History of Gibraltar
Gibraltar has 28,000 inhabitants and is located at the Southern-most tip of Spain, to the North of the Strait that bears the same name and forms the entrance to the Mediterranean. It is a British overseas territory and has been part of the United Kingdom since 1704. Claimed by Spain, this strip of land, with a surface area of 6 543 km², is the cause of significant conflict between Spain and the United Kingdom.
Gibraltar as an Offshore Centre
As well as being a member of the European Union, Gibraltar has a favourable tax system for offshore activity. The territory allows for the formation of a holding company, often connected to British companies, which can benefit from the region’s tax system, even if the owners and directors are located outside Gibraltar. Gibraltar is also an ideal environment for entrepreneurs to find directors and nominee shareholders. Gibraltar has also had its own stock exchange since 2007, the GibEx.
The Development Aid Ordinance
is the standard text on taxation in Gibraltar: it provides that non-resident corporations may obtain tax-exempt status. It also allows them to avoid paying income and property tax for 25 years. Tax exemption status in Gibraltar requires:
- The offshore company must not carry out any activity in Gibraltar.
- A minimum of 100 GBP capital.
- The company must not be owned by a resident of Gibraltar.
- The company must maintain a local register of shareholders.
The main type of offshore companies is the private company and holding companies based in the country meet the requirements to benefit from the EU parent-subsidiary system under 2003/223/EC and therefore benefit from an exemption from withholding tax on dividends receive from an European subsidiary. This type of offshore company allows 95% of profits to be retained. Anonymity can be achieved by the use of a nominee director and nominee shareholders.
Gibraltar investment funds are the most flexible in Europe and can be registered from a minimum of 100,000 euros of investment funds. The jurisdiction is an alternative to Luxembourg which imposes a higher minimum investment requirements.
Gibraltar’s main strength lies in the fact that as a member of the European Union it can benefit from EU legislation relating to dividends.
Gibraltar is also the ideal location for the principle company in the UK Agency Structure which can be operated without attracting scrutiny from tax authorities.
Since Gibraltar is no longer seen as a tax haven by the OECD companies can elect to pay 10% tax on profits or declare a lack of local income and be taxed at 0%.
Gibraltar is also an ideal destination for international import-export operations (except for intra-Community transactions, given the absence of a European VAT number). For freelancers and consultants we recommend the use of Gibraltar only if your services can be performed remotely, otherwise we recommend the United Kingdom.