Gibraltar: The Advantages Of Using Gibraltar As An Offshore Centre

Last Updated: 27 February 2001
Article by Isaac Massias

Gibraltar is a Crown colony, connected by a narrow isthmus to southern Spain. The Gibraltar government is responsible for defined domestic matters, whilst the UK is responsible for Gibraltar's defence, foreign affairs and internal security. The Island has its own legal system, based on British common law but with its own statutes, known as ordinances. Some English Acts are extended to Gibraltar by Order in Council, others are enacted as ordinances and other areas are applied directly by the Gibraltar House of Assembly. Gibraltar is treated as a part of the member state of the UK for EU purposes and is included for all matters with the exception of the Common Customs Tariff, Common Agricultural Policy and Harmonisation of Turnover Taxes (notably Value Added Tax). Gibraltar's Companies Ordinance is based on the English Companies Act 1929. The incorporation of a Gibraltar company is usual in order to apply for a tax exempt qualifying company. The Income Tax Ordinance governs the taxation of companies in Gibraltar. The assessment basis for resident entities in on worldwide income, after deducting expenses wholly and exclusively connected with the production of the entity's income.

Non-Resident Controlled Companies

The income and profits of Gibraltar non-resident owned and controlled companies, which do not trade in, earn or remit income to Gibraltar are not liable to Gibraltar corporation tax. Annual accounts have to be submitted to the tax authorities in Gibraltar, together with written confirmation that the company fulfils the aforesaid requirements.

The Exempt Company

Gibraltar's main offshore vehicle is the exempt company, which is registered under the Companies (Taxation and Concessions) Ordinance. An exempt company is so termed because it qualifies for certain exemptions from income tax, estate duty (abolished in 1997) and stamp duty. Apart form exemption from tax on profits, no tax is charged or payable on dividend, interest, directors fee, annual payment or other sum payable by the company to any person who is neither a Gibraltarian or a resident of Gibraltar. Estate duty was abolished in 197. To qualify for exemption, the following conditions must be complied with:

  1. the company must not trade or undertake any business in Gibraltar, unless with a non-resident or with other exempt or qualifying companies, unless the consent of the Gibraltar authorities has been obtained;
  2. the company must have a paid-up share capital of not less than UK£100 or the foreign currency equivalent;
  3. no Gibraltar resident or Gibraltarian may hold any beneficial interest in the shares of the company;
  4. the company must pay its annual exemption tax on 1 March of each year;
  5. the company must keep its register of members in Gibraltar;
  6. the company must not change its beneficial ownership, objects, increase its share capital or change it name without first obtaining consent; and
  7. a director or the company secretary must be resident in Gibraltar.

The Qualifying Company

A qualifying company is a company registered under the Income Tax (Qualifying Companies) Rules. These companies can either be incorporated in Gibraltar or can be a company incorporated overseas but registered in Gibraltar. Qualifying companies put tax on profits at prescribed rates, being not less than 2% nor more than 18%. The usual rates, with the exception of loan interest which is exempt from taxation, directors' fees or annul payments made by a qualifying company to a non-resident person, other than a permitted individual, is taxed at the prescribed rate. Any dividend declared by the company is subject to tax at the rate prescribed to be paid by the company. All shares, loans and debentures held in, and policies of life assurance issued by a qualifying company are exempt from estate duty, so long as they are not made by a Gibraltarian or a resident. In order to register, the following conditions must be complied with:

  1. no Gibraltarian or resident of Gibraltar may have a beneficial interest in the shares;
  2. the company's paid-up share capital must be UK£100 or the equivalent;
  3. the company must not trade or undertake any business in Gibraltar except with other qualifying companies, qualifying individuals, exempt companies or non-residents;
  4. the company's register of members must be kept in Gibraltar or, if a registered branch of an overseas company, a certified true copy thereof;
  5. the sum of UK£1000 must be deposited with the Gibraltar Government as security for future taxes;
  6. a fee of UK£250 must be paid for the Qualified Certificate; and
  7. the company secretary or a director must be a resident of Gibraltar.

Parent-Subsidiary Rules And The Gibraltar 1992 Company

EU legislation regarding dividends paid across borders between member states has been implemented in Gibraltar. Any Gibraltar registered company which holds at least 25% voting share capital of a company registered in another member state, will not be liable to pay any Gibraltar corporation tax on any income derived from that company. Any dividends paid by a Gibraltar company to a company in another member state, which holds at least 25% of the Gibraltar company's voting capital, will not be liable to Gibraltar withholding tax. A recent interesting development involved EC Directive 90/435, which requires most member states to exempt dividends paid by subsidiary companies to parent companies from withholding tax, when both such companies are resident in EU countries. The Gibraltar 1992 Company concept was created with a view of specifically taking advantage of this directory. A Gibraltar 1992 Company is a Gibraltar resident of company, certified by the Gibraltar Financial & Development Secretary. Dividends paid by a Gibraltar 1992 Company are liable in Gibraltar to a withholding tax of only 1%. Interest paid to a non-resident by a Gibraltar 1992 Company will not be liable to withholding tax. The principal requirements for a company to be registered as a 1992 Company are:

  1. the company must have been registered or incorporated in Gibraltar on or after 1 January 1992;
  2. the company must be ordinarily resident in Gibraltar;
  3. the company's main objective must be to hold relevant participations;
  4. at least 51% of its annual income must derive from relevant participations;
  5. the company must have a proper physical presence in Gibraltar (ie. premises of at least 400ft² and a minimum of two employees);
  6. no Gibraltarian or resident of Gibraltar may have a beneficial interest in its share capital;
  7. a reasonable debt/equity ratio must be maintained. A Gibraltar 1992 Company's main benefit is in the area of withholding tax, since it is otherwise taxed in a similar manner to a company ordinarily resident in Gibraltar. Income not exempt under the Parent-Subsidiary Rules and the Gibraltar 1992 Company creates a tax efficient vehicle for the remittance or profits of a non-EU parent company. Rulings in member states will be necessary in order to confirm the viability of any particular structure.

Double Taxation Treaties

No double taxation treaties exist between Gibraltar an other countries. In practice, however, double taxation relief is granted on reciprocal basis in respect of certain UK and Commonwealth income. Other foreign tax paid on remitted income is treated as an allowable expense by concession.

Capital And Indirect Taxes

Gibraltar does not apply any investment income surcharge, capital gains tax, value added or sales tax or capital transfer tax. There is a varying scale of import duty. Excise duties are levied mainly on spirits, wines, tobacco and mineral oils.


Losses can be carried forward indefinitely but cannot be carried back. This relief applies to both local trading entities and qualifying companies.

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.

This article also appears in the 'International Offshore and Financial Centres Handbook 2001. For further information about this highly informative guide to offshore centres, or to order your copy, please phone +44 (0) 207 820 7733 or send an email to

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

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
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
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 (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

To Use 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.


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.


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