offshore solutions since 1988
The Rock of Gibraltar guards the western entrance to the Mediterranean and is attached to the southern tip of Spain by a narrow isthmus. It has a population of 30,000 inhabitants although the Rock only has an area of two and a half square miles.
At the end of 1994, some 55,000 companies were registered in Gibraltar, that is, a greater number than the individual residents in Gibraltar. Many of these companies are offshore companies, but the policy of the Gibraltar Government both encourages the registration of offshore companies and also provides valuable tax concessions to foreign investors wishing to establish a physical presence on the Rock.
The law regulating the incorporation, constitution and dissolution of corporate bodies is set out in the Companies Ordinance. The provisions of the Companies Ordinance were originally based on the English Companies Act 1929 but the Ordinance has been much amended to bring it up to date. Under the terms of the Ordinance it is possible to incorporate an unlimited company, a company limited by guarantee, with or without share capital, or a company limited by shares, either public or private.
Gibraltar is a British Crown Colony and has been since 1704. The Constitution gives legislative powers to the Governor and the House of Assembly, which is elected every four years. Gibraltar has its own legal system, similar to that of the United Kingdom and based on English Common Law but with its own statutes, termed Ordinances, which are passed by the House of Assembly. Gibraltar is an associate member of the European Community and is included for all matters except VAT. English is the official language with Sterling the official currency.
Types of Company
The main attraction of Gibraltar as a financial center is that its Exempt Companies can be managed and controlled from within Gibraltar, in contrast with most other jurisdictions, where companies managed from within are subject to Corporation Tax.
These are becoming very popular as alternatives to the once popular Irish Non-Resident 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.
Non-Resident or Exempt?
The non-resident company is cheaper as it is not subject to the fixed rate annual duty and other fees which are payable by the exempt company but 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.
The shares of a non-resident company would be subject to Gibraltar estate duty whereas the shares of an exempt company would not. So, those who prefer the non-resident structure would be well advised to have the shares of the company held by a holding company or by a suitably drafted discretionary trust.
In a world of ever changing fiscal legislation the twenty five year guarantee enjoyed by the exempt company may prove particularly useful in the future and allows for certainty of planning.
This type of company is similar to the exempt company but, instead of being non-taxpaying, the company elects its own rate of tax as long as that rate is 2% or above. This type of company can be useful where it is necessary to show that a certain minimum level of taxation has been paid in order to gain relief from taxation in another country. For example, the taxation systems of certain countries provide that if taxation above a certain minimum level has already been paid on income remitted to the home country then no further taxation will be charged on those profits by the home country. Other countries do not apply CFC antiavoidance legislation if the subsidiary is subject to tax at a defined minimum rate. The Qualifying Company can therefore elect to pay the required minimum level which would allow that income to be remitted to the home country without further taxation being suffered on arrival.
A Qualifying Company must lodge an amount of GBP1, 000 with the Gibraltar Government as a guarantee against payment of future taxation.
This company was specifically created to take advantage of European Union Directive 90/435. In simple terms, this Directive states that dividends may be paid by a subsidiary company located in one EU state to a parent company located in another EU state without the imposition of withholding tax as long as the recipient parent company is not capable of being exempt from tax. The prohibition against tax exemption would mean that the exempt and non-resident Gibraltar companies are not suitable to receive dividends from a subsidiary in another EU state so the 1992 Holding Company was created. The 1992 Holding Company pays 35% tax on all profits except on dividend income received. Dividends paid out of the 1992 Holding Company are subject to a 1% withholding tax. This type of company can be particularly advantageous for non-EU countries who are investing within the EU and are expecting to receive dividend income. As can be seen the effective rate of tax on that dividend income will be 1% when remitted out of Gibraltar or zero tax when held within Gibraltar.
Neither an exempt company nor a non-resident company has a liability to tax of any kind in Gibraltar (except payment of the annual duty in the case of an exempt company, which is, in any case, included in our fees).
From 2001 a basic balance sheet must be filed annually although there is no requirement for this to be audited.
Gibraltar is not party to any double taxation treaties so there is therefore no exchange of information with other fiscal authorities.
Gibraltar companies can be especially good for purchasing properties in Spain.
Associate member of EC
Excellent communications Good banking facilities
No exchange control
No double taxation treaties
Official language is English Low annual tax
Exempt from direct taxation
Trusts recognised under special Trust Ordinance
Particularly good for the purchase of property in Spain
The clause includes financial and property investments, holding company and general trading activities among others.
Capital duty is only payable on the authorised capital, either on incorporation or upon an increase taking place, at a rate of one half of one percent (0.5%)
A Gibraltar Company must have its registered office in Gibraltar. The Statutory Registers must be held in Gibraltar, at the registered office.
It is a requirement, practical in the case of a non-resident company and legal in the case of the other types of Gibraltar company, for a Gibraltar resident company secretary to be appointed.
A Company must hold a General Meeting of shareholders once a year.
Accounts and Annual Returns
Accounts are required to be produced to shareholders at annual general meetings and these must be audited by Gibraltar auditors, but the accounts are not required to be filed and are not open to public inspection.
An annual return must, however, be filed at the Companies Registry once a year. This annual return gives details of the directors of the company, the company's share structure and the shareholders' names and holdings.
A Gibraltar company only requires a structure of one shareholder. It is possible for a company to have corporate shareholders. In view of the requirement to show shareholdings on annual returns, it may be preferable for nominees to hold the shares.
Directors' details are shown on Public Record and their names have to be printed on the company notepaper. It is permissible, however, to have corporate directors' whenever such are desired.
Restrictions on Name and Activity
The following words and their associated activities are restricted: association, royal, imperial, trust, trustee, bank, assurance, group, Europe and international.
In Gibraltar, confidentiality depends on the common law duty of professionals to keep their clients' affairs private. Bank secrecy is strengthened by the local Banking Ordinance although it should be noted that there is a Drug Trafficking Ordinance, 1989 in place. There is no requirement to declare beneficial ownership of a company before incorporation although there is requirement to make disclosure in respect of companies which seek exempt status. Private Gibraltarian companies are not presently required to file accounts with the Registrar of Companies although this may soon change as Gibraltar brings its legislation into line with EU directives governing company matters.
Costs For The Setting Up Of A Gibraltar Non Resident Company
Gibraltar Non Resident company package contains:
Incorporation, legal address, local agent, Company Secretary, Nominee Directors and
Shareholders, Corresponding address where your mail, phone/fax messages will be
received and redirected ...............................................................................................................................................
1395 £ Annual Fees............................................................................................................................ 650 £
fax: +1 917 4648381, +44 870 1387648, +385 51 214355