Sky Bet has relocated its headquarters from the UK to Malta, a move projected to reduce its annual tax bill by approximately £55 million. This strategic decision comes as the UK government faces pressure to increase tax revenues, especially within the gambling sector, which has been a target for potential tax rises.
Details of the Relocation
The transition of Sky Bet’s operations to Malta involves establishing a new entity, SBG Sports Limited. This move will allow Sky Bet, which is part of Flutter Entertainment PLC, to benefit from lower tax rates, as companies registered in Malta enjoy a significantly reduced corporation tax of around 5%, compared to 25% in the UK.
Background of the Move
Flutter Entertainment announced the decision to staff in June 2023, revealing plans to cut approximately 250 jobs across various UK locations including Leeds, Sunderland, London, Dublin, and more. Chief Commercial Officer Steve Birch stated that effective November 1, operational decisions would be managed from Malta, although the Leeds office will remain a significant hub within the company.
Tax Implications and Industry Concerns
Tax expert Dan Neidle indicated that Sky Bet could realize annual savings estimated between £31 million to £55 million through this relocation. Furthermore, a VAT loophole could potentially save up to £24 million on marketing expenditures. Neidle described the decision as risky, emphasizing potential future challenges from the changing legal landscape in Malta and scrutiny from HM Revenue and Customs (HMRC).
Impact on the UK Market
The UK gambling industry is under tight scrutiny, with calls from MPs, including Rachel Reeves, to increase taxes on gambling operations. The Institute for Public Policy Research has suggested that such tax increases could generate an additional £3.2 billion for the government annually. However, industry leaders have expressed concern that higher taxes could push customers toward unregulated black market options, which could harm legitimate businesses.
Flutter Entertainment’s Response
Flutter has defended its actions, highlighting that it contributed over £700 million in taxes to the UK Treasury last year and employs more than 5,000 individuals nationally. The company cites growing financial pressures, including costs associated with the recent Gambling Act Review and fears of increased competition from unlicensed operators, as factors influencing its decision to move to Malta.
Industry Reactions and Future Outlook
- Peter Jackson, CEO of Flutter, warned that increased taxes could encourage customers to shift to illegal betting platforms.
- MP Meg Hillier criticized the relocation, calling it hypocritical given the industry’s previous commitments to UK tax responsibilities.
- Flutter’s spokesperson acknowledged the tax implications of the move while affirming the aim to enhance operational efficiency and competitiveness.
Sky Bet’s transition to Malta signals significant changes within the gambling sector and raises critical questions about tax policies, industry sustainability, and economic impacts in the UK.
