Gibraltar Companies and Gibraltar Trusts 

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Gibraltar

Gibraltar companies can be regarded as international (business) companies in view of the fact that companies are not restricted to domestic trade and local ownership only. Instead, a company established locally can engage both international and domestic trade. In spite of this, a clear distinction is made between resident and non-resident companies due to the fact that Gibraltar fiscal regime is based on territoriality.

To be distinguished as a non-resident company, a Gibraltar company cannot be owned by persons who are ordinary residents of Gibraltar, must designate a resident secretary in Gibraltar, must maintain a registered office and the necessary registers for logging all relevant details pertaining to the company, its members and owners. Non-resident Gibraltar companies must not engage in any local commercial activity by providing its products and services to local residents and must not remit income for withdrawal anywhere in Gibraltar. Non-resident Gibraltar companies are free from exchange controls and fully capable of transferring funds into and out of the country.

Similar non-resident provisions apply to trusts whose settlors and beneficiaries do not reside in Gibraltar. Such trusts can be easily referred to as non-resident/offshore or international trusts based on Gibraltar tax structure. Trust assets are not liable to any taxes including stamp duty except if such trust property is not located in Gibraltar, and Gibraltar levies no estate duty, capital gains, or gift tax on non-resident trusts. Asset transfers are not subject to any duties or taxes.

Protected Cell Companies (PCC) are exempt from taxes if non-resident but and are subject to a license fee which must be paid every year. An additional fee is applicable for every cell that a PCC possesses.

As an offshore tax shelter, Gibraltar also does not impose withholding tax on dividends if profits are offshore profits, on interest payments if a loan given originates from a foreign jurisdiction. In further support of its low/zero tax fiscal regime, tax exemptions also benefit local residents who are not subject to any VAT, or capital taxes such as estate duty, gift tax or tax on capital gains.

In an attempt to broaden its offshore financial services through collective investment schemes as a tax haven, Gibraltar enacted the Financial Services (Collective Investment Scheme or CIS) Ordinance under which the UCITS (Undertakings for Collective Investments in Transferable Securities) Management Directive and Product Directive (identified as UCITS I and II respectively) were implemented. This legislative framework ensures that collective schemes operating with Gibraltar as a tax haven are recognised, authorized, private and operated by experienced investor funds. Under the CIS Ordinance, restrictions were placed on certain activities such as acting as the trustee of a unit trust, the manager of, or closure of, any given collective investment scheme or as the sole director or depository of an open-ended investment company, for which the necessary authorization are required. Tax haven Gibraltar UCITS are endowed with the ability to enter the EU and the EEA (European Economic Area) single market in investment services, to which Gibraltar entities were granted passport since 2003.

In facing up to the increased demands of the Organisation for Economic Development and Cooperation, tax haven Gibraltar came to its final resolutions regarding the phasing out of the Gibraltar tax exempt company. It is expected that this process will be complete by 2010, during which time the Gibraltarian government intends to introduce a flat, low corporate rate across the board. In his June 2007 budget speech Chief Minister Peter Caruana also expressed the importance of the Gibraltar Tax Exempt Company, which he described as the backbone of the development and growth of both the finance centre, the online gaming sector, not excluding job creation. The new proposed tax rate for tax haven Gibraltar is expected to range anywhere from 10% to 12% and will reflect similar moves that have been already made in Malta, Cyprus, Ireland and other EU member countries. Although plans of revising Gibraltar’s tax structure were on stream as early as 2003, increased demands by the OECD added urgency to Gibraltar’s quickened steps. In November 2008, Caruana expressed his Gibraltar’s commitment to enact the relevant legislation by July1, 2009.

Gibraltar Offshore Business Entities

  • Gibraltar Company
  • Gibraltar Non-Resident Company
  • Gibraltar Partnerships
  • Gibraltar Insurance Company
  • Gibraltar Protected Cell Company
  • Gibraltar Offshore Trust
  • Gibraltar Banking
  • Gibraltar Sole Proprietorship

Gibraltar Company

Main Features:

  • Regulation – Companies Act 1930
  • Able to trade both in and outside Gibraltar
  • May be established as a company limited by guarantee with or without share capital, a company limited y shares or an unlimited company with or without share capital
  • Legal entity separate from its beneficial owners, capable of lending and borrowing money, entering contracts and owning assets
  • Members have limited liability, as liabilities of Gibraltar company are not tied to the personal assets of company members
  • banks and landlords may from time to time request personal guarantees from the company directors, which exposes them to a certain degree of personal liability
  • Gibraltar company enjoys perpetual existence
  • beneficial ownership can be passed on by means of share transfer
  • All companies required to be managed and operated pursuant to the Companies Act

Holding Company

  • Usually utilized by entrepreneurs in order to make full use of Gibraltar low tax fiscal regime
  • Should be established principally for holding shares in other companies and not particularly for providing goods and services
  • Controls sufficient voting stock required for controlling a company’s administration, operations and board of directors
  • Helps companies to mitigate potential risks to owners

Branch

  • Established by foreign company
  • requires a details of secretary, director(s), registered agent in Gibraltar and business location

Gibraltar Non-Resident Company

Main Features:

  • Regulation - Law is based on the United Kingdom Companies Act 1929
  • Unable to do trade within Gibraltar
  • Unable to trade with persons who are ordinarily resident in Gibraltar
  • May take the form of an unlimited company, a company limited by shares, by guarantee without a share capital or limited guarantee with a share capital
  • Incorporated in Gibraltar but strictly owned and managed by non-residents
  • Required to keep a registered office in Gibraltar
  • Must have a corporate secretary at a local office
  • May choose to appoint nominee owners and directors
  • Must file annual reports as well as audited accounts
  • Business activities such as banking, investment or company and trust management and insurance require the relevant licensing

Gibraltar Partnerships

Main Features:

Ordinary Partnership (General)

  • Regulation – Partnership Principal Act 1895,/li>
  • Business arrangement whereby two or more persons take on business activities jointly
  • Partners personally and individually exposed to unlimited liability
  • Agreement for operating the partnership set out in Deed of Partnership
  • Capable of trading with the use of the names of partners or a business name

Limited Liability Partnership

  • Combines features or a corporation and an ordinary partnership
  • Business Business arrangement whereby two or more persons take on business activities jointly
  • Partners not responsible for misconduct or any other partner
  • Partners have limited liability, calculated in proportion to their contribution
  • Partners capable of managing and not subject to election a board of directors

Gibraltar Insurance Company

Main Features:

  • Regulation - Financial Services (Insurance Companies) Act (with amendments up to 2009)
  • Authorization to carry out insurance business in or from within Gibraltar is given my he Financial Services Commission
  • An insurance license remains effective unless surrendered or revoked
  • Licenses are not transferable
  • Required to keep accounts and records locally if head office is in Gibraltar
  • Proper records and accounts must be kept in Gibraltar if head office is not in an EEA country or not a Swiss company carrying out general insurance business

Classes of Insurance

General Business

  • Includes accident, sickness, land vehicles, railway rolling stock, aircraft, goods in transit, ships, damage to property, fire and natural forces

Long Term Business

  • Includes life and annuity, marriage and birth, linked long term, permanent, tontines, pension fund management, social insurance

Special Purpose Vehicles

  • Regulation - Insurance Companies (Special Purpose Vehicles) Regulations 2009
  • Assumes risks from reinsurance or insurance businesses
  • May or may not be an incorporated entity
  • Completely funds risks assumed by issuing debts or other means of financing where the insurer’s right to repay the debt is subordinated to the reinsurance obligations of the SPV
  • Must be legally separate from any third party
  • Can be licensed to provide reinsurance services in or from within Gibraltar
  • Required to maintain sound risk management, internal control systems, administrative and accounting procedures
  • Must indicate the way in which claims involving securities are limited if funds are not sufficient and rank between varying security holders
  • A cap of no value in excess of available assets must be placed in on all reinsurance liabilities

European Economic Area (EEA) Reinsurer

  • Any reinsurance company created or registered under the law of any member country of the EEA, is licensed in compliance with the reinsurance Directive and uses an EEA state as its head office.

Gibraltar Protected Cell Company (PCC)

Main Features:

  • Regulation – Protected Cell Company Act 2001
  • Used primarily to segregate and shield cellular assets
  • Helps reduce right and access of creditors to a company’s assets
  • Capable of issuing shares from any cell
  • Capable of distributing dividends accumulated from single cells, after considering the profits and liabilities of that cell
  • Every cell must be uniquely named or for of identification
  • To operate as a Gibraltar protected cell company, collective investment schemes and insurance companies must be permitted by the Financial Services Commission
  • Gibraltar companies can be converted into PCC’s or incorporated as PCC’s pursuant to the Articles

Gibraltar Offshore Trust

Main Features:

  • Legislation – Trusts Act 1895
  • Created by a settlor who does not reside in Gibraltar
  • Trust beneficiaries and trust income are sometimes exempt from Gibraltar income tax
  • Useful for protecting assets

Gibraltar Banking

  • Regulation – Banking Act
  • Provides services for both domestic and international customers
  • Well regulated with respect to AML and KYC (Know Your Client) standards
  • Every bank must respect the established solvency margins

Gibraltar Sole Proprietorship (SOLE TRADER)

Main Features:

  • Business undertaken by a single person
  • Profits and losses acquired only by proprietor, who is personally responsible for all losses incurred
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