Melilla, the Spanish autonomous city located on Africa's northern coast, is actively promoting its unique tax regime to draw iGaming and technology firms. This initiative does not stem from relaxed gambling regulations; companies in Melilla still adhere to the stringent oversight of the Spanish government and the Directorate General for Gambling Regulation (DGOJ).
Patricia Lalanda, a partner at Loyra Abogados, noted, "A company established in Melilla operates under exactly the same regulatory framework as any operator based anywhere else in Spain. The DGOJ remains the competent authority for licensing, supervision, and enforcement. 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."
The appeal of Melilla lies in its special tax regime, which allows qualifying companies to benefit from a lower corporate tax rate of just 12.5%, compared to rates that can soar to 50% in other regions of Spain. For gambling businesses, the tax rate is 10%, significantly lower than the 20% typically charged across the country. Another unique aspect of Melilla's tax structure is the implementation of the IPSI instead of VAT, which applies to certain iGaming services and offers a reduced rate of 0.5%.
Residents of Melilla benefit from personal income tax incentives, paying at a notably lower rate of 60%. Lalanda elaborated on the broader ecosystem supporting licensed operators:
"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."
Initially focused on gambling operators, Melilla is now seeking to attract suppliers and technology firms that service the iGaming sector, many of which do not require gaming licenses. This strategy coincides with Spain's reevaluation of its gambling legislation and the DGOJ's ongoing reforms of the 2011 gambling laws.
Melilla’s ambition extends beyond becoming a gambling hub. Lalanda asserted that the expertise gained from the iGaming industry could catalyze growth in other tech sectors, including AI, cybersecurity, blockchain, cloud computing, digital identity, and data analytics. She believes that online gambling can serve as a foundation for a more extensive digital economy, rather than being the sole focus of the city’s strategy.
This trajectory aligns with trends observed in various European gaming centers, such as Malta, where there is a shift toward B2B operations, contributing to a larger share of licenses and applications. 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."
For Melilla, success relies not only on lower taxes but also on attracting companies committed to establishing substantial operations, thus laying the groundwork for a thriving digital business ecosystem.
