According to this public ruling, the requirements in order to be considered by the Spanish authorities as actually established in the Autonomous Cities are:

  • More than a 50 percent of the gambling operator’s employees shall be tax residents and assigned to an Autonomous City workplace.
  • More than 50 percent of the gambling operator’s employee costs shall relate to employees which are tax resident and assigned to an Autonomous City workplace.
  • Intragroup services received by the gambling operator shall not exceed 50 percent of its total costs.

As a result, if the above mentioned requirements are met, the gambling operator would be deemed to be actually established in the Autonomous Cities and the reduced gambling tax rates would apply. Nevertheless, compliance with these requirements is a factual matter which is subject to verification by the Spanish Tax Authorities.

Ceuta and Melilla seem to be an attractive alternative for the establishment of online gambling operators in the EU, and the public ruling issued by the Spanish General Directorate of Taxes is very helpful in order to asses the different alternatives .