TBA & Associates

Gibraltar taxation

Non-resident company

Gibraltar was the first European financial center to introduce the tax-exempt company (no-longer existing), as an offshore holding vehicle, and its unique status within the EU makes it the jurisdiction of choice for certain types of investors or traders.

Gibraltar non-resident company is not taxable in Gibraltar. It is a company, which is incorporated in Gibraltar, owned by non-residents and controlled by directors who reside and hold board meetings outside Gibraltar.

Non-resident company is another offshore business form which escapes taxation on foreign income. The Companies Taxation and Concessions Ordinance (amended) introduced the territorial scope of taxation, status for companies trading outside Gibraltar. A company registered in Gibraltar will not be liable to Gibraltar taxation, including income tax and estate duty, if it’s owned and controlled by non-residents of Gibraltar, does not trade in Gibraltar and does not remit income to Gibraltar.

Detailed features

To be a non-resident company, a Gibraltar-registered company must satisfy the following criteria:
The company must be owned by persons, who are not resident in Gibraltar.
The company must be controlled (directed) by persons who are not resident in Gibraltar.
The company may not trade or carry on business in Gibraltar with residents of Gibraltar. It may however trade with other exempt or qualifying companies or non-resident persons.
The company must maintain its Company Register, Registered Office and Resident Secretary in Gibraltar.
The company must not remit income to Gibraltar.
The last requirement effectively means that in order to maintain its no-tax status a Gibraltar non-resident company should not hold any bank accounts in a Gibraltar-situated bank. This simply means that the non-resident company would usually operate its bank accounts in another country.

Often it would be just a different offshore jurisdiction – like, Isle of Man, for example. It may also be practical to open the offshore bank account in a country situated closer to the place of the actual business of the company – or to the actual location of its beneficial owners.

If the above criteria is satisfied, a Gibraltar company will be considered “non-resident”. As such, it will not fall under the Gibraltar tax system by definition and will not be required to register for Gibraltar taxation purposes. This also means that, unlike the tax-exempt company, the non-resident company can in no circumstances be considered as a Gibraltar taxpayer.

Types of entities in Gibraltar

Several types of businesses are available in Gibraltar for registration. The most popular are the partnerships (general and limited) and the companies (sole proprietorships, limited by shares, limited by guarantees and public companies).

General and Limited Partnership

General Partnership

The general partnership is created by partners equally responsible for the business’ responsibilities and duties with their own contributions. The maximum number of partners in a Gibraltar partnership cannot exceed 25 individuals or companies (not available for professional firms). Even though annual accounts must be submitted to the Commissioner of Income Tax, the general partners are not obliged to fill agreements and financial accounts.

Limited Partnership

The limited partnership is formed by at least one general partner, fully liable for the company’s debts and a silent partner, liable only in the extent of his contributions. The major difference between the two types of partners is that the silent partner may not make managerial decisions. The partners must file a declaration regarding the composition of the partnership and the amount of capital deposited by the limited partners and submits it at the Registrar of Companies.

The limited liability partnership resembles the general one, with the main difference in the liability of the partners which are not responsible for each other mistakes or negligence.

All types of partnerships are regulated by the Partnership Act (as updated). The companies are regulated by the Companies Ordinance, pretty similar with the English Companies Act 1929.

Private and Public Limited Liability companies

The private limited liability company may be limited by shares or by guarantees.
Private limited liability by shares

The companies limited by shares’ capital is made of non-transferable shares and the responsibility for the company’s liabilities depends on the contributions to the share capital. The minimum number of shareholders in such a company is 2 and the maximum is 50. The management is assured by a director and the secretary appointment is not necessary.

Companies limited by guarantee

The companies limited by guarantee with or without share capital have members which have their liability guaranteed by a deposited sum of money and their members don’t need to register with the Companies Registrar (unlike the previous type of company, where details regarding their names and contribution to the capital were necessary).

Public limited liability

The public limited liability companies are founded by an unlimited number of shareholders and, as a particularity, a minimum share capital has to be deposited at incorporation, with the total amount of 20,500 GIP.


Gibraltar as a European jurisdiction of choice

Gibraltar is fast becoming the jurisdiction of choice for many e-commerce, financial services businesses and investment fund managers that wish to be established within Europe. Over the last 20 years Gibraltar has seen tremendous advances in development of the economy and the high quality of the regulatory environment here.

A few surprising remarks:

Gibraltar licensed operators currently supply more than 50% of the UK online gambling market. It is the world’s leading online jurisdiction with over 15 years of experience and home to regulated FTSE and NASDAQ listed companies in the sector.

The e-commerce industry also includes a growing e-money and payments sector and Gibraltar is now one of the leading EU jurisdictions for electronic payment companies.

Competitive tax environment

In addition, Gibraltar has favourable tax systems including competitive corporate tax rates, an attractive structure for cross-border dividend distributions and no capital gains tax or value added tax (VAT).

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