Once an online gambling affiliate starts taking off and the tax man comes to collect their lawful amount, many turn to the offshore sector for refuge.

In this article, I will go through some common solutions used by large gambling affiliates and pros and cons.

Incorporation

As a gambling affiliate, you usually only enter into agreements with gambling companies, your bank, a web hosting company, and potentially a handful other online services.

Choice of jurisdiction therefore is of relatively low importance here. Many opt for Seychelles, The Bahamas, Costa Rica, Panama, Cyprus, and Malta. In reality, nearly any jurisdiction can suffice.

Gambling-hostile jurisdictions such as Hong Kong and the US are often avoided. For incorporation, this is typically not necessary and is a by-product of over-compliance.

It is arguable whether incorporation is even necessary. Many do it just to keep their names away from the websites while still being able to show the name of a company.

Forming a company has the advantage of creating a separate entity under which the affiliate business takes place. While this is unlikely to have any tax advantages, it can make a legal difference or provide a strong enough privacy shield in certain situations – especially for residents in gambling-hostile jurisdictions.

Banking

A gambling affiliate doesn’t offer gambling services so you might think a bank would be open to an affiliate even if they are not open to gambling operators. That is unfortunately not the case.

First of all, banks in gambling-hostile jurisdictions are and should generally be avoided – for example Hong Kong and Turkey. I have seen banks in Hong Kong throw out affiliates, but I have also seen affiliates thrive. These banks often have a zero-tolerance policy to anything related to gambling.

A bank account separate from your personal is really only necessary if you separate your affiliate income under a company or if you want to keep your affiliate earnings separate from your other funds. It can be a costly and time-consuming to open an offshore bank account.

Having an offshore company and bank account can be problematic if your affiliate earnings are paid out to an e-wallet such as Neteller and Skrill, since they often insist on only paying out to bank accounts where you are resident. In many cases, it’s enough to make one or two withdrawals to an account where you are resident. After that, adding a foreign bank account is often not problematic.

Operating under a company can be both a blessing and a curse in this regard. It can be advantageous if you bank in the same jurisdiction as you incorporate. However, many don’t, and in that case, you end up having three jurisdictions (your residence, your company’s, and your bank’s). This can confuse the often inexperienced compliance offers working at payment service providers.

Consider also that if your affiliate is paid our via for example Trustly or other Euro-centric payment methods, having an IBAN is essentially required if you don’t want to wait for lengthy manual processes.

As far as possible, it is wise to be paid out via bank. However, high bank fees (as are common with offshore banks) can really start chipping away at small payments.

Banks

So what banks do igaming affiliates usually bank with? From experience, the offshore banks below cover well over 90% of all gambling affiliates:

• Alpha Bank – Cyprus
• Antigua Overseas Bank – Antigua and Barbuda
• Bank of Valletta – Malta
• British Caribbean Bank – Belize, Turks and Caicos Islands
• Choice Bank – Belize
• First Caribbean – Bahamas, Curaçao
• Global Bank of Commerce – Antigua and Barbuda
• Hellenic Bank – Cyprus
• Heritage Bank – Belize
• LHV – Estonia
• Loyal Bank – Saint Vincent and the Grenadines
• Mediterranean Bank – Malta
• MCB Bank – Curaçao
• Multibank – Panama
• Norvik Banka – Latvia
• Piraeus Bank – Cyprus

Opening An Account

As many affiliates can attest to, it can be very difficult to open a bank account (whether onshore or offshore). Many banks will balk when approached by a gambling affiliate. This is because the word gambling is highly stigmatised in the financial services sector. It is associated with money laundering, despite today being heavily controlled and regulated.

To get around this, many approach banks and present their business as online marketing, online media advertising, and so on.

If asked about the connection to gambling, you chances may not be immediately ruined. Explain that you do not offer gambling services, take bets, or offer any rewards, and banks might listen to you again.

It helps to go through an intermediary, especially one which has experience working with gambling affiliates since they hopefully have connections at banks that understand what affiliate marketing is. If you contact the banks above directly, odds are that you will end up speaking to someone who has no experience with offshore gambling affiliates and only know that gambling means an instant no.

Residence

Have you ever wondered by lots of tax havens are only ever pictured as sandy beaches and palm trees? That’s because you wouldn’t want to know what it looks like elsewhere. Many of these island nations are poor and reliant on foreign aid to stay afloat.

I’m not saying you should stay away. I’m saying that it probably isn’t what you imagine it to be. It doesn’t matter if you spent two weeks snorkling in Aruba a summer a few years ago. That doesn’t prepare you for living in Rossaeu, Dominica or Belize City, Belize.

By far, most gambling affiliates who choose not to stay put end up in Malta. It is a tax friendly and gambling friendly jurisdiction where EU and EEA nationals can settle without any special permits. Other nationals are welcome under special programmes depending on wealth or professional skills.

A large number also go to Thailand, Indonesia, or other low-income jurisdictions in Asia with lenient immigration and taxation laws or, at least, lax enforcement of such laws against wealthy foreigners.

But uprooting isn’t for everyone and with uncertain tax benefits, it’s not always advantageous to move just to save some money on taxation compared to continue living near old friends and family.

Taxation

Income is income and profit is profit. You are taxed based on your tax residence, which in most cases is where you live (see also The Permanent Traveller).

Forming an offshore company and or opening an offshore bank account does not under most circumstances in any way reduce your tax liability. (It can in fact make it worse in some circumstances.) Stashing the money offshore doesn’t matter – unless you live in a tax haven, or a jurisdiction with particularly favourable tax laws.

Tax evasion is rampant among gambling affiliates, to the point of being the norm. The income is usually so low it doesn’t register with tax authorities but many have been caught and prosecuted.

Conclusion

Setting up an offshore presence for a gambling affiliate does not offer any legal means to reduce you tax situation but can render high privacy in an industry where the reputability of your company and bank matters a lot less than in for example ecommerce or freelancing.

Bank account opening is often difficult. This can be made easier by using an intermediary and by presenting your company (in a non-deceptive way) as an online marketing business.