Gibraltar is an Overseas Territory of the United Kingdom, with such elements of sovereignty as its own parliament, as well as its own taxation and national currency. As in other Overseas Territories of the United Kingdom, the formal head of Gibraltar is the King of England, and the jurisdiction is governed by legal rules very similar to those of the metropolis. Gibraltarians are British subjects.
The relationship between Gibraltar and the European Union is curious. In 2002, by an absolute majority, the inhabitants of this enclave voted in favour of keeping the status of their homeland unchanged. This upset the authorities of neighbouring Spain, which has been claiming this region almost since its capture by the British, i.e. for more than 300 years. On the other hand, when the United Kingdom and its territories voted on the issue of leaving the EU, the majority of Gibraltarians were against it.
However, Gibraltar ceased to be part of the European Union in 2020. Now citizens of the EU and this jurisdiction still have the possibility of visa-free border crossing. In 2022, negotiations were underway to bring Gibraltar, as a relatively independent territory, into the Schengen area.
To conclude our brief historical and political excursion, we note that this small piece of land on the Iberian Peninsula is very important to the British. With its help it is possible to effectively control the Strait of Gibraltar, which connects the Mediterranean Sea and the Atlantic Ocean. That is why they built a large naval base on Gibraltar. Therefore, no changes in the status of this jurisdiction should be expected in the near future.
Foreign entrepreneurs often choose Gibraltar to register their company. Let us consider the most obvious reasons for the popularity of this jurisdiction.
A Gibraltar company does not pay tax on profits if it carries on business abroad and accumulates its profits in foreign bank accounts. Such companies are also called non-resident companies.
But even if you have a resident company with an existing business and current accounts in Gibraltar, profits will be taxed at a low (compared to other European countries) rate of 12.5%. In addition, in Gibraltar entrepreneurs do not pay value added tax and a number of other taxes customary for other European countries.
When opening a company abroad, an enterprising businessman always looks for a place where the possibilities of an offshore zone are combined with the impeccable business reputation of the jurisdiction. It is also desirable that this territory should not be located on the other side of the world and should be safe.
Gibraltar is an amazing combination of a tax haven and a completely white jurisdiction. Located in Europe, this British enclave is as comfortable and prosperous as neighbouring Spain.
In order to comply with the requirements of international financial organisations, the Gibraltarian authorities have had to make concessions to make information about the founders, shareholders and directors of companies registered in the country relatively transparent. However, we used the word “relatively” for a reason:
All information is provided on a pay-per-use basis only;
Data can only be retrieved if you know the exact name of the organisation. Search by name and surname of the founder is not available;
Those cautious entrepreneurs who don’t like to be out in the open can always use nominal service.
The Gibraltar authorities are characterised by a loyal attitude towards bona fide foreign entrepreneurs. Both individuals and other companies (this can also include companies of foreign origin) can set up a company or be its director.
Your business will not be regulated by licences, work permits and so on. But only if you are registering an international company whose tasks do not include banking, insurance services or organising the operation of online casinos.
Unlike many other European countries, you can register a company in Gibraltar with any authorised capital. You will not be forced to open a special account in a local bank and pay the stated share capital in full.
You do not need to visit Gibraltar in person to incorporate a company. It is usually sufficient to apply online. If you do need to visit the jurisdiction, Schengen visa holders will cross the enclave without any administrative obstacles.
It takes no more than 3 working days to register a company. It is worth bearing in mind that even a non-resident business needs to interact with the regulatory authorities. Therefore, a corporate secretary will need to be hired to carry out administrative functions on site.
A convenient feature of registering a business in this jurisdiction is that each newly opened organisation is automatically assigned a tax number. Simply put, your company is immediately registered with the local tax office. Organisations with a tax number find it much easier to open a current account with one of the local banks.
By registering your company here, you can expect to have your business interests protected in a court independent of the authorities. Your business and assets will be protected by English law and you will pay taxes at a much lower rate of interest than in England.
There are several options for corporate structures and partnerships to launch a business in this country.
According to Gibraltar statistics, foreign businessmen most often opt for a limited liability company. Why do foreigners choose LTD out of all the variety of organisational and legal forms in Gibraltar?
Here are the main reasons why:
The liability of the founders of such companies is limited only by the amount of their investment in the authorised capital;
The share capital can be of any size and does not need to be fully paid up in advance by placing a large sum of money in a specially opened bank account. Only registered shares can constitute the authorised capital of LTD.
The standard recommendation is to claim £2,000 of share capital and issue 1,000 shares of £2 each;
In a limited liability company, there are no restrictions regarding the nationality or tax affiliation of the directors or founders. Individuals and other companies may act as shareholders or managers of such structures.
However, there are restrictions on the number of LTD shareholders, which cannot be more than 50, and you must have at least 1 director in your company. And if you want your firm to be non-resident, the director cannot be a citizen or permanent resident of Gibraltar;
The Gibraltar LTD must have a registered office directly in the jurisdiction where the corporate records will be kept. A secretary must also be hired to take over the administrative functions. The corporate secretary should be a local resident lawyer or law firm.
The key difference between this corporate structure and LTD is the ability to attract additional investment in the business by issuing bearer shares and selling them freely on the stock market.
There is no limit on the maximum number of shareholders in such a company, and their liability for the debts of the firm is limited to the market value of their shares.
The minimum authorised share capital of a public limited company in Gibraltar must be £20,500. No public company may carry on business unless it has shareholder funds equal to at least one quarter of this minimum. In legal parlance, this means that the founders must pay at least 25 per cent of the minimum founding capital.
PLC cannot list its shares on the stock exchange until they are paid up:
The nominal value is at least one-fourth as much;
Share premium — in full.
A Gibraltar public company requires the appointment of at least 2 directors and the employment of a corporate secretary. All PLCs incorporated in this jurisdiction hold an annual AGM and submit audited financial statements.
Opening a partnership in Gibraltar requires a minimum of 2 founding partners, which can be either individuals or organisations.
A partnership is not considered a non-resident taxpayer if all of its partnership business, management and control are carried on abroad. All partnerships registered in this jurisdiction are subject to the principle of “pass-through taxation”, where the income earned by the organisation is not taxed, but the partners are subject to income tax, but after the profits have been distributed to them.
There are 3 forms of partnerships available for registration in Gibraltar:
A regular partnership;
Limited partnership;
Limited Liability Partnership.
In an ordinary Gibraltar partnership, the liability of all members for the debts and financial obligations of the firm is unlimited and joint and several.
In an LP — limited partnership, all partners are divided into general partners and limited partners. Full partners participate in the management of the organisation and are fully liable for its debts. Limited partners generally do not manage the partnership. Such partners are liable for the debts of the firm only to the extent of the amount they contributed when the partnership was registered.
In an LLP, a limited liability partnership, all partners have limited liability to the extent of their contribution. All partners have the right to participate in management.
It is extremely rare for foreign entrepreneurs to use corporate forms to register a business in Gibraltar such as:
A company with unlimited liability;
A company with unlimited liability with no authorised capital;
A company limited by guarantee with or without authorised capital.
If you are planning to set up one of these types of companies in Gibraltar, for example to carry out charitable activities, please contact our experts for more information.
As already emphasised, it usually doesn’t take long to set up a new company in Gibraltar. And you will not spend a large amount of money on registration.
Even a non-resident company must have its registered office in the enclave, as well as a local resident secretary. The office is required not only as a registered office, but also as a place to keep the company’s records. A future Gibraltarian entrepreneur will need a reliable corporate secretary with his or her own office.
Therefore, businessmen do not waste their precious time trying to understand the peculiarities of Gibraltar’s corporate law and immediately turn for help to experienced specialists. We will quickly find you a responsible secretary and competently draw up the statutory documents of the future company.
What other stages does the company registration procedure include? They can be divided into five parts:
Selecting a name for the company and having it approved by the Trade Register.
Preparation of all documents required to open a company, including articles of association, memorandum of association, certificate of shares issued and personal details of management, shareholders and beneficiaries.
Payment of the fee for consideration of the application for registration of the company.
Completing the online application form and uploading copies of all supporting documents.
The Gibraltar authorities will consider the application. If approved, the company’s details will be entered in the commercial register, and information about the directors, shareholders and beneficiaries will be entered in the relevant public registers. The certificate of incorporation and the company’s constituent documents are sent to the entrepreneur or his authorised representative via a delivery service.
Our specialists usually allow up to 2 weeks from the time of the client’s application to the receipt of the certificate of registration. It takes only 2-3 days for Companies House Gibraltar to make a decision on your application.
It is generally accepted that non-resident companies in Gibraltar are exempt from paying corporation tax if their profits were derived abroad.
Firstly, in order for your company to be recognised as non-resident in Gibraltar, it is not sufficient for your company to operate outside the place of incorporation. It is also important that the profits of your organisation are not paid into accounts opened in Gibraltar banks. Otherwise, corporation tax will be charged on those earnings.
Secondly, when people talk about zero taxation of non-resident firms in Gibraltar, they overlook the numerous gambling companies registered in this jurisdiction. Meanwhile, revenues from such business structures can reach 40% of all tax payments to the local budget.
In this case, gambling should be understood as the organisation of gambling games on the Internet. The income of a gambling company is subject to symbolic corporate tax at a rate of 0.15%, even if the firm does not have a “sub-stance” — a physical and economic presence in the jurisdiction.
Moreover, gambling activities in Gibraltar are regulated by licences that are issued to companies for up to 5 years and must be renewed every year for an additional fee.
Thirdly, if a non-resident company carries on a banking business or operates overseas as a credit institution, corporation tax at the standard rate will be charged on those of its income which are interest payments. No tax is charged only if the annual interest income of a Gibraltar firm operating overseas does not pass the £100,000 mark.
Fourthly, royalty income from Gibraltar-registered companies is also subject to corporation tax at the standard rate of 12.5 per cent regardless of where it arises.
Gibraltar resident companies registered in Gibraltar are subject to corporate tax at 12.5% on their profits. The income of monopolies, companies guilty of abusing their dominant market position, utilities and electricity suppliers is taxed at 20 per cent.
Another advantage for a Gibraltar resident firm is the complete absence of VAT. However, this same advantage can also be a disadvantage, which can complicate foreign trade, especially if you intend to work with EU countries.
Gibraltar businessmen are exempt from fiscal payments such as capital gains tax and dividend and inheritance taxes.
Commercial property in Gibraltar is taxed each year, the rate of which depends on the property and its location in the enclave.
Stamp duty will need to be paid on transfers of real estate, as well as shares in Gibraltar companies that have immovable property in this jurisdiction.
If you buy shares in Gibraltar-registered companies that do not have any property in the jurisdiction, no stamp duty will be payable.
The reporting rules for Gibraltar-incorporated companies are very similar to those in the UK:
All commercial organisations officially registered in Gibraltar are required to prepare and submit a tax return and financial statement on time;
Even if your firm has no economic presence in Gibraltar, makes all its profits overseas and accumulates them in overseas accounts, you must still prepare and submit a tax return every year;
Even if your company is “dormant” and you are not conducting commercial activities yet, you still need to submit the so-called “zero” reporting — a tax return and a financial report;
Those Gibraltar companies that are medium and large businesses are required to have an annual audit.
Our company has a team of professionals ready to support you at any stage of the company registration procedure in Gibraltar. As a rule, mutually beneficial co-operation with the client does not end after he receives the official certificate of incorporation.
With the help of Imperial & Legal’s specialists, aspiring Gibraltarian entrepreneurs have successfully resolved many important business issues, from optimising their taxes to obtaining a work permit within the jurisdiction. To find out more, book a consultation.
The tax residence of a Gibraltar company is not only determined by the place where profits are made and the bank account into which those profits are paid. Close attention is also paid to where the business is controlled and managed from.
If you appoint a Gibraltar resident as a director, the company’s profits will be subject to corporation tax even if they were derived overseas and held in an overseas bank account during the accounting period.
It is known that a significant number of companies are registered in this jurisdiction to conduct non-resident business. In other words, such firms do not have a current account with Gibraltar banks and all their business activities take place abroad.
Thus, non-resident companies can avoid paying corporate tax or minimise its interest rate. And since non-resident businesses operate only abroad, with few exceptions, such companies do not have to obtain permits and state licences. Therefore, non-resident companies are most often opened to engage in:
Trading through online marketplaces (own and large international marketplaces);
International wholesale sales and procurement;
Developing computer programmes and games;
Brokerage activities;
Trust management of property through holding structures;
Online gambling.
Unless it is an online casino organisation, where an entrepreneur first needs to obtain an official licence, resident business in Gibraltar is more complicated. As soon as it appears that you intend to sell your products or provide services in the place where you have registered your company, you will need a licence:
Obtain authorisation from the authorities for your work;
Buy or rent the premises in which you will carry out your business activities.
Gibraltar is often chosen as a tax residence not only by wholesalers, but also by shipowners and passenger and cargo airlines.
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