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Opening a Company in Gibraltar Under Favourable Conditions

by | Jun 13, 2024 | Gibraltar

Gibraltar, a British Overseas Territory located at the southern tip of the Iberian Peninsula, offers a business-friendly environment with numerous advantages for entrepreneurs and companies looking to establish themselves in a favourable jurisdiction. The strategic location, coupled with attractive tax incentives and a robust legal framework, makes Gibraltar an ideal destination to incorporate a company. In this blog, we will explore the key benefits of opening a company in Gibraltar, including tax advantages, the incorporation process, and residency options.

Octopus International Business Services Limited can assist with all your needs when it comes to incorporating a resident or non-resident company and guide you through the full process and licensing requirements.

Tax Advantages in Gibraltar

One of the most compelling reasons to establish a company in Gibraltar is the favourable tax regime. Gibraltar boasts a competitive corporate tax rate of 12.5%, which is significantly lower than many other jurisdictions. Corporation Tax is only due on income accrued within or derive from Gibraltar. Additionally, there is no capital gains tax, wealth tax, inheritance tax, or value-added tax (VAT) in Gibraltar, making it a highly attractive location for businesses and investors.

Gibraltar Tax Rates

Corporate Tax Rate: 12.5%

Income Tax Rates: Progressive rates ranging from 0% to 35%, with generous allowances and deductions.

No Capital Gains Tax: Investors can realize gains without incurring additional taxes.

No VAT: Absence of VAT simplifies accounting and reduces costs for businesses.

These favourable tax conditions, combined with Gibraltar’s adherence to international standards, including the OECD’s requirements for transparency and information exchange, ensure that businesses can operate efficiently while enjoying substantial tax savings.

Incorporation Process

Setting up a company in Gibraltar is straightforward and efficient, thanks to the streamlined company registration process. Here are the key steps involved in incorporating a company in Gibraltar:

  1. Choose a Company Name: Select a unique name for your company and we can check its availability online with the Gibraltar Companies House.
  2. Prepare Documentation: We draft the Memorandum and Articles of Association, which outline the company’s structure and operations. These documents must be submitted along with the incorporation application.
  3. Appoint Directors, Shareholders and Secretary: Appoint at least one director and one shareholder. Nominee shareholders and Corporate directors can be used for added privacy and convenience. A sole director cannot be the sole secretary. Octopus provide a corporate secretarial service to file all documents on behalf of the company and advise on all filing requirements.
  4. Registered Office: Octopus provide a registered office address in Gibraltar where official documents and correspondence will be sent.
  5. Submit Application: Octopus prepare the application and file the incorporation documents with the Gibraltar Companies House and pay the applicable registration fees.
  6. Obtain a Business License: Depending on the nature of your business, if the company is resident you may need to apply for a business license from the Gibraltar Government, Octopus can apply on your behalf through the Office of Fair Trading.
  7. Registration with the Tax Office and Employment Trading Board: Octopus can assist with the registration of your company for tax and employment purposes (if a resident company).

The incorporation process typically takes a three to four days to complete, allowing businesses to start operations quickly and efficiently. However, the local licensing requirements for resident companies can take a while longer. Using Octopus can streamline this process.

Residency and Re-domiciliation

Gibraltar offers attractive residency options for individuals and businesses. By obtaining Gibraltar residency, business owners can benefit from the territory’s favourable tax regime and enjoy a high standard of living in a safe and vibrant environment.

Gibraltar Residency Qualifying (Category 2) Individuals: High-net-worth individuals with net worth of greater than £2M can apply for Category 2 status. The tax is capped on £118,000 of income which equates to a maximum of £44,740 per annum, regardless of their worldwide income. The added advantage to this regime is there is a zero-day residency requirement. They need to rent or buy a premium property in Gibraltar. They are required to have private medical insurance and cannot compete with local business.

HEPSS (High Executive Possessing Special Skills) – this is a regime which applies to individuals who bring their skillset to Gibraltar which is not readily available. Their income would be capped at £160,000 under the gross based system (£43,140). Any income earnt from the company above that would not be subject to tax. To comply, you must have a premium property available for your use and cannot have been resident for the last 3 years. You will need to reside for 183 days or more in Gibraltar. 

Ordinary residence – this requires you to rent or buy a property in Gibraltar suitable for your needs, you must reside for 183 days or more and be employed in Gibraltar. Setting up a company with Octopus can achieve this. 

Self-employed – Only available to British nationals or residents already in Gibraltar.

Re-domiciliation

Gibraltar allows companies to re-domicile from other jurisdictions, enabling businesses to relocate without having to dissolve and re-incorporate. This process is particularly advantageous for companies seeking to take advantage of Gibraltar’s tax benefits and stable business environment.

Please note UK companies cannot redomicile in or out of the UK so a new company is required for UK residents relocating to Gibraltar.

Legal Remedies and Compliance

Gibraltar’s legal system is based on English common law, providing a stable and reliable framework for businesses. The territory has robust legal remedies to protect the rights of businesses and individuals, including:

Conclusion

Opening a company in Gibraltar offers numerous advantages, including a favourable tax regime, efficient incorporation process, and attractive residency options. The absence of capital gains tax, wealth tax, and VAT, combined with a competitive corporate tax rate, makes Gibraltar an ideal location for businesses looking to maximize profitability and minimize tax liabilities. Whether you are an entrepreneur, investor, or established business, Gibraltar provides a stable and supportive environment to achieve your business goals.

By leveraging Gibraltar’s strategic location, favourable tax conditions, and robust legal framework, businesses can unlock significant opportunities for growth and success in the global marketplace.