We advise all our clients to start a company in one of the free zones on the island. This is the easiest and most tax efficient way to apply for the license.

If an “e-Zone company” holds the licence, this allows you to benefit from:

• 0% tax on gross bets
• Favourable income tax*
• No VAT, Sales Tax or import duties
• No restriction on dividend withdrawals

So besides having the ability to offer every game imaginable, you can also start enjoying your (passive) income with very little taxes.

*Tax rules

As of January 1 st , 2020, Curacao changed from a worldwide tax system with exemptions for foreign permanent establishments and sales to foreign buyers, to a stricter territorial system where only income from a domestic enterprise is included in the taxable basis.

To determine whether income is considered domestic or foreign, the profit before indirect cost is allocated based on direct foreign and direct domestic expenses. For this reason the income tax rate is variable and depending on the set-up. We can ensure that Curacao remains a favourable tax regime. Make sure to ask us for the details. 

Processing agent

Due to ongoing regulatory scrutiny, it is now next to impossible for offshore companies in jurisdictions such as Curacao to accept online payments, or open bank account to receive those online payments. Given the fact that you need to accept payments on your website before people can start playing, you need this crucial element: a payment processing agent, also known as a Payment Agent Company.

A processing agent is a company that is part of the structure which processes payments for your website. For this, it receives a small fee (to satisfy local tax rules). The best jurisdiction has a low tax rate, has experience with such arrangements, and offers access to a variety of credit-card payment providers. The best option for this is Cyprus.

Cyprus is a EU country and it has one of the lowest corporate tax rates of the developed world. It allows access to payment systems and its regulatory body accepts these set-ups. In order to start a business here you do need local substance, such as a director, a company secretary, and an accountant.

You might also consider using an experienced company to handle the day-to-day administration and management of the corporate structure; this way you can focus on the important matters promoting the platform and driving up revenues!

To summarize the structure

For this structure you need to set-up a company in Curacao, which acquires the license. This company then becomes the shareholder of a Cyprus company, which is set-up to process payments.

All the income in this structure passes through Cyprus, but flows directly to Curacao. Of the total income 3% is invoiced as management fee by the Cyprus company, which is then taxed at 12.5%. This is an effective tax rate on total income of 0.375%. The income of the Cyprus company is than distributed to the Curacao company. All profits in Curacao are taxed according to the arrangement mentioned above. From there, your profits can be freely distributed to you without withholding taxes on dividends.

As you can see, to offer gaming services requires some planning. But for the serious entrepreneur, this structure offers a solid low-tax legitimate way to offer gaming products that are massively in demand at the moment.