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Gibraltar

Gibraltar is an important offshore jurisdiction for forming and administering companies and trusts. Gibraltar companies are widely used for holding property assets, for trading and re-invoicing activities, for acting as investment holding companies and for marine purposes because vessels owned by Gibraltar companies may fly the British Red Ensign if registered on the British Register.

Gibraltar has no double tax treaties at all and no exchange of fiscal information unless criminal fraud is proven to the satisfaction of the Gibraltar courts.

Advantages

  • Political and economic stability
  • Low or nominal taxation for companies
  • No capital gains tax
  • Zero taxation for trusts for Non-Gibraltarians
  • Specific laws to protect assets settled in trusts
  • No death duties for Non-Gibraltarians
  • Confidentiality for the Beneficial Owners of companies and trusts
  • Complete professional legal, accounting and administration services
  • Common law legal system
  • Financial Services Regulation
  • Membership of the EEC
  • No double tax treaty
  • No exchange of fiscal information

Offshore Formation Formalities

Offshore formations can take several types. Exempt Private Companies, which can be resident or non-resident in Gibraltar and are used for the avoidance of tax. The only liability is a yearly registration fee. Branches of Foreign incorporated companies which are created to allow dividend payments to be deferred fr om one EU member state to another without any withholding taxes. Qualifying Companies that pay income tax on profits at a rate form 0%-35%. Non Resident Companies that are liable for tax in income arising or receive through local agents and Trusts.

The Exempt Company is the most popular offshore vehicle in Gibraltar and is generally used for holding bank accounts and investments (since capital and interest earned is tax-free); yacht/ship and property ownership; the management of ships and cargo; for operating businesses; invoicing so that payments received in Gibraltar are tax-free; re-invoicing so that tax liabilities in other jurisdictions are minimised and for the holding of family assets using trust structures.

To qualify for tax exempt status the company must adhere to certain stipulations:

  • At all times the paid-up share capital must not be less than £100 or the foreign currency equivalent;
  • Gibraltarians or resident of Gibraltar are prohibited fr om any beneficial interest in the shares of the Exempt Company except as a shareholder in a public company which is registered in a country other than Gibraltar;
  • If the company is incorporated in Gibraltar, it must keep its register of shares within Gibraltar and have a provision in its Memorandum and Articles of Association to the effect that its register will not be kept elsewhere. If the company is incorporated outside Gibraltar, it must keep a true copy of its register of members within Gibraltar;
  • The company must not, without the approval of the Financial and Development Secretary, carry on any trade or business in Gibraltar or with Gibraltarians or residents of Gibraltar except wh ere these are other exempt companies. An exempt company may, however, manage and control its business fr om Gibraltar and have an office and staff locally; and
  • Its auditors must be approved by the Government of Gibraltar, who must confirm annually that the company is not in breach of the provisions of the Companies (Taxation and Concessions) Ordinance.

The legal requirements are as follows:

  • All Gibraltar companies require a local registered office for the service of process but there is no specific requirement for the appointment of a registered agent;
  • Both registered and bearer shares can be issued. There must be at least one director. A director can either be a real person or a corporate entity. Details are on public record. Nominee directors can be supplied internally or externally;
  • There are no nationality or residence requirements;
  • There must be at least one shareholder. A shareholder can be a corporate entity and there are no nationality or residence requirements;
  • There is a disclosure requirement for Exempt companies of the name and address of the beneficial owner but all such information is protected by a legal guarantee of confidentiality;
  • The name of the required company should be checked with the Registrar and the ending will be either Limited or Public Lim ited Company;
  • No-accounts or annual returns to be filed with the Government in the case of Exempt companies.

Trusts

Trust management, particularly for wealthy UK individuals, has been a traditional business for Gibraltar. Gibraltar has a well-developed legal and financial infrastructure for trust management. With a large established base of trusts, and a growing reliance on corporate work, the volume of trust litigation is becoming significant. Trust income is exempt from tax. Under the Income Tax Interest, income received from a Gibraltar bank is normally exempt from taxation. Trustees are required to be licensed by the Financial Services Commission.

Taxation

Gibraltar is one of the cheapest European offshore jurisdictions and one of the first of the British dependent territories to develop tax-exempt corporate forms for offshore business. It has quite high internal income taxes, but offers low-tax regimes to both companies. Exempt Companies are exempted from all taxes; Qualifying Companies are liable for tax on worldwide income at rates between 2% and 35% and 1992 Holding Companies subject to 35% tax on profits but the liability to withholding taxes on distributed dividends is lim ited to no more than 1%.