Gibraltar - As a Business Location

A common law legal system, a highly developed professional infrastructure, high regulatory standards, low tax rates and EU access, have made Gibraltar a very desirable business location.

Legal Infrastructure:

Except for minor modifications, the judicial system of Gibraltar is based entirely on the English system and provides a stable backbone for any business activity. Together with Jersey, Guernsey and the Isle of Man, Gibraltar belongs to the High Disclosure Offshore Centres. However it is the only British offshore centre that is part of the European Union and as such it can provide financial institutions with passporting rights and access to the single European market for financial services.

Financial sector:

Gibraltar has a burgeoning financial services sector that is the heart of its economy. The sector is regulated by the Financial Services Commission, an independent statutory body. In 1997, the Department of Trade and Industry established its Gibraltar Finance Centre (GFC) Division to facilitate the financial sector's development.

Today Gibraltar boasts a wealth of banks, accountancy firms, insurance firms and fund management companies.

Taxation:

In 1967, Gibraltar enacted the Companies (Taxation and Concessions) Ordinance, which provided for special tax treatment for international business. This was one of the factors leading to the establishment of Gibraltar as a business centre.

Today corporate tax for existing businesses is 22%, however a new tax scheme will take effect from the 1st of January 2011. The scheme will introduce the new lower tax rate of 10% for all businesses, except Energy and Utility providers who will be taxed at the rate of 20%. Businesses newly registered in Gibraltar will be able to benefit from the lower 10% rate straight away.

Gibraltar also has no sales tax and no VAT. However, depending on the type of business, some Gibraltar firms can obtain a British VAT number. Furthermore there is no capital gains tax, no inheritance tax, no withholding tax on dividends paid to non-residents and no wealth tax.

In addition to low corporate tax, Gibraltar also offers attractive tax schemes for High Net Worth Individuals who wish to live in Gibraltar. These individuals can apply for "Category 2" status. Category 2 individuals are only taxed on the first £70,000 of their worldwide taxable income, irrespective of their actual income. The annual tax liability currently ranges between £20,000 and £24,500. In order to qualify for this status one must satisfy certain criteria including the purchase of a suitable property and have a minimum of £2million in net assets.

EU membership:

Gibraltar enjoys a special status within the European Union. Under article 299(4) of the EC Treaty, Gibraltar is within the Union by virtue of being a European territory for whose external relations the United Kingdom is responsible. However, article 28 of the UK Accession Treaty 1972 specifically excludes Gibraltar from the Common Customs Tariff, the Common Agricultural Policy and the harmonisation of turnover taxes, in particular value added tax (VAT). Gibraltar is treated as part of a member state (the UK) and must comply with all EU Directives relating to financial services. Gibraltar can take advantage of the single European passport for banking, insurance and investment services that allows Gibraltar-licensed banks, insurance companies and investment services providers to operate in other EU Member States, enabling them to sell their financial products throughout the European Union and the European Economic Area.