The country

Gibraltar has 28,000 inhabitants and is located in the south of Spain, on the Strait that bears the same name. It is a British overseas territory and has therefore been part of the United Kingdom since 1704. Claimed by Spain, this piece of land with a surface area of 6 543 km² is a cause of significant conflict with the United Kingdom.

An offshore centre

As well as being a member of the European Union, Gibraltar has a favourable tax system for offshore activity. The country allows a holding company, often attached to British companies, to be created so that all these entities can benefit from the region’s tax system, even if they are located outside Gibraltar. It is also an ideal environment for entrepreneurs, who have the opportunity to find directors and designated shareholders there. The country has also had its own stock exchange since 2007, the GibEx.

The Development Aid Ordinance is the standard text on taxation in Gibraltar: it allows non-resident corporations to obtain tax-exempt status. It also enables them to avoid paying income and property tax for 25 years. Tax exemption status requires:

• a minimum of 100 GBP capital
• no right of the company shall be held by a resident of Gibraltar
• the share register must remain in the country
• the offshore company must not carry out any activity in the country
• one of the directors must live in Gibraltar

The main type of offshore companies is the company limited by shares and holding companies based in the country meet the standards of the EU parent-subsidiary system under 2003/223/EC. Holding companies benefit from an exemption from withholding tax on dividends of a European subsidiary. This type of offshore company allows 95% of profits to be retained. Anonymity is guaranteed by the presence of a director and designated shareholders.

Useful information

Gibraltar investment funds are the most flexible in Europe, and can be registered from a minimum of 100 000 euros of investment upwards. The jurisdiction is an alternative to the Luxembourg, which requires larger investments.

Gibraltar is ideal because the country is a member of the European Union, which means that the directives for passing on dividends apply and that a perfect holding company for a British company in the Agency Agreement can be operated without examination by the tax authorities. S ince Gibraltar is no longer seen as a tax haven by the OECD, one can choose to pay 10% tax on profits or declare a lack of income on the spot and be taxed at 0%.

Gibraltar is the ideal destination for international import-export operations, except for intra-Community transactions, given the absence of a European VAT number. As a freelancer or consultant, use Gibraltar only if the service you provide can be performed remotely, otherwise use the United Kingdom.

The various tax rates

Enterprises based in Gibraltar and not making their income from an activity in the territory are not subject to corporate tax. On the other hand, for companies with activities in the country, the tax rate is 10%. Moreover, there is no capital gains tax or property tax. There is no VAT or wealth tax in Gibraltar.

Accounting essentials

As for the tax system, companies not carrying out any activity on Gibraltarian territory have no obligation to keep accounts. For other companies, it is mandatory to keep accounts.

The jurisdiction in detail

Gibraltar’s economy is mainly based on services, especially in finance and tourism. Many British and foreign banks have opened subsidiaries there, to the point that it has become a very important international financial centre. Tourism is also very important, benefiting from the natural landscape (with the popular rock of Gibraltar) and Gibraltar’s very favourable climate. In addition, the military has long dominated the economy of the territory; however, today it only accounts for 7% of GDP, compared with 60% 30 years ago.

Situated in a very busy area, Gibraltar is an important international trade location. The port sector is therefore very important in the region’s economy, and has grown dramatically over the years.

Strengths for investment :

• part of the European Union
• has its own advantageous tax system
• legal framework similar to common law
• good geographical location

Disadvantage

• some European standards do not apply (customs, CAP, etc.)

Access to and functioning of the market

Although Gibraltar is part of the European Union, the territory does not have all the relevant regulations, starting with customs policy. Thus, Gibraltar is not part of the customs union and European standards do not apply to international trade. There is therefore no free movement of goods with other European countries and customs duties always apply.

Political data

Since it under the control of the United Kingdom, Gibraltar is ruled by Queen Elizabeth II and the territory is governed by the British Government. The Governor of Gibraltar (Sir Adrian Johns) has a mostly ceremonial role and is responsible for appointing the Government. Legislative power is held by the Parliament of Gibraltar, with its 17 members elected for four years.

The main political parties are the Social Democrats, the Socialist Labour Party and the Liberal Party.