|
Gibraltar is an attractive offshore
location for investment fund management, trust management, shipping,
and investment holding companies because of its established cost and
tax-effective base. There are no income or capital gains taxes and no
exchange controls. Branches of foreign companies in Gibraltar can
apply for special exempt tax status. A company can be incorporated
within five days.
Offshore Formation Formalities
Offshore formations can take several types. Exempt Private Companies,
which can be resident or non-resident in Gibraltar and are used for
the avoidance of tax. The only liability is a yearly registration fee.
Branches of Foreign incorporated companies which are created to allow
dividend payments to be deferred from one EU member state to another
without any withholding taxes. Qualifying Companies that pay income
tax on profits at a rate form 0%-35%. Non Resident Companies that are
liable for tax in income arising or receive through local agents and
Trusts.
The Exempt Company is the most popular offshore vehicle in Gibraltar
and is generally used for holding bank accounts and investments (since
capital and interest earned is tax-free); yacht/ship and property
ownership; the management of ships and cargo; for operating businesses;
invoicing so that payments received in Gibraltar are tax-free;
re-invoicing so that tax liabilities in other jurisdictions are
minimised and for the holding of family assets using trust structures.
To qualify for tax exempt status the company must adhere to certain
stipulations:
|
- At all times the paid-up share capital must not
be less than £100 or the foreign currency equivalent;
- Gibraltarians or resident of Gibraltar are
prohibited from any beneficial interest in the shares of the
Exempt Company except as a shareholder in a public company which
is registered in a country other than Gibraltar;
- If the company is incorporated in Gibraltar, it
must keep its register of shares within Gibraltar and have a
provision in its Memorandum and Articles of Association to the
effect that its register will not be kept elsewhere. If the
company is incorporated outside Gibraltar, it must keep a true
copy of its register of members within Gibraltar;
- The company must not, without the approval of
the Financial and Development Secretary, carry on any trade or
business in Gibraltar or with Gibraltarians or residents of
Gibraltar except where these are other exempt companies. An exempt
company may, however, manage and control its business from
Gibraltar and have an office and staff locally; and
- Its auditors must be approved by the Government
of Gibraltar, who must confirm annually that the company is not in
breach of the provisions of the Companies (Taxation and
Concessions) Ordinance.
|
|
The legal requirements are as follows:
|
- All Gibraltar companies require a local
registered office for the service of process but there is no
specific requirement for the appointment of a registered agent;
- Both registered and bearer shares can be issued.
There must be at least one director. A director can either be a
real person or a corporate entity. Details are on public record.
Nominee directors can be supplied internally or externally;
- There are no nationality or residence
requirements;
- There must be at least one shareholder. A
shareholder can be a corporate entity and there are no nationality
or residence requirements;
- There is a disclosure requirement for Exempt
companies of the name and address of the beneficial owner but all
such information is protected by a legal guarantee of
confidentiality;
- The name of the required company should be
checked with the Registrar and the ending will be either Limited
or Public Limited Company;
- No-accounts or annual returns to be filed with
the Government in the case of Exempt companies.
|
|
Trusts
Trust management, particularly for wealthy UK individuals, has been a
traditional business for Gibraltar. Gibraltar has a well-developed
legal and financial infrastructure for trust management. With a large
established base of trusts, and a growing reliance on corporate work,
the volume of trust litigation is becoming significant. Trust income
is exempt from tax. Under the Income Tax Interest, income received
from a Gibraltar bank is normally exempt from taxation
Trustees are required to be licensed by the Financial Services
Commission.
Taxation
Gibraltar is one of the cheapest European offshore jurisdictions and
one of the first of the British dependent territories to develop
tax-exempt corporate forms for offshore business. It has quite high
internal income taxes, but offers low-tax regimes to both companies.
Exempt Companies are exempted from all taxes; Qualifying Companies are
liable for tax on worldwide income at rates between 2% and 35% and
1992 Holding Companies subject to 35% tax on profits but the liability
to withholding taxes on distributed dividends is limited to no more
than 1 %.
Banking
The banking sector is well established in Gibraltar in both the
offshore and local market with assets in the vicinity of G£6.5 billion.
The advantages of offshore banking in Gibraltar include its attractive
tax status, the lack of exchange controls, excellent communications,
stable government, and EU membership. Much of the banking activity in
Gibraltar is directed to asset management for high-net-worth
individuals, not least because Gibraltar has tried hard to attract
such people with special tax regimes.
Employment law
Gibraltar's employment legislation largely mirrors that of the UK.
there is legislation which permits statutory determination of wage
levels in the event of an impasse between management and workers. The
statutory minimum of holidays is 2 weeks, rising to 3 weeks after 5
years, in addition to public holidays. There are also Industrial
Tribunals to deal with cases of unfair dismissals
Businesses in Gibraltar are required to register their and their
employees' details with the Employment and Training Board - details of
the business within 3 months of commencement, and details of employees
within 14 days of engagement. Job vacancies must also be notified to
the Board, since it administers the work permit system. This is no
mere bureaucratic form-filling exercise: the Board's stamped and
signed Notice of Terms of Engagement is needed for an employee to
obtain a Registration Card from the Immigration Department, or a
Social Insurance Card from the Department of Labour and Social
Security. An employer pays G£26 per employee per annum to the Board's
Employers' Insolvency Fund, which compensates the employees of
insolvent enterprises for unpaid wages, etc.
Social security contributions are compulsory for employed persons, but
voluntary for the self-employed. There is a normal range of benefits,
but access to them is tied to contribution record in many cases.
Insurance contributions are payable at a standard flat rate for each
week of employment. The standard rate is £42.69, of which £18.87 is
paid by the insured person and £23.82 is paid by the employer.
As Gibraltar is part of the EU, EU nationals have the right of free
movement of labour and should have no difficulty in obtaining a
resident's card.
Geography, People, and Culture
The population estimated at July 2004 was 27,833. The climate is
Mediterranean with mild winters and warm summers. The terrain narrow
coastal lowland borders the Rock of Gibraltar. The ethnic groups are
Spanish, Italian, English, Maltese, and Portuguese. English is the
official language, but more commonly spoken is what sounds to an
outsider like perfect Andalucian Spanish. It is in fact llanito, an
Andalucían dialect with borrowed words that reflect its diverse
origins.
Immigration and Residency
Nationals of EU member states have the right to enter, live and work
in Gibraltar. Initially a six-month visa is given, and then a 5-year
renewable residence permit, provided that they have found suitable
employment or have started a business. Work permits cannot be denied
to EU citizens.
Other nationals have to apply for residency under the Immigration
Control Ordinance and permission is issued by the Governor. Government
guidelines indicate that an applicant for residency must be ready and
able to purchase a property of sufficient size to accommodate his
dependents, must be in good health, and must have adequate financial
resources. The Government looks more favourably on those applicants
who purchase luxury property in Gibraltar.
If Non-Gibraltarians need work permits, they are issued under the
Control of Employment Ordinance. A work permit cannot be refused to an
EU national.
Legal and Political System
Queen Elizabeth II is the Head of State and is represented in
Gibraltar by the Governor and Commander-in-Chief Sir Francis Richards
(since 27 May 2003).
Following elections, the leader of the majority party or the leader of
the majority coalition is usually appointed chief minister for a four
year term by the Governor
A Council of Ministers is appointed from among the 15 elected members
of the House of Assembly by the governor in consultation with the
chief minister. The last held elections were on 27 November 2004. The
current ruling party is the Gibraltar Social Democrats which received
58% of the vote. The opposition party is Gibraltar Socialist Labour
Party.
Economy
The currency is the Gibraltar pound which is at par with the
British pound. Gibraltar benefits from an extensive shipping trade,
offshore banking, and its position as an international conference
centre. The financial sector, tourism (almost 5 million visitors in
1998), shipping services fees, and duties on consumer goods also
generate revenue. The financial sector, the shipping sector, and
tourism each contribute 25%-30% of GDP. Telecommunications accounts
for another 10%. In recent years, Gibraltar has seen major structural
change from a public to a private sector economy, but changes in
government spending still have a major impact on the level of
employment.
Legislation relating to offshore
and non-resident business
If you require more information on any particular statute please
contact us.
Banking (Accounts Directive) Regulations 1997
Banking (Auditors and Information) Ordinance 1997
Banking Ordinance 1992
Bankruptcy Ordinance
Companies Ordinance as amended
Companies (Taxation and Concessions) Ordinance
Deposit Guarantee Scheme Ordinance 1997
Development Aid Ordinance
Estate Duties Ordinance
Financial Institutions (Prudential Supervision) Ordinance 1997
Financial Services (Accounting and Financial) Regulations
Financial Services (Collective Investment Schemes) Regulations 1991
Financial Services (Conduct of Business) Regulations 1991
Financial Services Ordinance 1998
Immigration Control Ordinance
Income Tax Ordinance 1984 as amended
Income Tax (Allowances, Deductions and Exemptions) Rules 1992
Income Tax (Qualifying Companies) Rules 1992
Insurance Companies Ordinance 1987
Limited Partnership Ordinance as amended
Partnership Act 1890 (UK)
Perpetuities and Accumulations Ordinance 1986
Private Foundation Ordinance 1999
Qualifying (High Net-Worth Individuals) Rules 1992
The Registered Trust Ordinance 1999
Trust Recognition Ordinance
EU Directives having direct effect in Gibraltar:
Directive 78/660/EEC (The Fourth Directive) as amended
Directive 83/349/EEC (The Seventh Directive) as amended
Directive 83/350/EEC (sharing of confidential banking information)
Second Banking Co-ordination Directive 89/646/EC (passporting)
|
