Gibraltar: Companies In Gibraltar

Last Updated: 16 April 1998
INTRODUCTION

Offshore companies, which are those companies subject to a nil or a very low rate of tax on their income and gains, can play a major role in financial planning for individuals, families and companies, particularly in the protection of assets and the mitigation of tax liabilities.

This brochure briefly sets out the benefits to be gained from basing such arrangements in Gibraltar, some typical examples of existing arrangements and an outline of the formation and administrative procedures involved. Where reference is made to offshore companies, it is to those companies registered in Gibraltar which have qualified for one of the categories of favourable fiscal status in Gibraltar. These categories are described later in this brochure.

As one of the largest firms of accountants in Gibraltar, Coopers & Lybrand are well placed, not only to advise on any proposals but to provide the services necessary for the formation and/or administration of offshore companies, trusts and nominee services.

This brochure is not intended to be comprehensive. It is based on Gibraltar legislation in force at the time of going to print. This brochure does not take into account the effect of legislation in the territory in which the client is resident at the time of setting up a company in Gibraltar. However, coordination of professional advice is one of the principal advantages of using the services offered by a member firm of Coopers & Lybrand International.

GIBRALTAR

Gibraltar is a dependent territory of the United Kingdom but enjoys considerable autonomy and legislates for itself in such areas as taxation. Gibraltar is part of the European Union having joined with Britain in 1972. The Rock has an experienced financial services industry which is rapidly developing as a major element of the local economy. A highly sophisticated telecommunications system and daily scheduled flights to London enable Gibraltar to compete successfully with other major offshore centres.

Gibraltar has also introduced a comprehensive regulatory framework which covers:

  • banking,
  • insurance,
  • financial services and
  • corporate trustee and company management services.

There is a Financial Services Commission which supervises the activities of the local industry.

For more details about Gibraltar, please consult our brochure "GENERAL BACKGROUND".

BENEFITS AND USES OF OFFSHORE COMPANIES

1. General

The reasons for forming a company are the same in Gibraltar as in many parts of the world ie limited liability for shareholders, separate legal identity and easy transfer of ownership. The formation and recurring annual procedures are straightforward and are governed by the Companies Ordinance.

2. Investment and property holding

The use of a company to hold investments and property may provide a number of advantages:

  • it may enable the owner of the company to avoid high levels of capital and inheritance taxes that would otherwise be payable if investments were held directly;
  • it may preserve the anonymity of the beneficial owner in companies and countries in which investments are made;
  • it may protect assets from legal attack in the country in which the beneficial owner is resident, although such an arrangement should normally be considered in conjunction with a trust.

3. Trading

Trading companies may be operated for many purposes including ship chartering, aircraft leasing, film making, property development, mining and oil development and production.

4. Invoicing

The invoicing of goods by one company to another in a different country may be arranged through a company which can then retain a proportion of the profit for the services that it renders.

5. Trade marks

Trade marks, patents, royalties and other rights can be held by a company which may derive a profit from them by granting leases, rights or sole distributorship arrangements to residents of other countries of the world.

6. Employment

Companies may be operated for the benefit of individuals subject to high personal taxation and who earn income outside their country of residence, by the sale to a company of the rights to their services.

TAXATION OF OFFSHORE COMPANIES

1. General

Subject to the following exceptions, companies regarded as resident in Gibraltar are taxed at the rate of 35% on their profits wherever they arise.

2. Exempt Companies

Companies beneficially owned by non-residents, and which do not trade with residents may apply for tax exempt status. An exempt company will not be subject to any Gibraltar taxes, notwithstanding the fact that it is managed and controlled from Gibraltar. A number of exempt companies have established "bricks and mortar" presence in Gibraltar employing large numbers of local staff. Such companies are only permitted to trade with non-residents, and exempt status is therefore particularly appealing for companies carrying out purely administrative functions such as invoicing.

Dividends and interest paid by an exempt company are not subject to Gibraltar withholding taxes.

The annual Government charge for exempt status is £225.

Apart from confirmation that the company is beneficially owned by, and only trades with, non-residents, an applicant for exempt status must disclose details of the beneficial ownership of the company and can be accompanied by professional references on those owners. It is a requirement of the Companies (Taxation and Concessions) Ordinance that this information be kept confidential by the office of the Financial and Development Secretary. Various penalties, including imprisonment, may be imposed for a breach of confidentiality. Changes of beneficial ownership must be notified in advance to and approved by the Financial and Development Secretary. There is no requirement for financial statements to be available for public inspection at present.

3. Qualifying companies

In some situations it may be appropriate for an offshore company to be subjected to tax, albeit at reduced rates. In these circumstances a Qualifying Company is often an appropriate vehicle. The requirements of an application for qualifying status are the same as those for exempt status (see above). Qualifying Companies are subject to tax at a negotiated rate of not more than the rate of corporation tax (currently 35%) of net profits. A similar rate of withholding tax is normally applied on interest and dividends.

Annual audited accounts must be ledged with the Commissioner of Income Tax. An application for qualifying company status must be accompanied by an application fee of £250 and an advance payment against future taxation liabilities of £1,000.

4. Foreign companies

Companies incorporated outside Gibraltar may apply for tax exempt or qualifying company status in Gibraltar providing they meet the same requirements as exempt companies (see above). Such companies must, as a first step, register under Part IX of the Companies Ordinance which requires the applicant to provide Companies House with full details of directors, shareholders and persons authorised to accept service of legal process in Gibraltar.

5. EU parent/subsidiary directive

Gibraltar has enacted the EU Parent/Subsidiary Directive 90/435 which, subject to certain requirements being met, exempts from further taxation in Gibraltar dividends received by a Gibraltar company from a subsidiary taxed in another EU member state. Conversely, dividends paid by a Gibraltar company to its parent company based in another EU member state will not be subject to Gibraltar withholding tax, provided that certain requirements are met.

6. Gibraltar 1992 (GC) company

A GC is a Gibraltar incorporated company formed after 1 January 1992 and the main business of which is invested in the share capital of subsidiary companies. GCs, whilst paying normal rates of Gibraltar income tax on income (subject of course to the Parent/Subsidiary legislation (see above)), only pay a 1% withholding tax on dividends paid out of Gibraltar (subject again to the Parent/Subsidiary Directive). Such a company may be attractive as an efficient vehicle for investment into the European Union by a parent based outside the Union.

The client would subscribe to the shares in his own name, but he may prefer, for reasons of confidentiality, that his name not appear and that the shares be held by a nominee. Coopers & Lybrand are able to provide nominees in such cases and, where the shares are to be maintained in the name of the nominee, will provide declarations of trust, testifying to the fact that they hold the shares only as nominee in favour of a stated beneficial owner.

FORMATION OF AND STATUTORY REQUIREMENTS FOR GIBRALTAR COMPANIES

1. Formation Procedures

The first step in the formation of a Gibraltar company is to ensure that the proposed name will be acceptable to Companies House. This is achieved by a search of the Register to ascertain if there is already in existence a company with an identical or similar name. Furthermore, there are certain words (such as "first", "royal", "international") the use of which in a company's name is restricted.

The next step is the preparation of the Memorandum and Articles of Association, which are the documents governing the constitution, activities and administration of the company. Alternatively, the shares may be registered in the name of the beneficial owner or in the names of other nominees.

Ad valorem stamp duty is payable at the time of the incorporation of a company and is based on the authorised share capital of the company at a rate of 50p per £100, subject to a minimum of £10. The minimum payment thus covers an authorised share capital of £2,000. The Memorandum and Articles of Association are then registered with Companies House and a Certificate of Incorporation is issued. Incorporation is usually a speedy process.

Alternatively, Coopers & Lybrand always have available a selection of "shelf" companies ready for immediate use . It is usually simple to change the name of an existing company, should this be required. The price of shelf companies and formation of new companies with a specific name is the same.

The first directors of the company are normally appointed by the subscribers to the Memorandum of Association. The Directors held an inaugural meeting to adopt the Memorandum and Articles of Association and the common seal of the company, decide on the registered address, deal with the transfer of the subscribers' shares, if necessary, and allot any further shares necessary to meet the beneficial owner's requirements. The registered office of the company must always be situate in Gibraltar.

Shares may also be issued in currencies other than sterling, and in exceptional cases bearer shares may be issued. If bearer shares are required, specific clauses must be included in the Articles of Association which allow the issue of warrants to bearer.

2. Annual statutory requirements

A company registered in Gibraltar must make a return each year, stating the capital structure and the names and addresses of registered shareholders of the company as well as its directors. Each return must be accompanied by a small annual registration fee. The registered shareholders may be nominees acting on behalf of the beneficial owners of the company and, if so, there is no requirement for the return to disclose the identity of the beneficial owners. Any mortgages or charges over company must also be recorded in the Annual Return having been properly registered at the time of the change by the Directors.

There is a statutory obligation on a company to maintain a register of shareholders at its registered office, available for inspection by members of the public, together with a copy of its last annual return.

A company is required to produce annual audited financial statements but there is no requirement for these to be made available for public record.

All non-exempt companies are required to file a copy of their annual accounts with the Commissioner of Income Tax.

A company must hold an annual general meeting of shareholders each calendar year.

3. Company law

The relevant law is the Companies Ordinance 1930. The Ordinance requires that the Memorandum of Association must specify:

  • the name of the company;
  • the activities that the company may undertake;
  • the amount of the authorised share capital.

Amendments can only be made by a special resolution of the shareholders in Extraordinary General Meeting in accordance with the company's Articles.

A private company may have only one registered shareholder whilst seven is the minimum for a public company.

It is permissible for a company to issue different types of shares if authorised by its Memorandum of Association.

Unless otherwise stipulated by the company's Articles, the minimum number of directors is one.

There is a statutory restriction on the borrowing powers of a company in the ordinary course of its business and there are no rules on ratios between capital and debt.

4. Liquidations

The voluntary liquidation of a Gibraltar company is a straightforward process.

COSTS OF FORMING AND RUNNING AN OFFSHORE COMPANY

Details of fees for services provided by Coopers & Lybrand are available in a separate leaflet.

COMPANIES IN OTHER JURISDICTIONS

In certain circumstances a company incorporated in a jurisdiction other than Gibraltar may be appropriate. Coopers & Lybrand are able to arrange for the formation of companies in other jurisdictions and, if appropriate, for their administration from Gibraltar.

SERVICES OFFERED BY COOPERS & LYBRAND

The Firm is now among the largest providers of the company, trust and related services in Gibraltar. It provides virtually all the services and advice required for the formation and administration of companies, including the following:

  • initial advice and liaison with professional advisors in other jurisdictions in order to recommend the most practical and tax efficient arrangement to suit the client's circumstances;
  • administration services which include, in certain well defined circumstances, the provision of directors of a company or arranging, if appropriate, for suitably qualified individuals in other jurisdictions to act as directors. As a minimum, administration services include ensuring that all matters required by statute or by Gibraltar's authorities are dealt with in a practical and timely manner and that the company is maintained in good standing. In many cases the services provided by the Firm will encompass the complete administration of a company;
  • a registered office as required by law, or an administrative office for companies registered in other jurisdictions but administered in Gibraltar;
  • the services of a corporate secretary;
  • the services of corporate nominees being Abacus Nominees (Gibraltar) Limited, preserve the anonymity of the beneficial owner, a company wholly owned by the Gibraltar partners of Coopers & Lybrand;
  • accounting services, including preparation of the financial statements required by law. If required, more frequent and detailed information can be prepared to suit the client's circumstances (such as computer-produced monthly management accounts or schedules of investment portfolios);
  • advice on Gibraltar tax relating to the circumstances of the company and the beneficial owner, including preparation, submission and agreement of tax returns and assessments as appropriate;
  • sophisticated trustee services. This aspect is dealt with in more detail in our brochure entitled "Trusts in Gibraltar".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances

Coopers & Lybrand is a member of Coopers & Lybrand International, a limited liability association incorporated in Switzerland.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions