Melilla Woos iGaming Operators: Tax Offensive in the Spanish Enclave

The Spanish autonomous city of Melilla, located on the North African coast, is taking a bold step to position itself as a leading hub for the online gambling industry. By introducing a special tax regime, the city administration aims to attract iGaming companies to the region. While the industry globally often faces rising taxes and stricter regulations, Melilla is doing the opposite: offering massive fiscal relief for operators willing to physically set up shop in the enclave.

This is not just a minor adjustment but a strategic package. The city is leveraging its special status within Spain to offer fiscal advantages that go far beyond what is common on the Spanish mainland. It is not just about the companies themselves, but also about the people who work there. With personal income tax refunds of 60 percent for residents, Melilla is also becoming more attractive as a place to live for tech professionals.

Numbers and facts

The concrete figures behind this initiative are impressive and explain why the industry is taking notice. Qualified operators can expect a 50 percent reduction in their corporate income tax liability. This brings the effective tax rate down to approximately 12.5 percent. Even more critical for day-to-day business is the tax on Gross Gaming Revenue (GGR). While a rate of 20 percent applies in the rest of Spain, companies in Melilla only have to pay 10 percent.

Patricia Lalanda, partner at Loyra Abogados, explained in a conversation with SiGMA:

„Today, Melilla is no longer a concept or a policy initiative; it is an established business environment. The key question is not whether obtaining a license 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.“

In addition to these reliefs, the city offers tax credits and incentives for technological innovation. This aligns with Spain's national strategy to promote investment in future-oriented sectors. Despite these regional peculiarities, supervision remains strictly centralized. The Directorate General for the Regulation of Gambling (DGOJ) maintains full control over compliance with the rules.

Background

As early as 2018, Spain began reducing the tax burden for online gambling operators nationwide from 25 percent to 20 percent of GGR. The enclaves of Ceuta and Melilla were identified early on as special zones with a 10 percent tax rate. This policy is now bearing fruit, as the Spanish market has proven to be one of the most stable and fastest-growing in Europe. According to DGOJ reports, the sector recorded a 27 percent year-on-year increase in revenue in the first quarter of 2018.

The economic recovery of Spain after years of austerity allowed the Ministry of Finance to implement these changes discreetly within the annual budget. Santiago Asensi of Asensi Abogados emphasized that lower tax rates help draw players into the regulated market and away from the black market. At a time when illegal gambling in Spain was estimated to be worth 231 million euros in 2024, strengthening legal operators is a key political goal.

Why it matters for German players

For German players, the tax rules in Melilla do not directly change their daily gaming experience. Anyone playing from Germany is bound by the rules of the State Treaty on Gambling 2021 (GlüStV 2021). Strict limits apply in Germany: deposits are generally limited to 1,000 euros per month via the LUGAS system, and bets on virtual slot machines may not exceed 1 euro per spin.

However, it is important to understand that operators based in Melilla must hold a Spanish license from the DGOJ. These companies are allowed to offer their services legally in Spain, but not automatically in Germany. German customers should exclusively play at casinos listed on the official whitelist of the Gemeinsame Glücksspielbehörde der Länder (GGL). An operator based in Melilla without a German GGL license is considered an illegal black market provider in Germany, even if they are fully regulated in Spain.

What it means for GGL-licensed casinos

For operators with a German GGL license, the tax situation in Germany remains a challenge. While Melilla lures with a 10 percent GGR tax, providers in Germany must pay 5.3 percent on every single stake for online slots and poker. This is a completely different calculation basis than the taxation of gross gaming revenue. However, the competition between locations shows that regulatory stability and fair taxes are crucial for long-term commitment to the legal market.

If international giants settle in Melilla, they could theoretically try to use the taxes saved there to improve their offerings in other regulated markets. However, the GGL strictly ensures that all licensed providers in Germany face the same competitive conditions. A location advantage in Spain does not automatically lead to relief in the German market.