Top 5 Mistakes to Avoid When Setting Up a Company in Gibraltar - OCTOPUS

Gibraltar offers one of the most efficient and tax-friendly environments for entrepreneurs — but getting it wrong during incorporation can lead to delays, compliance issues, or unnecessary costs.

If you’re planning to start or move your business to Gibraltar, avoid these 5 common mistakes when setting up a company so you get it right from the start.

1. Choosing the Wrong Company Structure

Most businesses in Gibraltar are set up as Private Companies Limited by Shares (Ltd), but this isn’t always the right choice.

What can go wrong:

• Choosing the wrong entity for your business model (e.g. using Ltd instead of PCC or LLP)

• Not understanding how share capital and shareholder responsibilities work

How to get it right:

• Consult with a licensed intermediary like Octopus to choose the most suitable structure for your goals.

2. Not Understanding Tax Scope and Substance Requirements

Gibraltar’s 15% corporate tax only applies to income accrued or derived from Gibraltar — not foreign income. But to benefit, you must meet local substance requirements.

What can go wrong:

• Incorrectly assuming you’re exempt from tax or obligations

• Failing to meet substance criteria (e.g. lack of local operations or management presence)

How to get it right:

• Review Gibraltar’s substance guidelines in full or work with a formation agent who ensures you’re compliant.

3. Skipping Proper Banking and EMI Planning

Opening a traditional business bank account in Gibraltar can be time-consuming. Many founders now use EMIs (Electronic Money Institutions).

What can go wrong:

• Assuming you’ll get a bank account instantly

• Not planning ahead for payment solutions

How to get it right:

• Ask your agent to introduce you to a suitable EMI during the formation process

• Choose providers familiar with Gibraltar-based entities

4. Ignoring Ongoing Compliance Obligations

Gibraltar companies must file annual returns and keep proper accounting records — even if dormant.

What can go wrong:

• Late filings resulting in penalties

• Assumption that no activity = no filing required

How to get it right:

• Partner with a company secretary or service provider (like Octopus) who handles filings and deadlines on your behalf

5. Not Budgeting for Registered Office and Local Services

A Gibraltar company must maintain a registered office address and appoint a local company manager or secretary.

What can go wrong:

• Underestimating setup or maintenance costs

• Using a non-compliant address or unlicensed agent

How to get it right:

• Request a full quote upfront from a licensed provider including all annual services

• Verify that your registered office meets Companies Act requirements

Get a tailored company formation quote from Octopus

Frequently Asked Questions

What are the risks of selecting the wrong company structure when incorporating in Gibraltar?

Selecting an inappropriate company structure, such as a Private Company Limited by Shares instead of a Protected Cell Company or LLP, can lead to unsuitable governance, liability, or operational arrangements. This may result in compliance issues, shareholder disputes, or inefficient tax outcomes.

How does Gibraltar's corporate tax regime apply to company income?

Gibraltar's 15% corporate tax is only levied on income that is accrued or derived within Gibraltar. Foreign-sourced income is not subject to this tax, but to benefit, companies must meet specific local substance requirements.

Why is meeting substance requirements important for Gibraltar-registered companies?

Meeting substance requirements is essential because failure to do so may result in the loss of local tax advantages or potential non-compliance penalties. Substance typically includes maintaining a local presence, such as management and operational activities in Gibraltar.

What challenges might companies face when opening a business bank account in Gibraltar?

Opening a traditional business bank account in Gibraltar can be time-consuming and may not be completed as quickly as expected. Many founders now use Electronic Money Institutions (EMIs) as alternative payment solutions during or after incorporation.

Are dormant companies in Gibraltar required to maintain compliance and file returns?

Yes, all Gibraltar companies, including dormant ones, must file annual returns and keep proper accounting records. Assuming that no business activity exempts a company from filing obligations can result in late penalties.

What ongoing costs must be budgeted for when setting up a Gibraltar company?

Companies must budget for a compliant registered office address and the appointment of a licensed company manager or secretary. Underestimating these setup and maintenance expenses or using unlicensed providers can result in non-compliance or regulatory issues.

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