Sky Bet Heads to Malta to Cut Tax Bill; Decision Questioned by Critics

Sky Bet is reportedly switching its UK headquarters to Malta in a bid to slash its tax bill. It is thought Sky Bet’s owner, Flutter Entertainment, could save as much as £55 million in tax each year from the move.

Although the UK government has come under increasing financial pressure, Flutter transitioned its sports betting business to the Maltese branch of a new UK company, SBG Sports Limited, which has obtained a licence from the Gambling Commission. There was also a plan last summer to make 250 UK staff members redundant.

Exploiting a loophole

Flutter, which has owned Sky Bet since 2018, is one of the biggest gambling groups, and a move to Malta had been in the pipeline for a few months. Instead of paying 35% in corporation tax in Malta, international companies can pay as little as 5%, which is more amenable than the UK’s 25% rate.

If a profit is paid as a dividend to a holding company shareholder, a 30% refund may be given. Hestview Limited, a subsidiary of Flutter, noted that Sky Bet’s profits last year, which were filed to Companies House, a potential saving of £31m in tax could have been made.

Added to that, there is a VAT loophole that Sky Bet could capitalise on. Doing this would have reduced Sky Bet’s marketing budget by as much as £24m, meaning they could cut their tax bill by up to £55m each year.

Decision called into question

Apparently, staff were left in the dark over the tax motive behind the move. A Flutter insider admitted it would be ridiculous to label the switch to Malta as being purely for ‘strategic reasons’.

However, Dan Neidle, a tax expert, cast aspersions over the move, telling ITV News: “If I had been advising them, I’d say that it was reckless. The risk is that there’s a lot of expense in moving people to Malta, and then they’re stuck. If the law changes [or] HMRC challenges their position, they could end up, in fact, saving nothing but being stuck in Malta.”

Meanwhile, Flutter’s decision was labelled “hypocritical” by MP Meg Hillier. She said: “The betting industry appeared in front of the Treasury Select Committee just a couple of weeks ago, extolling the virtues about how much tax they’re paying in the UK. And here we see a company going and offshoring. It rather takes the biscuit, doesn’t it?”

Government under financial strain

Filling a £50 billion financial black hole is a priority for the Chancellor of the Exchequer. Research carried out by think tanks such as the Institute for Public Policy Research (IPPR) has suggested the government could raise an extra £3.2bn by increasing gambling taxes.

Former Prime Minister Gordon Brown also recently renewed calls for a hike in gambling taxes to end child poverty. Although Rachel Reeves hasn’t concealed her desire for gambling operators to pay more in taxes, Flutter, which also owns Paddy Power, revealed last month that it could close as many as 57 UK betting shops if the prospective tax rise comes into effect.

Flutter stays defiant

While not negating the tax implications linked to the Malta move, Flutter remains defiant. Indeed, it pointed to the £700m paid in taxes last year, but it insists the move was to ensure the business thrives in the future.

In a statement, Flutter said:

“As with most global businesses around the world, we are constantly striving to remain competitive and efficient and to give ourselves the best chance of success in an incredibly challenging environment.”