How Ceuta Built a Gambling Hub, and Why Digital Assets Could Be Next | EBC12

Thank you very much for the introduction. Thank you very much for the invitation to talk about this fantastic city. First of all, let me introduce the people who are with you today. First, Marina Villalonga. She is a partner at Ascensi Abogados, a Spanish law firm with deep expertise in gaming, gambling, technology and regulated digital businesses.

And Alberto El Jarat is the managing director of Sportium. Sportium is one of the leading operators in the Spanish market. As for me, I am a lawyer in EY's tax practice in Spain. I am also a tax advisor, an external tax consultant to the Ceuta government for the last few years. First of all, I would like to make a brief introduction about Ceuta.

Ceuta is a Spanish city located in the Strait of Gibraltar on the African coast. And I assume that yesterday you all heard the words of the President of the European Commission, Ursula von der Leyen, when she said that Ceuta is part of Spain and Ceuta is part of Europe. Some of you may have discovered Ceuta through the recent news about the migration processes that took place 45 days ago, but our experience with Marina and Alberto in this city is completely different. It's an extraordinary place to do business, and we're here to share our personal experiences with the city. First of all, I would like to highlight three topics that I think are worth discussing when we talk about Ceuta.

First of all, the tax system: you must take into account that Ceuta is part of Spain, but has a special tax regime, thanks to which the entire tax system provides for discounts. After all, for example, we have a 60% tax break on corporate income tax. When we talk about individuals in income tax, we also have a 60% also have a 60% deduction. For employees working in the city, there is a 75% discount on social insurance costs. So, in the end, in Ceuta we see that the profitability of business profitability of business projects is increasing compared to mainland Spain or any other jurisdiction in Europe.

The second topic I want to cover is legal security. Marino, we've talked about this before, but we are part of Spain, and therefore we are part of Europe. Ceuta is subject to Spanish and European data protection and anti- money laundering regulations. So you can count on legal security in this city. And the third topic I want to emphasize is institutional support.

I think we all agree that the local government of Ceuta helps and supports every business project implemented in the city. Actually, we are here to tell the success story of the gaming and gambling industry based in the city since around 2020, when Brexit happened and operators who were in Gibraltar who were in Gibraltar had to move elsewhere within the European Union to continue working with the Spanish market. In this regard, I would like to note that last year, EY conducted an analysis of the impact of the gambling industry on the city and the industry itself. We saw that at least 45% of at least 45% of operators licensed to operate in Spain are already located in Ceuta. 80% of operators based in Gibraltar before Brexit are now based in Ceuta.

And 80% of the turnover of companies registered in the city is accounted for by operators located in Ceuta. So, this is a success story. And our feeling is: why shouldn't digital assets be next? This is the reason we are here, to explain our experience and explain why we believe that other businesses with a significant technology component can achieve this. In this regard, Marino, can you explain to us what you have been doing over the last few years regarding the gambling industry and regarding the relocation of these companies to Ceuta?

And, well, tell us about relevant examples, etc. Of course. Well, first of all, we noticed while traveling the world at crypto conferences and meeting with many companies interested in entering the European market that they didn't know exactly where to locate their core business and which country to choose. Of course country to choose. Of course , one of the most important points they take into account is the tax regime.

Therefore, one could consider Malta or other similar jurisdictions. But Ceuta is unknown. I mean, nobody knows about Ceuta. Nobody knows that Ceuta has one of the best tax regimes in Europe. So we noticed that Ceuta is well known for the gambling business, but not for the digital asset industry.

And I mean, they could gain significant benefits by moving their business there. Of course, there must be some economic presence. You must meet certain requirements to be eligible for this tax treatment. But that's exactly what we do. We help companies by advising them on how to set up this business in Ceuta and what restructuring or transaction operations they need to carry out, depending on whether they want to leave their main business in their country of origin and only open a branch in Ceuta, which is quite possible.

Or they want to move the entire business to Ceuta, which is also quite possible. So we help them, and we've already helped many gaming companies, and now technology and cryptocurrency companies, rethink and build that business there, explaining business there, explaining how to do it. They need to have a certain team there. They need to have an office. But of course, as you said, the institutional part of the city is very supportive.

They are always ready to help. Personally, I mean they get involved in the process. They are really involved because sometimes it's a small town. I mean, it's a small town. So everyone knows each other, and everyone wants to help each other.

So, this is a good moment. So yes , we have helped many companies successfully relocate to Ceuta. And what you mentioned, that legal certainty is important certainty is important , because you are in Spain, you are in the European Union. So this is a question that many people ask us when we talk about Ceuta. Okay, it's located in northern Africa, but is it Spain?

What legal regime are you in ? What laws apply there? Spanish laws and European laws. Therefore, legal certainty is fully ensured there fully ensured there . Alberto, could you tell us about your experience from the beginning of the Sportium move until now?

Yes, first of all, thank you for inviting me here. I am very pleased to attend this congress and especially to share our experiences. We decided to move to Ceuta in January 2020 . By the way, this was a few months before the pandemic. We are a multinational online online gaming company.

You people from Spain probably know us better because we are based here in Barcelona. We are present in nine countries. Of course, in every country, in all regulated jurisdictions, we have our subsidiaries. But we decided to move the Spanish branch of our online operations to Ceuta. And this, as I said, was in 2020.

It is also worth saying that at that time the only or main incentive we found was the competitive tax system that the city offered at all levels. You mentioned corporate taxes corporate taxes , gambling taxes , VAT, and also personal income tax, which has very competitive advantages. But after 6 years of working there. I must say that Ceuta is much more than just a location with tax advantages. We were able to continue to grow and expand our business.

We currently operate under two licenses and develop three brands. We have expanded our activities. And we really want to continue working in Ceuta in the long term, because we understand—and this is my personal assessment after this experience— after this experience— that what is happening now and what we see on TV regarding Ceuta is a temporary phenomenon. This is something that will pass faster than it seems. It's a matter of a few weeks, certainly before the end of the year.

And my personal opinion is that, following all the economic and political dynamics in Spain, it is clear that Ceuta will emerge from this crisis even stronger. They will receive even greater support from the Spanish government and the European Union, which will strengthen their infrastructure and certainly accelerate development towards attracting more technology companies. So, as I said, in the beginning, taxes were the main driver, but once we got there, we saw that there were many other benefits. It's not just about that. In my opinion, one of the two key points for our company was that the administration here is business-friendly.

And, as you both noted, that doesn't mean that regulation here is weak. These are high standards because these are European Spanish standards. So the requirements here are as strict as strict as anywhere else in Spain or Europe, but the local administration is very responsive and understanding towards companies opening there, and they will help you and support you in solving all your problems. This could be hiring staff, finding premises, or anything else. It could be a search for, say, apartments for executives moving to Ceuta, etc.

So, it is a business-friendly environment with high standards of compliance with regulations and requirements. Another thing is the very convenient transport connections. It is very easy to get here. I fly there often. I live in Barcelona, ​​and I can fly there and back in one day, and sleep at home in Barcelona.

So it's very convenient. Nearby is Malaga, a large aviation hub, and from there, from the same airport, it is only 25 minutes to Ceuta. Therefore, you can fly there in the morning and return in the evening . This allows for close communication between communication between headquarters and branches, and for branches to be very close to the main office on the mainland. I would also like to emphasize that the quality of life in the city is simply the quality of life in the city is simply wonderful.

It is a livable urban environment as it is a small city. There are less than a hundred thousand residents here. Nature, sea, gastronomy. So, it's a nice place to live. You feel like you are in one of the beautiful coastal towns of the Costa del Sol, even though you are actually on the other side of the continent.

That was our experience. And in conclusion, summing up my experience, I will say that it's not just this, and despite what we see on TV now, I believe that it is temporary. We are focused on the long term , so much so that by the end of the year we will be moving to larger premises, because, as I said, we are growing and our current offices have become too small. So, we are expanding and will soon, before the end of the year, open new offices. Well, to sum up, since I think Marina and Alberto's recommendations were very clear.

In summary, I think Ceuta is the best place. And it is true, if we want to summarize our impressions of Ceuta: you will get profitability, legal security and institutional support. We will be there . We have an understanding with the Ceuta government in case you need additional information or would like to clarify any questions regarding Ceuta, and we would be happy to consider new digital asset initiatives for implementation in the city. Thank you very much.