Gibraltar is a tiny jurisdiction sitting at the very edge of the European continent: Africa is across the strait. Geographically, it should be part of Spain but politically, it is a British overseas territory. This fact is annoying for many Spaniards.
Today, the Spanish can freely visit Gibraltar and residents of Gibraltar can freely visit Spain but things have not always been so peaceful. There were times when tensions were high between Great Britain and Spain over Gibraltar. The British had to build an airport in the jurisdictions to avoid blockade by Spanish ships. Because the area of Gibraltar is only 6.8 square kilometers, the runway has to cross the main street at 90 degrees. The cars have to wait when airplanes land and take off.
Another key characteristic of Gibraltar is that it is one of the oldest offshore jurisdictions in the world. Around a half of all offshore companies are registered in Gibraltar. Due to the global efforts to make business operations transparent, Gibraltar has had to make some concessions. Currently, the jurisdiction exchanges fiscal information with other countries and its Company Register is partially open.
Notwithstanding these facts, Gibraltar is still highly attractive for foreign investors. There are some objective reasons why business people from other countries choose to register companies in Gibraltar and we discuss these reasons below. In addition, we point out some disadvantages that Gibraltar has as an offshore jurisdiction.
Main advantages of Gibraltar for foreign entrepreneurs
It is not difficult to set up an offshore business company in Gibraltar but some professional support is going to be required anyway. Offshore Pro Group experts will gladly advise you on establishing an offshore company in Gibraltar. Below we list the main advantages of Gibraltar as an offshore jurisdiction.
- Offshore companies registered in Gibraltar do not pay any taxes there if they conduct business operations exclusively in other jurisdictions.
- Gibraltar-registered companies have full access to banks in Europe and other parts of the world.
- The geographical position of Gibraltar is highly beneficial. Unlike many other offshore jurisdictions, Gibraltar is not a remote island in the middle of nowhere: it is an offshore zone located in Europe.
- If you do business with residents of Gibraltar, your income is going to be taxed at 10%. The tax rate is low by the global standards.
- The official language in Gibraltar is English. Spanish is also widely spoken in the jurisdiction.
- It is possible to use nominee services in Gibraltar.
- There is no currency control in the jurisdiction.
- No inheritance tax is charged in Gibraltar.
- No dividend tax is charged either.
- You can register an offshore company in Gibraltar without paying a personal visit there.
- There are no requirements as to the company charter capital in Gibraltar.
- You can re-domicile your company to Gibraltar from some other jurisdiction.
Requirements to use the benefits that Gibraltar offers to international entrepreneurs
To make full use of the offshore benefits found in Gibraltar, you have to meet the following requirements:
- You should not conduct any financial operations in Gibraltar.
- You should not transfer any money to local bank accounts.
- In fact, you should not have an account with a local bank.
- The owners of the offshore company have to be non-residents of Gibraltar.
- You should not conduct any economic activities on the territory of the jurisdiction.
- You should not have any business dealings with residents of Gibraltar.
- You cannot engage in certain types of business activities that require licenses (banking, fund management, insurance, and so on). If you acquire a business license in Gibraltar, you become a tax resident of the jurisdiction by default.
As you can see, the benefits come at certain costs.
Legal system in Gibraltar
Not surprisingly, the legislation in Gibraltar is based on British Common Law. The territorial taxation system is applied in the jurisdiction. An offshore company can be registered in Gibraltar within 5 to 14 days.
The following forms of company ownership are available in Gibraltar:
- Sole proprietorship;
- General Partnership;
- Limited Liability Partnership;
- Limited Liability Company;
- Trust;
- Not-for-profit organization.
An LLC is the most popular form of company ownership in Gibraltar. Some specifics applicable to LLCs registered in Gibraltar:
- Company’s activities are regulated by the Companies Act of 1984.
- A non-resident LLC can do business all over the world.
- All types of legal business activities are allowed. Banking, insurance and reinsurance activities require licenses.
- The company shall have a registered address in Gibraltar.
- The company shall have a Secretary whose name is entered into the Registry and becomes open to the public.
- The company cannot do any business in Gibraltar.
- Registered shares can be issued.
- The name of the company shall be unique and end in LTD. The company name needs to be approved by the Company Register.
- The charter capital shall be at least 2,000 GBP but it does not have to be deposited.
- Minimum number of directors and shareholders is one (person or legal entity), maximum number is 50.
- Location of the shareholders’ meetings: any place in the world.
- The information about the company owners and shareholders is kept in a publically accessible register.
- No taxes are payable by the company if no business operations are conducted in Gibraltar.
- Yearly reports shall be submitted.
- Accounting records shall be kept.
- No currency control regulations are in place.
- Audit requirements are in place. The larger the company is, the more reports are required.
- Even though the company is going to pay no taxes in Gibraltar, annual reporting is obligatory anyway.
- An offshore company registered in Gibraltar has to prove tax residency in another jurisdiction. If it fails to do so, it will be taxed in Gibraltar.
To conclude, we will list the main advantages and disadvantages of Gibraltar as a jurisdiction where you could register an offshore company.
Advantages of Gibraltar:
- The cost of company maintenance is low in Gibraltar: you will not have to pay more than 100 pounds to keep your company functional.
- Gibraltar-registered offshore companies do not have to pay any taxes in the jurisdiction.
- Gibraltar offers good opportunities for business development.
- Gibraltar is an offshore zone with a good reputation.
- Capital can be easily withdrawn from Gibraltar.
- The jurisdiction has been politically stable for many years now.
- A Gibraltar-registered company will give you access to the largest banks.
- No currency control.
- No inheritance tax.
- No dividend tax.
- No corporate income tax.
- It is possible to register an offshore company in Gibraltar remotely.
- No requirements to charter capital.
- It is possible to re-domicile an existing company to Gibraltar.
- If you buy a boat or a ship, you can fly the flag of Gibraltar.
Disadvantages of Gibraltar:
- There are offshore jurisdictions where company maintenance costs even less.
- Beginning 2019, all companies registered in the jurisdiction shall have economic substance.
- The company founders and directors’ data are available through a publicly accessible register. However, nominee services are available.
- Annual reporting is obligatory for all offshore companies registered in Gibraltar.
Conclusion
It is true that Gibraltar has certain properties that make it somewhat less attractive than other offshore zones. On the other hand, however, it certainly has some properties that make it very attractive for an international entrepreneur. Should you register an offshore company in Gibraltar? It’s up to you to decide.