Gibraltar, probably the cheapest offshore jurisdiction within Europe, offers unique opportunities to do business tax efficiently. It was one of the first British dependent territories to develop tax-exempt corporate forms for overseas business.
Since then, Gibraltar has established itself as one of the world’s leading offshore financial centres. Unlike many, Gibraltar is not some faraway exotic island, it is part of the European mainland. Its strong regulation and attractive tax incentives have made it an ideal base for organizations around the world, while its proximity to both Europe and Africa makes it easily accessible from many of the world’s business centers. Membership of the European Union brings a clear commercial benefit to Gibraltar-registered companies, which can access the Union’s financial services market and take advantage of an extremely favorable business environment.
Gibraltar has an excellent offshore business infrastructure, consisting of numerous sectors: offshore banking, insurance, investment fund management, investment holding companies. There is a good range of professional services in Gibraltar. As there are no exchange controls, investors have complete freedom to remit funds to or from Gibraltar and to convert funds to other currencies. The currency is the Gibraltarian pound, which is on a par with the British pound sterling.
Gibraltar’s tax system is similar to that of the UK, however there are several important differences. Key incentives include:
o Without VAT or other sales taxes
o No capital gains tax
o No wealth tax
o No inheritance or gift tax or inheritance tax
o Tax efficiency opportunities for international businesses
o Tax-efficiency opportunities for high net worth individuals and relocated executives who possess specialized skills.
The most practical type of all Gibraltar offshore corporate entities is the non-resident company. Until recently, there were two other specialist and tax efficient corporate structures available in Gibraltar: the Exempt Company and the Qualified Company. However, following an agreement between the Government of Gibraltar and the EU in 2005, the end of these tax-exempt structures has been announced. Gibraltar dissolved its qualifying company tax regime in January 2005. Later in the month, the cut-off date for exempt companies was announced. Existing Gibraltar exempt companies can maintain their status until 31 December 2010. However, applications for new exempt companies are no longer available from July 2006.
Following the change in legislation, the non-Gibraltar resident company can be used as an excellent alternative to tax-exempt companies. Unlike exempt companies, non-resident companies are not subject to the same due diligence criteria and are better for most tax planning purposes.
To enjoy the benefits, a company registered in Gibraltar must meet the following criteria:
o Must be owned, managed and controlled by non-residents. Board meetings must be held outside of Gibraltar;
o You must not trade or conduct business in Gibraltar;
o You must not return income to Gibraltar.
If the above criteria are met, a company will be considered as non-resident. It will not enter the Gibraltar tax system by definition and will not need to be registered for Gibraltar tax purposes. Gibraltar corporation tax is levied only where the company’s income is derived from or remitted to Gibraltar.
The non-resident company is cheaper than the previous exempt company as it is not subject to the annual flat rate tax and other fees that such exempt companies had to pay. However, it should be noted that it is generally less desirable to manage due to the requirement to supplement non-resident directors and to hold bank accounts outside of Gibraltar only. At the same time, the non-resident company can operate its bank accounts in different offshore jurisdictions, such as the Isle of Man, for example. It may also be practical to open the offshore bank account in a country closer to the actual place of business of the company, or the actual location of its beneficial owners.
Gibraltar businesses are also mobile. They can continue in many other respected offshore financial centers (including Malta, BVI and USA) and reciprocally, companies registered in these territories can once again be domiciled in Gibraltar.
Other factors affecting Gibraltar companies that are worth noting include:
1. The non-resident company must maintain a local registered office with a local corporate secretary.
2. The standard incorporation time for Gibraltar companies is 4-5 days.
3. Gibraltar companies are not favorably structured for the provision of Bearer Shares.
4. The identity of Directors and Shareholders of Gibraltar companies must be filed with the Gibraltar Companies Register, although these may be Representatives.
5. Only one director and one shareholder (corporate or individual) are required to be appointed for a Gibraltar company.
6. A director can be of any nationality.
7. As of 2001, basic Balance Sheets must be presented annually, although they are not required to be audited (unless it is not a typical “small company”).
The Gibraltar Non-Resident Company is suitable for many purposes, in particular:
Protection and confidentiality of assets. Hold funds, stocks and shares and other investments in company accounts in Gibraltar, as the capital invested and interest earned will not be taxable. Owning a yacht or ship in the name of a company so that profits made from trading or chartering are not taxable. Buying a property outside Gibraltar in the name of a company, developing it and reselling it by selling the shares of the company, rather than the property itself, thus avoiding capital gains tax and other charges in the jurisdiction where the property is located . Operate a business with a Gibraltar company to avoid tax when invoicing so that payments received in Gibraltar are tax free and re-invoice to minimize tax liability in other jurisdictions. For the possession of family assets through fiduciary structures.
In general, by choosing Gibraltar as our tax haven, we receive political and economic stability for our investment, tax-free income and profits for offshore companies.