Melilla, an autonomous city on the northern coast of Africa, is actively promoting itself as a hub for the iGaming and technology sectors, emphasizing its favorable tax policies. Importantly, this initiative does not reflect any relaxation of gambling regulations. Businesses in the iGaming industry are still subject to oversight by the Spanish government and the Directorate General for Gambling Regulation (DGOJ).
According to Patricia Lalanda, a partner at Loyra Abogados, "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." Lalanda emphasized that Melilla has transitioned from a conceptual initiative to a practical business environment. International operators have successfully established operations there, attracting technology firms that have gained traction based on real business outcomes rather than speculative potential.
Central to Melilla's attractiveness is its special tax regime, which allows qualifying companies to benefit from a corporate tax rate of only 12.5%, significantly lower than the rates that can reach 50% elsewhere in Spain. Furthermore, the tax rate on gambling operations is set at 10%, compared to the national standard of 20%. Additionally, Melilla employs an IPSI tax system rather than VAT for certain services pertinent to the iGaming sector, featuring a substantially reduced rate of just 0.5%.
There are also tax advantages for workers; residents enjoy a personal income tax rate of 60%. Lalanda noted the breadth of support available in Melilla, stating, "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, Melilla's focus was primarily on gambling operators, but there is now a concerted effort to attract suppliers and technology firms that support the iGaming sector. Many of these companies do not require gambling licenses because they provide technology and services instead of directly handling gambling products.
This evolution occurs as Spain revises its gambling legislation, with the DGOJ working on reforms to laws first enacted in 2011. Lalanda points out that Melilla's aspirations extend beyond becoming a gambling center. She argues that the expertise gained from the iGaming sector can foster growth in other tech industries, including artificial intelligence, cybersecurity, blockchain, cloud computing, digital identity, and data analytics. Lalanda envisions online gambling as merely the starting point for Melilla's broader digital economy strategy.
This strategy reflects trends in other European gaming hubs, such as Malta, where there is a notable shift toward business-to-business (B2B) companies within the gaming industry, allowing suppliers to form a larger share of licenses and applications.
Lalanda also commented on 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."
Ultimately, Melilla's prospects rest not just on its lower tax rates but on the ability to attract companies committed to establishing substantial operations, thereby laying the groundwork for a diverse digital business ecosystem.
