Incorporations in Gibraltar

Gibraltar is dependent territory of the UK located on the southern end of the Iberian Peninsula, surrounded by the territory of Spain and separated from Africa by the Strait of Gibraltar.

Gibraltar has its internal self-government since 1965. Gibraltar membership in the EU is based on the same condition as the UK membership due to the fact that the UK is fully responsible for Gibraltar international relations.

Legalization of Documents under International Law: for the countries that are signatories to the Hague Convention documents are legalized by apostille. For any other countries there is an option for consular legalization by embassies of these countries in the USA and in the UK.

The companies in Gibraltar are incorporated under The Companies Ordinance, 1984 as further amended. The Companies Ordinance text is based on the UK Companies Act. 1929.

Under the Gibraltar Companies Ordinance there can be incorporated several kinds of companies subject to ownership type, and the most popular for international business purposes are the following:

• companies limited by shares;
• unlimited companies;

The names of limited companies must end with the word “Limited”; in case a company name does not end with the word “Limited”, this means that the liability of its members (shareholders) is unlimited.

Directors: a Gibraltar company must appoint at least one director – either individual or legal entity. In Gibraltar there are no restrictions applicable to directors’ nationality. Additionally, a Gibraltar company must appoint a Secretary – a Gibraltar resident. A sole Director of a Gibraltar company may not act as its Secretary as well. A Gibraltar company must have a Register of Directors and Secretaries. Additionally, the details of the companies Directors and Secretaries are filed with the Registrar of Companies and are open for public.

Shares: a Gibraltar company may issue only registered shares. A company must have a register of Shareholders. Additionally, the information details the companies shareholders are filed with the Registrar of Companies and are open for public. A Gibraltar company must have at least one Shareholder. An unlimited company may have its capital in a form other than share capital.

Audit and Reporting: a Gibraltar must submit its report and be audited. For more details please refer to our Reporting and Audit page.

Taxes: up to the end of 2010 Gibraltar resident companies are subject to income tax at the rate of 35%. However, different laws regulating taxation, like The Companies (Taxation and Concessions) Ordinance, Income Tax Ordinance etc., provide for tax concessions. Subject to these tax concessions, Gibraltar companies may be classified the following way:

• non-resident companies;
• tax exempt companies;
• qualifying companies paying taxes at reduced rates;
• holding companies.

Non-resident Companies. In case the beneficial owners of a Gibraltar company are not Gibraltar residents and provided that this company is managed and controlled by directors residing and holding meetings of the Board of Directors outside Gibraltar, such a Gibraltar company is deemed non-resident for the taxation purposes and its revenues are not subject to taxes except for a part of income transferred into Gibraltar. Non-resident companies are exempt from paying fixed government fees (however, the company must annually pay for its registered address in Gibraltar, mail forwarding, submitting reports to the Registrar of Companies etc.), however since such a company is not a Gibraltar tax resident and its Directors’ meetings are held outside Gibraltar, the tax authorities at the residence of Directors to treat them as tax residents at the location place of the Directors.

Holding Companies. According to the EU Directive No. 90/435 on taxation of parent companies and their subsidiaries, in case a company incorporated in a EU country and being subsidiary or affiliated to a company incorporated in another EU country (parent company holding at least 25% of the subsidiary/affiliated company) pays dividends to its parent company, these dividends are exempted from dividend tax, provided that the parent company is a tax resident of its country of domiciliation. Thus, dividend tax is withheld whenever a Gibraltar non-resident or tax exempt company receives dividends from its EU subsidiaries. To avail of tax benefits as a holding company a Gibraltar company should be non-resident, its beneficial owners should not be EU residents and at least 51% of the company income should be investment income. Income other than investment is subject to standard taxation at the rate of 22%. The holding company itself must pay dividend tax at the rate of 1%. A holding company is the best choice for non-EU residents carrying on investment projects in the EU countries.

LAWYER’S COMMENT:

Gibraltar is a reliable jurisdiction located in the EU offering a whole range of options to use Gibraltar companies for the purposes of different projects.

However, the recent EU tendency to eliminate such tax havens within the European Economic Area entailed a number of changes in the status of Gibraltar companies.

Thus, Gibraltar Government announced abolition of Tax Exempt status and flat income tax rate of 10% with effect from January 1, 2011.

The tax status of non-resident companies is not yet clear; however, even if the new rules are applicable to these, Gibraltar companies will still be attractive for the international business purposes.