Synopsis

Gibraltar is a peninsula with an area of 2.75 square miles situated at the Southern most tip of Spain. Gibraltar has been a Crown Colony of the United Kingdom since 1713 when the Territory was ceded to Britain under the terms of the treaty of Utrecht. Gibraltar is politically and economically stable and although Spain still maintains a territorial claim over Gibraltar the British Government has undertaken not to place the people of Gibraltar under the sovereignty of another state without their free and democratic consent. This consent is most unlikely to be forthcoming.

Britain maintains responsibility for defence and international affairs but local matters, including company and taxation law, are the preserve of a locally elected House of Assembly.

Gibraltar is a full member of the European community having been included as a member when Britain joined in 1973 but Gibraltar is specifically excluded from the European Common Agricultural Policy, the VAT system and the Common Customs Union.

Gibraltar enjoys a sophisticated range of banking, legal, accountancy and other professional services. Communications are excellent. The currency is, for all practical purposes, the British Pound Sterling (although local Gibraltar Pounds are also issued and trade on a par with Sterling) and the population is bilingual in English and Spanish which facilitates the translation of documents for the Spanish speaking market.

There are 2 main types of non-tax paying company available in Gibraltar:-

THE GIBRALTAR TAX EXEMPT COMPANY

A company incorporated in Gibraltar which is owned by non-residents of Gibraltar and does not transact business with other Gibraltar resident companies or individuals is eligible to apply for tax exempt status in Gibraltar.

An exempt company is convenient to administer due to the fact that it may have locally appointed directors and may maintain Bank accounts within Gibraltar. Thus the whole of the administration may be located within Gibraltar which helps to prevent the assumption that the company may be tax resident anywhere else.

Following an agreement between the Gibraltar Government and the EU in February 2005, it has been announced that the Tax Exempt regime will come to an end on 31 December 2010. New applications can still be made until 30 June 2006 although such applications will only be approved if "real economic benefit to Gibraltar" can be shown. In practice this means that applications are unlikely to be successful and further information on the present situation can be obtained by sending an e-mail to info@sovereigngroup.com inserting Gibraltar Tax Exempt Companies in the subject header.

NON-RESIDENT GIBRALTAR COMPANIES

A company which is incorporated in Gibraltar, owned by non-residents of Gibraltar and managed and controlled by directors who reside and hold their board meetings outside of Gibraltar will be considered as non-resident.

A non-resident company is not subject to Gibraltar corporation tax except on that part of the profit which is remitted to Gibraltar. In practice this means that a non-resident company may be totally exempt from Gibraltar corporate taxation provided that it does not maintain Bank accounts within Gibraltar.

The non-resident company is cheaper than the previous exempt company as it is not subject to the fixed rate annual duty and other fees which were payable by said exempt companies. Is should be noted however that it is generally less convenient to manage due to the requirement to appoint non-resident directors and maintain Bank accounts outside of Gibraltar only. This may have tax implications in the home country of the directors - please see our notes on directors under the "Optional Services" section.

Gibraltar non-resident companies have the following characteristics:

 

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Last reviewed: Wednesday, May 26, 2010

Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission.