Melilla, the Spanish autonomous city located on Africa's northern coast, is positioning itself as a hub for iGaming and technology companies by highlighting its favorable tax regime. This initiative does not involve any relaxation of gambling regulations, as all iGaming enterprises remain under the oversight of the Spanish government and the Directorate General for Gambling Regulation (DGOJ).
Patricia Lalanda, a partner at Loyra Abogados, stated, "A company established in Melilla operates under exactly the same regulatory framework as any operator based anywhere else in Spain. The Directorate General for the Regulation of Gambling (DGOJ) remains the competent authority for licensing, supervision and enforcement." Lalanda emphasized that Melilla has matured beyond a mere concept to become a viable business environment with international operators and technology companies now established there. This growth has allowed businesses to evaluate their operations based on tried and tested commercial outcomes.
The city’s special tax regime is a significant draw, allowing qualifying companies to benefit from a corporate tax rate of only 12.5%, compared to rates that could reach up to 50% elsewhere. Furthermore, the tax rate for gambling activities in Melilla is set at 10%, lower than the standard 20% applicable across Spain. Another unique aspect is the application of the IPSI in place of VAT, which significantly reduces the tax burden on certain services relevant to the iGaming sector to a rate of only 0.5%.
Additionally, Melilla offers tax incentives for workers, as residents enjoy a reduced personal income tax rate of 60%.
Lalanda remarked, "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." Though initially focused primarily on gambling operators, Melilla is now actively pursuing suppliers and technology firms related to the iGaming sector, specifically those that provide technology and services without needing gaming licenses.
This strategic shift occurs as Spain reviews its gambling legislation, with the DGOJ currently reforming laws established in 2011. Melilla's aspirations extend beyond becoming a gambling center; Lalanda suggests that the expertise gained from the iGaming industry could also foster the growth of other tech sectors, including AI, cybersecurity, blockchain, cloud computing, digital identity, and data analytics. She believes that online gambling could serve as the foundation for developing a broader digital economy within the city.
This trend mirrors developments in other European gaming centers, such as Malta, where the focus is increasingly on B2B companies in the gaming sector, leading to a higher proportion of licenses and applications for businesses focused on supplying services rather than direct gambling operations.
Lalanda also addressed the implications of the global minimum tax framework known as Pillar Two, stating, "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."
Thus, for Melilla, the goal is not just to offer low taxes but to attract companies committed to establishing substantial operations within the city, thereby laying the groundwork for a thriving digital business ecosystem.
