Gibraltar

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Most of us know about geographical location of Gibraltar right next to Spain’s world famous Costa del Sol. Sotogrande and Marbella just along the coast road, with its beaches and more than 60 golf courses. Even skiing is only two hours away by car in Granada with Madrid less than three hours by train from Malaga.

The Mediterranean climate is perfect with wonderful summers, balmy winters and a healthy place to live.

But what is not so well known is it’s excellent tax advantages aimed at High Net Wealth Individuals ( HNWI’s ) Seeking a sympathetic haven away from higher rate tax locations.Now in excess of 50% in the UK and much more when additional levies and reduced allowances are taken into account.

Gibraltar has recently revised it’s tax liabilities for qualifying HNWI’s. The maximum annual tax now payable by Category 2 persons can be as little as £22k! The savings for many can therefore run into hundreds of thousands pounds and for some, even more.

Gibraltar does not have CGT..CTT..VAT and a Corporation tax of just 10% The Gaming industry continues to benefit from low taxes and levies and each week see’s new arrivals to join this fast expanding sector. Now probably the world’s leading center for on-line gambling.

Gibraltar is an English – speaking European Union jurisdiction with a legal system based on English common law. It is increasingly becoming the jurisdiction of choice for fund clients who find other EU fund jurisdictions such as Ireland and Luxembourg too expensive or too restrictive. Due to its bilingual English – Spanish speaking workforce and the flexibility of its regulatory regime, Gibraltar is also quickly becoming the destination of choice for Latin American managers wishing to domicile in or passport into the EU.

In Gibraltar the flexibility of the Experienced Investor Fund and Private Fund structures make them ideal vehicles to act as European Feeder Funds. Given that there are no investment restrictions, such a fund can invest up to 100% of the subscription proceeds in a Master Fund. As there are no currency restrictions, specialist funds may be facilitated on currencies other than the predominant dollar, euro and sterling denominations.

Population: 32,314 (2017)
Form of government: British overseas territory
Official languages: English
Other spoken languages: Spanish, Llanito
Currency: Gibraltar pound, GIP (£)
Country code: +350
Time zone: UTC +1, Daylight saving time UTC +2
Life expectancy: Female 83,3 years, male 78,5 years
GDP (PPP): $2.51 billion (2015)
GDP (PPP)/per capita: $78,110 (2015)
Public debt: – (British overseas territory)
Unemployment: 3%
Average salary: £2353/month
Economy: Primary production 0 %, retail and travel 25%, Finance 22%, seafaring 20%, military and support from Great Britain: 10%
Major trading partners: Great Britain 60%, Spain 30%, Other EU countries 10%

 

Advantages of doing business in Gibraltar

  • Taxation rate for companies is 10%. Only applies on income accrued in or derived from Gibraltar
  • English speaking professional workforce easily available
  • Part of EU, but nor part of EU´s VAT or customs
  • Cheap office rents
  • Fast and reasonably priced internet access available

Disadvantages of doing business in Gibraltar

  • Reputation as a “Tax haven” still stands
  • Very small home market
  • Regulations regarding finance, insurance and gambling companies have become more strick lately

Setting up a new business in Gibraltar

Who can start a new business in Gibraltar:

  • Any person or legal entity who can provide documentation required by the law for incorporation
  • Person who has been banned from business operations cannot incorporate or be involved with incorporation through any middlemen.

Who can own property or shares of Gibraltar company:

  • Any legal entity
  • Any person apart from individuals who has been banned from business operations

Who can act as a director or member of the board:

  • Any person or legal entity who can provide documentation required by the law.

Business entities in Gibraltar:

  • Private limited company (Ltd).
  • Public limited company (plc)
  • Partnership
  • Limited partnership (LP)
  • Sole trader
  • Branch
  • Nonresident company

Requirements to incorporate in Gibraltar:

  • At least 1 owner
  • At least one director
  • Owner and director may be the same person and/or company.
  • Nonresident company possible
  • Minimum paid-up share capital £1000 payable after company registration

Opening bank account:

  • Incorporation documents and articles of association
  • Board of directors meeting minutes
  • Proof of identity of signatories

Public register of shareholders and directors:

  • Directors: yes
  • Shareholders: yes

Allowed trades:

  • All the legal trades that doesn´t require permit (Finance, insurance and gambling services requires permit)

Accounting and reporting regulations

  • Companies must file accounts
  • Balance sheet must be delivered for IAS/IFRS ja GAAP
  • Financial year 1. July – 30. june
  • Auditing required if yearly overturn exceeds £6.5 million or company has assets worth more than £3.26 million or company employs more that 50 employees
  • If the company is a subsidiary of another company registered within EU, it may get exemption from auditing in Gibraltar

How funds can be withdrawn from company

  • Company may transfer money to another company based on sales of services and goods.
  • Company can lend money to another company and / or person given that loan agreement with minimum interest and payment terms have been made. Owners cannot owe money for the company in the end of the book year.
  • Company can pay dividends from it´s own capital to shareholders after end of the book year
  • Company can pay salary to it´s employees given it has registered in the Tax Administration´s employer register. Employer is obliged to pay tax withheld at source from all wages paid to employees, along with making employer´s social security contributions.
  • Company can pay tax free allowance, such as kilometre allowance for using they own car, per diem and meal money, to owners in order to cover their temporary business travel expenses as defined in the official Decision of the Tax Administration on Allowances for Travel Expenses
  • Company can pay meeting allowances for its directors, members of the board and owners
  • Profits may be transferred (if certain requirements are met) between group companies through group contribution system
  • Company can invest in shares, funds or real property.

Can you transfer Gibraltar company to another jurisdiction?

  • Yes given that another jurisdiction approves the transfer

How to terminate business in Gibraltar

  • Company may be sold
  • Filing bankruptcy

The World Banks “Ease of doing business ranking”: Gibraltar

Ranking not available as the World Bank doesnt separate Gibraltar from UK

Overall Rank: (UK Rank: 8)
- Starting a Business: (UK Rank: 45)
- Dealing with construction permits: (UK Rank: 17)
- Getting electricity: (UK Rank: 70) 
- Registering property: (UK Rank: 68)
- Getting credit:(UK Rank: 17)
- Protecting minority investors:(UK Rank: 4)
- Paying taxes: (UK Rank: 16)
- Trading accross borders: (UK Rank: 15)
- Enforcing contracts: (UK Rank: 36)
-Resolving insolvency: (UK Rank: 13)

New businesses registered in 2012: Data not available (UK 455.600 new businesses)

Living and working in Gibraltar (Tax residency)

Advantages

  • Gibraltar is offering  very attractive tax treaties for wealthy individuals, required that they personal assets are worth at least £2 million and they own or rent an apartment from Gibraltar
  • Gibraltar is only couple of hours away from Costa Del Sol and there are direct flight connections to London and Manchester
  • Gibraltar has a lot of attractive work opportunities in the areas of accounting, insurance, finance and gambling. Individual with special skills enjoy low taxation
  • Living costs same as in Costa Del Sol

Disadvantages

  • Gibraltar is fairly small
  • Traveling between Spain and Gibraltar may sometimes, especially during week nights, be quite slow.

HEPSS Tax citizenship (High Executive Possessing Specialist Skills)

HEPSS status is available to those individuals who intend to relocate to Gibraltar and engage in business activities. This special employment tax status is available for employees as a cost saving incentive for companies recruiting senior executives. An individual in respect of whom a HEPSS certificate is issued shall be charged to tax on the first £120,000 of their assessable income only. This would mean that an individual with HEPSS status would pay a fixed rate of £29,940 tax per year regardless of how much they would earn in that employment.

  • Must have available for exclusive use approved residential accommodation in Gibraltar for the whole year of assessment. (Can be either purchased or rented)
  • Possess skills that are necessary to promote and sustain economic activity of particular economic value to Gibraltar.
  • Possess skills that are not readily available in Gibraltar.
  • Not have been resident in Gibraltar for 3 years preceding the year in which the application is made.
  • Earn more than £120,000 per annum
  • Must produce valid passport and comprehensive Curriculum Vitae (CV). • Must produce 2 independent references from recognised institutions/professionals – (1 must be from a bank)

Gibraltar Category 2 Individuals

Category 2 status is available to an individuals who:

  • has at least £2 million of net assets;
  • either purchases or rents accommodation in Gibraltar, which is available for his or her (and family’s) exclusive use throughout the year (the accommodation must be of an appropriately high standard, suitable for the individual’s needs and approved by the Gibraltar Finance Centre);
  • has not been ordinarily resident nor participated in a trade, business or employment in Gibraltar in the five years prior to the application; and
  • generally, undertakes not to engage in any trade, business or employment in Gibraltar, although the Gibraltar Government have issued guidance on permissible activities.

Notes:

  • Only the first £80,000 (2012/13 year of assessment) of income is taxable, resulting in a maximum annual tax liability of £29,800*, although there is a minimum annual tax payable of £22,000 (2012/13 year of assessment). The tax liability is pro-rated in the year of arrival and departure.
  • No minimum presence is required in Gibraltar in any year of assessment but there is a need to have approved residential accommodation.
  • The income of spouse and children may be included in the capped income.
  • There is no tax on capital gains in Gibraltar.
  • There is no inheritance tax or estate duty in Gibraltar.
  • Individuals may still be subject to taxes in other jurisdictions.

Corporate taxation in Gibraltar

Taxable income0% / 10% / 20%
Taxation of dividents
VAT registration Not applicable
Rates - 
Tax at source0% (EU and Tax treaties/ 10% Outside EU)
- Dividents0%
- Royalties0%
- Interest0%
- Technical services0%
Transfer tax0%
Capital gains taxTreated as an normal income. Taxable only on dividents
Real property tax0%
Social securitymax GIP 32.97 /week/employee
Capital duty0%
Stamp duty0%
Car tax-
Tax treatiesno tax treaties
CFC (Controlled Foreign Company) ruleno

Personal taxation in Gibraltar

Income taxYearly income less than £25.000: first £10.000 tax 6%, £10.001-£17.000 tax 20%, exceeding 28%. Yearly income more than £25.000: first £17.000 tax 16%, £17.001-25.000 tax 19%, £25.001-40.000 tax 25%, £40.001-105.000 tax 28%, £105.001-500.000 tax 25%, £500.001-700.000 tax 18%, exceeding £700.001 tax 10%
Income tax for CAT 2 residents Based on agreement £22.000 - £28.360 / year regardless amount of income 
Social securitymax £32.97/week
VATNot applicable
Capital income tax0%
Capital gains0%
Net wealth / Net worth tax:0%
Real property tax0%
Inheritance0%
Transfer tax0%
Vehicle tax-
Tax year1. July - 30- June

Services for corporations interested in Gibraltar

  • Consultation and advisory (business, tax, legal) services before incorporation / during your business operations in Gibraltar
  • Assistance in incorporation process: Tailor made company formation or shelf companies available
  • Administration services available for new companies incorporated through Novasigma

For corporations operating in Gibraltar

  • Banking and financial solutions for a Gibraltar company
  • Accounting and Audit services for a Gibraltar company
  • Legal services for a Gibraltar company

For individuals and families interested in Gibraltar

  • Consultation and advisory (tax, legal) services before re-located to Gibraltar
  • Assistance in immigration process when moving to Gibraltar (residency permanent, work permit, tax residency)
  • Incorporation and administration services for your privately held Gibraltar holding company

For individuals and families who hold the Gibraltar residency

  • Banking services in Gibraltar for private persons
  • Local and international accounting services for Gibraltar tax residents
  • Local and international legal services for Gibraltar residents

News and business opportunities in Gibraltar

  • Tax Changes in Gibraltar
  • how brexit will affect in Gibraltar
    Gibraltar Urges UK To Avoid BREXIT

Interested in Gibraltar? Please leave us a message and we will get back to you shortly.

In cases KYC or/and Due Diligence process required Novasigma requires a personal meeting with all its new clients before proceeding any assignment

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