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- GIBRALTAR
PRIVATE COMPANY LIMITED BY SHARES
- GIBRALTAR COMPANY LIMITED
BY GUARANTEE
- GIBRALTAR EXEMPT PRIVATE COMPANY
- GIBRALTAR PUBLIC COMPANY LIMITED
BY SHARES
- THE GIBRALTAR 1992 COMPANY
- GIBRALTAR THE QUALIFYING
COMPANY
- GIBRALTAR BRANCH OF OVERSEAS
COMPANY
- GIBRALTAR NON-RESIDENT COMPANY
- GIBRALTAR GENERAL PARTNERSHIP
- GIBRALTAR LIMITED PARTNERSHIP
- GIBRALTAR SOLE PROPRIETORSHIP
- GIBRALTAR TRUSTS
- GIBRALTAR FOUNDATIONS
Under
the Companies Ordinance 1930 all incorporated
companies in Gibraltar are required to prepare
accounts and have them audited by independent
accountants.
Auditors,
who are individuals, are appointed by the
directors of a company, must be independent
of the company, and must be registered under
the Auditors Registration Ordinance.
The
European Commission announced in 2001 that
it would begin a review of Gibraltar's exempt
and qualifying company regimes, but after
Gibraltar sued the Commission to prevent
the review, the European Court of Justice
ruled in Gibraltar's favour in April 2002.
However,
in July, 2002, Gibraltar's
Chief Minister, Peter Caruana announced
the territory's new corporate taxation policy
to be applied from July, 2003, which included
the abolition of the
existing corporate forms which allowed zero
taxation, the Exempt and Qualifying companies.
In
March, 2003, the EU's Council of Finance
Ministers confirmed that the reforms did
not constitute harmful tax measures.
However,
in April, 2004, the Commission argued that
the new rules would give companies domiciled
in Gibraltar an unfair advantage over their
counterparts in the UK, under a principle
known as 'regional selectivity'. The Commission
also took issue with the fact that since
the taxes are based on payroll and the occupation
of business premises, offshore companies
registered in Gibraltar would be unlikely
to incur any tax liability. The EC therefore
rejected the reforms, effectively suggesting
that for taxation purposes, Gibraltar should
be considered part of the United Kingdom.
Chief
Minister, Peter Caruana slammed the EC for
suggesting that the jurisdiction is fiscally
part of the United Kingdom, pointing to
its 1969 constitution, which gives the territory
fiscal autonomy. The United Kingdom government
is said to be “100% on-side” regarding the
‘regional selectivity’ debate, and Gibraltar
is challenging the EC's view at the European
Court of Justice. The issue will take years
to resolve, and meanwhile Brussels officials
seem to have agreed that the existing situation
(confusing as it is) may be allowed to continue.
Gibraltar
dissolved its qualifying companies tax regime
in January, 2005, as negotiations continued
in Brussels. In a move that cost the Gibraltar
government an estimated £1.5 million in
annual tax revenues, the remaining qualifying
companies, of which there were about 80,
switched to the ‘exempt’ companies regime.
“Each qualifying company has been dealt
with on an individual basis and alternative
arrangements made,” said the government.
Later
in the month, it was announced that Gibraltar
had been given until 2010 (2007 for new
companies) to phase out its exempt company
tax regime after the European Commission
ruled that the scheme violated EU state
aid rules.
The
government of Gibraltar welcomed the European
Commission's approval of the Exempt Company
Status Agreement as an acceptable compromise.
Then
in June 2007, further major changes to Gibraltar's
corporate tax regime were announced in Peter
Caruana's Budget speech.
Mr
Caruana explained that:
"The
Tax Exempt Company has been the backbone
of the development and growth of both our
finance centre and the online gambling industry,
and thus of a very significant part of our
economy. It continues to underpin thousands
of jobs in Gibraltar and large amounts of
Government revenue."
"In
order to comply with EU law we must phase
out the tax exempt company in 2010. However,
in order to sustain our successful economic
model we must retain a commitment to a very
competitive corporate tax model."
Since
it is no longer legally acceptable to have
one tax model for ‘local’ companies
and a different one for ‘foreign’
companies it is necessary to have a low
tax system for all companies because
without a low tax system for overseas companies
they will leave, and our economy
will suffer hugely. Thousands of jobs would
be lost, as well as significant Government
revenue. I have therefore already said,
and I reaffirm now, that the Gibraltar Government
is irrevocably committed to the principle
of ‘low tax’ for our economic
operators."
"By
mid-2010 the Government will have introduced
an across the board flat, low corporate
tax rate. This will most probably be set
at 10%, but in any event not higher than
12%. This will be similar to arrangements
that already exist in Ireland, Cyprus, Malta
and other EU Countries."
"In
the intervening period, the Government will
engage in an intensive, detailed and lengthy
process of consultation with the different
economic sectors."
"In
order to signal the Government’s seriousness
of purpose in this respect I am today taking
the first step in the process of reducing
corporate tax rates in Gibraltar, by 2%
for the year of assessment 07/08 from 35%
to 33%, and with effect from the year of
assessment 2008/09 by a further 3% from
33% to 30%."
"
I would also signal the intention of a further
reduction the year after that to 27%, in
anticipation of the introduction of the
flat low tax rate in 2010."
As
can be seen, the Rock's company formation
regime has undergone (and is undergoing)
some fairly major changes in recent years,
and professional advice is a must before
deciding to form a company in the jurisdiction.
The
remainder of this page deals with the corporate
regime prior to the aforementioned changes.
Gibraltar
Private Company Limited by Shares
Gibraltar
Limited Companies are incorporated under the Gibraltar
Companies Ordinance 1930 which is based on the
English Companies Act 1929. The basic rules are
as follows:
- A
private company limited by shares is required
to have at least two members, who can be individuals
or companies; one shareholder can be a nominee
company holding a share on trust for the other
shareholder; the maximum number of members
is 50; the Memorandum and Articles of Incorporation
state that the company is private, restrict
the transfer of shares, and prohibit public
offerings of the shares;
-
Annual returns must be made to the Registrar,
and details of the shareholders and capital
structure are held on the public files;
-
Only one director is required; secretaries
are not mandatory, and they may be corporate;
- There
must be a registered office in Gibraltar where
the statutory books are kept;
- There
is no requirement for accounts to be filed;
tax-resident companies however have to submit
accounts to the tax authorities;
-
A Gibraltar company can be incorporated within
7 working days and ready made companies are
available for immediate use.
- There
is a 0.5% duty on authorised share capital
(minimum duty £G10);
- There
is an annual tax of £G225 (at the time
of writing) payable by a limited company.
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Gibraltar
Company Limited by Guarantee
The Company Limited by Guarantee, and its sibling,
the Company Limited by Guarantee and having Shares,
have the nature of mutual companies, and as such
have normally been used essentially for charitable
and non-profit purposes.
Lately
they have come to be used sometimes for private
family foundations in place of discretionary trusts.
In addition, they have been used for proprietary
and members' clubs in the international leisure
and timeshare resort industry, where they meet
all the requirements of modern EU (and Spanish)
law.
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Gibraltar
Exempt Private Company
See
above for changes to the Exempt Company regime
It
was Gibraltar that originated the exempt company
form, which has been widely copied by other jurisdictions
(see above for details of negotiations with the
EC over the future of exempt companies). The low
set up cost makes them ideal for property and
investment holding, international trading and
sales agencies, particularly if trade is being
carried on between two high tax jurisdictions.
The
exempt company is the main offshore vehicle
in Gibraltar. An exempt company may be either
incorporated in Gibraltar under the Gibraltar
Companies Ordinance, or incorporated outside
Gibraltar but registered as an overseas company
under Part IX of the Companies Ordinance.
If a company obtains exempt status, the company
will be exempt from corporate tax and stamp
duty (save in certain specific instances) in
Gibraltar under the Companies (Taxation and
Concessions Ordinance) 1984 (as amended).
Shares in an exempt company may be transmitted
free of estate and stamp duty on the death
of the shareholder. An exempt company pays
a flat rate annual fee regardless of profits.
A company incorporated in Gibraltar which
is ordinarily resident pays a flat rate fee
of £225 per annum, whilst a non-resident company
incorporates outside Gibraltar pays a flat
rate fee of £200. Fees payable to non-resident
directors and dividends paid to its shareholders
are not subject to a withholding tax. For
a company to obtain and retain its tax exempt
status, it must fulfil the following conditions:
-
Its paid-up share capital at all times
must not be less than £100 or the foreign
currency equivalent thereof;
-
No Gibraltarian or resident of Gibraltar
must have 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 where these are other
exempt companies. An exempt company
may, however, manage and control its
business from 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
privacy of exempt companies is protected by Section
14 of the Companies (Taxation and Concessions)
Ordinance 1984, which states:
14(1). ... the Financial and Development Secretary
and every person having an official duty in
the administration of this Ordinance shall regard
and deal with all documents, information and
declarations relating to the identity of the
beneficial owners or persons interseted in any
shares, or bearer certificates or coupons issued
under the provisions of this Ordinance as secret
and confidential.
Disclosure
is permitted for the purposes of any criminal
or civil proceedings in which such document,
declaration, matter or thing is material (Section
14(3)).
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Gibraltar Public Company
Limited by Shares
A
public company is defined as one which is not
a private company and which has at the end of
its name the words 'Public Limited Company' or
'P.L.C.'. A public company must have a minimum
of two members.
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The Gibraltar 1992 Company
The
Gibraltar 1992 Company was introduced to implement
the EU Parent/Subsidiary Directive 90/435. See
Direct Corporate
Taxation for details of the considerable
tax advantages accruing to a 1992 Company. The
1992 Company is a normal private company limited
by shares which conforms with the following conditions:
-
the
company's main objective must be to invest
in holdings in other companies incorporated
in or outside Gibraltar amounting in each
case to a minimum of 5% of the voting share
capital;
-
at
least 51% of the company's annual income should
be derived from such investments;
-
the
company must have business premises in Gibraltar
of at least 400 sq.ft and employ a minimum
of two employees;
-
persons who are normally resident in Gibraltar
cannot own shares in the company;
-
the
company must maintain a satisfactory debt
to equity ratio (not defined).
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Gibraltar The Qualifying Company
See
above for details regarding the abolition of Qualifying
Companies in January 2005.
A
company incorporated in Gibraltar or a registered
branch of an overseas company is eligible to apply
for Qualifying Company status subject to conditions
which are largely the same as those applying to
an exempt company (see above). A Qualifying Company
pays tax on its profits at a rate agreed with
the Financial and Development Secretary and stated
on a certificate issued to the company. A qualifying
company certificate is valid for 25 years from
the date of issue.See
above for details of the abolition of Qualifying
Companies in January 2005.
According
to the legislation, a Qualifying Company pays
tax at a rate (between 1% and 35%) to be agreed
between the company and the authorities. This
type of 'designer' tax arrangement is intended
to allow a company to slide under the bar of its
home tax regime by paying just the amount of tax
required to escape anti-avoidance rules. In practice
most Qualifying Companies nowadays agree to pay
between 5% and 10% tax, and the form has perhaps
become more the standard Gibraltar low-tax offshore
entity for significant trading companies.
A
qualifying company must have minimum paid-up capital
of G£1,000 and must deposit G£1,000
with the Accountant-General against future tax
liabilities. Qualifying companies in the financial
sector have to pay annual fees to the Financial
Services Commission:
- Life
assurance or collective investment scheme:
G£2,000
- Insurance
broker: G£3,000
- Investment
manager: G£3,000
- Investment
adviser: G£1,500
In
effect this form broadens the concept of the exempt
company and is particularly aimed at helping finance
sector companies. See Offshore
Legal and Tax Regimes for further details.
Qualifying
companies need to submit accounts to the Gibraltar
Commissioner of Income Tax, and normal income
tax legislation applicable to resident companies
is applied to calculate the assessable profits
of the company. Although the qualifying company
is subject to tax at a variable rate, as explained
above, most of the current qualifying companies
are taxed at 5%.
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Gibraltar
Branch of Overseas Company
If a foreign company intends to establish a branch
or a permanent place of business in Gibraltar,
it must within one month deposit with the Registrar
of Companies a certified copy of its Memorandum
and Articles of Association, a list and particulars
of its directors and company secretary, and details
of one or more resident individuals authorised
to receive notices and communications. Once registered,
the foreign company will be treated in the same
way as a Gibraltarian company, and can take exempt
or qualifying status if appropriate. The annual
fee for a branch registration at the time of writing
is G£300.
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Gibraltar
Non-Resident Company
A
company which is incorporated in Gibraltar (whether
or not exempt), owned by non-residents of Gibraltar
and managed and controlled by directors who reside
and hold board meetings outside Gibraltar is considered
to be non-resident.
A
non-resident company pays Gibraltar corporation
tax only on its income derived from or remitted
to Gibraltar.
A
non-resident company pays an annual tax at the
time of writing of G£200.
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Gibraltar
General Partnership
Partnerships are governed by the Partnership Ordinance,
which is based on the English Partnership Act
1890. Partners may be individuals or companies.
In a general partnership, a partner's liability
is unlimited. Under the Business Names Registration
Ordinance, partnership names must be registered
if they differ from the surnames of the partners.
Partnership agreements and financial accounts
do not have to be filed although a partnership
that is resident in Gibraltar must submit accounts
annually to the Commissioner of Income Tax. Partnerships
are, of course, fiscally transparent. The minimum
number of partners is two, and the maximum number
20, although this does not apply to professional
firms.
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Gibraltar
Limited Partnership
Limited partnerships are governed by the Limited
Partnership Ordinance, which is based on the English
Limited Partnership Act 1907. Partners may be
individuals or companies. A limited partnership
consists of one or more general partners with
unlimited liability, and one or more limited partners,
who are liable only to the extent of their capital
contributions. A limited partner does not take
part in the management of the partnership and
is not entitled to dissolve the partnership by
notice. A limited partnership must file a statement
with the Registrar of Companies giving details
of general and limited partners, and the amounts
of capital contributed, in order to benefit from
limitation of liability. A limited partnership
must have its principal place of business in Gibraltar.
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Gibraltar
Sole Proprietorship
The
business name of a sole trader, who has unlimited
responsibility for his liabilities, must be registered
with the Registrar of Companies, if it is other
than the name of the sole trader. An annual return
must be submitted to the Commissioner of Income
Tax.
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Gibraltar Trusts
The basic law of trusts is contained in the Gibraltar
Trustee Ordinance, which is virtually a copy of
English trust legislation. Gibraltarian legislation
affecting trusts also includes the Perpetuities
and Accumulations Ordinance, the Trustee Investments
Ordinance, the Bankruptcy Ordinance and the Trusts
(Recognition) Ordinance. Appeal is to the Privy
Council.
The
Hague Convention has been implemented, but there
are no provisions for the exclusion of foreign
inheritance laws or for the nonrecogition of foreign
judgements.
Under
the Bankruptcy Ordinance there is statutory protection
against creditors for asset protection trusts,
providing the settlor is an individual, and was
not insolvent at the time of the disposition,
nor became so as a result of it.
Trust
documents are in English, and there are no requirements
for registration except that Asset Protection
Trusts must be registered with the Registrar of
Dispositions. There is no stamp duty. The normal
perpetuity period of a Gibraltar trust is 100
years. There are no restrictions on the accumulation
of income during the perpetuity period.
Legislation
has not yet been introduced to provide for purpose
trusts.
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Gibraltar
Foundations
The
Gibraltar Private Foundation Ordinance 1999 was
intended to establish a regime for foundations
as 'vehicles for the holding of private assets
endowed on the foundation for the benefit of identified
persons or classes of persons', and was scheduled
to become effective from 1st January 2000.
However,
this legislation appears to have fallen by the
wayside, leaving the situation with regard to
Gibraltar foundations uncertain, to say the least.
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