The Spanish autonomous city of Melilla is promoting a special tax regime that cuts the gaming duty on operators to 10% of gross gaming revenue, half the 20% rate applied in the rest of Spain, and reduces the effective corporate income tax rate to 12.5%.
The regime is not new and it is not a licensing shortcut. Gambling supervision stays with the Directorate General for the Regulation of Gambling (DGOJ), the national regulator, and companies established in the city hold the same Spanish licences on the same terms as operators in Madrid. What changes is the tax bill, and only for companies that move real operations to the North African enclave.
Patricia Lalanda, partner at Loyra Abogados, told SiGMA News that the model has moved past the pitch stage.
Today, Melilla is no longer a concept or a policy initiative; it is an established business environment. International operators have successfully built operations there, technology companies have followed, and there is now enough practical experience for businesses to assess the model on the basis of real commercial outcomes rather than expectations.
What the regime gives operators
Melilla and its sister enclave Ceuta sit inside the scope of Spain’s Gambling Act 13/2011 but outside Spanish VAT territory. That pairing produces four separate reductions.
The Tax on Gambling Activities falls to 10% of GGR under article 48.7 of Law 13/2011, against the 20% general rate, for operators with tax residence and effective establishment in the city.
Corporate income tax carries a 50% rebate under article 33 of the Corporate Income Tax Law on income genuinely earned in Melilla. On the 25% headline rate that gives an effective 12.5%, and tax advisers say R&D deductions can take it lower in specific cases.
The Tax on Production, Services and Imports (IPSI) replaces VAT, with general rates between 0.5% and 10%. Since 2019 Melilla has applied a super-reduced 0.5% rate to services online operators buy in volume: advisory work, fraud prevention, data processing and information services tied to gaming operations. Alberto López Gómez, tax partner at EJASO, put the gap in cash terms: €10m of annual spend on qualifying outsourced services costs roughly €2.1m in VAT on the mainland and about €50,000 in IPSI in Melilla.
Personal income tax carries a 60% rebate for Melilla residents, so employees pay tax on 40% of their income. Employer social security contributions run at 11.8%, and local business tax and municipal fees are cut by half.
The substance test
None of it applies to a nameplate. The Spanish Directorate-General for Taxation set out the conditions in a binding ruling of 4 April 2019: the office, management functions, operational processes and decision-making capacity must sit in the city. Melilla’s own investment agency states that at least 50% of staff and labour costs must be located there.
The key question is not whether obtaining a licence becomes easier by establishing operations in Melilla; it does not, but whether the business can genuinely build part of its operations there in a way that satisfies the legal requirements of the special tax regime.
Lalanda also argues the global minimum tax framework works in the city’s favour.
This is also why I believe Pillar Two is ultimately good news for Melilla: it means competition between jurisdictions is no longer a race to the bottom on nominal rates. Jurisdictions will increasingly have to compete on real substance, people, functions, infrastructure and genuine activity, and that is precisely the ground on which Melilla’s regime was built.
Which operators are already there
Codere was the first to move, transferring the subsidiary holding its Spanish online licence to Melilla in October 2018 after the incentives entered the state budget. Codere Online has since opened a further office in the city.
The Melilla Online Gaming Association (AJOM) launched in September 2021 with a founding group that included Codere, Versus, Jokerbet, Casino Gran Madrid Online, SkillOnNet, Wanabet, AfiliaGo and AfiliaGambling. The body co-hosted a networking and roundtable programme with Clarion Gaming at ICE Barcelona 2025.
Ceuta took a similar route, with Betfred moving its Spanish online headquarters there in 2019. Local and industry estimates put more than 30 licensed companies across the two cities.
Malta’s reform changes the comparison
The timing matters. Malta, the default base for European online gaming for two decades, overhauls its gambling VAT and gaming tax from October 2026. Legal Notice 86/2026 narrows the VAT exemption for gaming and betting to three defined cases, classifies online betting, platform access and online bingo as electronically supplied services taxed where the customer sits, and replaces the flat 5% gaming tax with a tiered system by product.
Malta’s 5% effective corporate rate through shareholder refunds survives, along with two decades of accumulated legal, audit and regtech expertise that the island built its industry on. Melilla, with fewer than 90,000 residents, has nothing comparable, and an MGA licence still carries commercial weight in third markets that a Spanish licence does not.
From operators to suppliers
Melilla’s current pitch reaches beyond licence holders. Platform developers, payment specialists, identity verification firms, cybersecurity providers, compliance consultancies, CRM companies and marketing agencies need no gaming licence, which removes the licensing question entirely and leaves only the substance test.
Behind every licensed operator sits a much wider ecosystem of specialised businesses: platform developers, software providers, payment specialists, identity verification companies, cybersecurity firms, compliance consultancies, fraud prevention providers, CRM companies, data analytics businesses and digital marketing agencies.
The push lands while the DGOJ works on reform of the 2011 gambling law, and while mainland Spanish operators absorb a market that generated €405m in GGR in the third quarter of 2025 under a 20% duty.
Whether Melilla converts attention into relocations depends on what it can supply rather than what it can discount. Operators weighing the move need local hires, office space and a supplier base the city is still assembling. The seven weeks to Malta’s 1 October start date will show how many are prepared to test it.
Source: Loyra Abogados
