Detailed Review of Gibraltar’s Economy
Gibraltar’s economy is mainly based on services, especially in the finance and tourism sectors. Many British and foreign banks have subsidiaries in Gibraltar and it has become a very important international financial centre. Tourism is also very important, benefiting from the natural landscape (with the popular rock of Gibraltar) and Gibraltar’s very favourable climate. In addition, a military base has long benefited Gibraltar’s economy; however, today it only accounts for 7% of GDP, compared with 60% 30 years ago.
Situated in a very busy maritime area, Gibraltar is an important international trade location. The port sector is therefore very important in the region’s economy, and has grown dramatically over the years.
Gibraltar’s Economic Strengths
- Part of the European Union.
- Advantageous tax system.
- Common law legal framework.
- Good geographical location.
- Not part of the VAT system (it may be beneficial to avoid VAT).
Gibraltar’s Economic Weaknesses
- Some European standards do not apply (customs, CAP, etc.).
- Not part of the VAT system (VAT may not be recoverable).