Adam Roarty is a journalist covering sports betting, regulation, and industry innovation for CasinoBeats. His coverage includes tax increases in the UK, covering breaking stories in the ever-evolving landscape of US betting such as the...
Read Full BioSkyBet, one of Flutter’s UK-based betting and gaming platforms, has relocated its headquarters to Malta ahead of an expected rise in gambling taxes.
The relocation is estimated to save the company as much as £55 million ($72 million) in annual taxes. Previously, SkyBet operated under Hestview Ltd, a UK company, but this has been changed to SBG Sports Ltd.
Rather than setting up a Maltese company, SkyBet registered SBG Sports in the UK with a Maltese branch. It has now set up a headquarters in the tax haven, relocating its senior staff.
Flutter announced the move to staff back in June, citing a “need to operate more efficiently” and to reduce costs. The company has not explicitly said the move to Malta is for tax reasons.
Instead, Flutter issued a statement declaring, “This decision was made for a number of strategic and commercial reasons and will have some tax implications. But Flutter is committed to the UK and Sky Bet will continue to pay UK corporation tax on its profits.”
However, ITV News quotes a “Flutter insider” as commenting, “Tax was the elephant in the room. It is absolutely understood, across everyone affected, indirectly or directly, or even aware of the announcement, that this is about tax. No one with a straight face would say it’s ‘for strategic reasons’ or whatever other nonsense people come up with.”
UK Plans Tax Hike, Allows Companies Based Offshore
As a result of the move, the new company, SBG Sports had to apply for a new license to continue operating as SkyBet in the UK. The Gambling Commission granted the license last month, listing the company’s headquarters at Spinola Park in San Giljan, Malta.
At the same time, UK Chancellor Rachel Reeves is planning to increase the gambling tax this month. The increase is expected to apply to sports betting, with an exemption for horse racing.
Reeves stated that gambling companies “should pay their fair share of taxes, and we will make sure that happens.”
SBG Sports Limited is subject to UK corporation tax on its profits, but under UK tax rules, it can elect to be exempt from tax on the profits of its Maltese branch.
Maltese Tax Loopholes Attractive to Companies
Malta’s flexible tax rules allow international companies to receive a 30% reduction in corporation tax, bringing the effective rate down to 35%. In effect, SkyBet can therefore reduce its corporation tax rate from 25% in the UK to 5% in Malta.
Last year, the company paid £39 million ($51 million) to the UK government, which can be reduced to £8 milllion ($10.5 million) as a result of the move. The UK would get none of this, and it will now be directed to the Maltese government.
In addition, Tax Policy Associates explains that the company can avoid paying VAT entirely on marketing expenses through a loophole. Malta allows companies to create a VAT group, which Flutter can exploit to save an additional £24 million ($31.5 million) in taxes. Together with the savings on corporation tax, this adds up to a total annual saving of £55 million.
Tax Policy Associates is a not-for-profit company, founded to improve tax and legal policy. It states that the move by SkyBet is risky, noting, “Our team of experienced advisers would not have advised a client to adopt this structure; it is aggressive and likely susceptible to both HMRC challenge and/or change of law.”
In addition to relocating SkyBet to Malta, Flutter has its headquarters in other tax havens for its subsidiaries. Betfair, Tombola, and Sky Gaming are all registered in Gibraltar where companies pay 15% in corporation tax and are exempt from VAT on remote gambling.
