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Offshore Company Formation: Gibraltar Company Formation

offshore company formation

Gibraltar is located at the entrance of the Mediterranean. It is connected to the Spanish mainland by a sandy isthmus, and by ferry to Morocco. The subject of repeated conquest and sieges, Gibraltar has been a British Territory since 1704. It was ceded under the Treaty of Utrecht. Since 1973 it is part of the European Union under the British accession.

The legal system is based on English common law with comparable business formation types, the private company limited by shares, private company limited by guarantee, general and limited partnerships, sole proprietor, Foundations and Trusts and there are offshore entities: the Exempt Company, the Qualifying Company and the Gibraltar1992 Holding Company.

Gibraltar is an attractive offshore location for investment fund management, trust management, shipping, and investment holding companies because of its established cost and tax-effective base. There are no income or capital gains taxes and no exchange controls. Branches of foreign companies in Gibraltar can apply for special exempt tax status. A company can be incorporated within five days.

Offshore Formation Formalities

Offshore formations can take several types. Exempt Private Companies, which can be resident or non-resident in Gibraltar and are used for the avoidance of tax. The only liability is a yearly registration fee. Branches of Foreign incorporated companies which are created to allow dividend payments to be deferred from one EU member state to another without any withholding taxes. Qualifying Companies that pay income tax on profits at a rate form 0%-35%. Non Resident Companies that are liable for tax in income arising or receive through local agents and Trusts.

The Exempt Company is the most popular offshore vehicle in Gibraltar and is generally used for holding bank accounts and investments (since capital and interest earned is tax-free); yacht/ship and property ownership; the management of ships and cargo; for operating businesses; invoicing so that payments received in Gibraltar are tax-free; re-invoicing so that tax liabilities in other jurisdictions are minimised and for the holding of family assets using trust structures.

To qualify for tax exempt status the company must adhere to certain stipulations:


  • At all times the paid-up share capital must not be less than £100 or the foreign currency equivalent;
  • Gibraltarians or resident of Gibraltar are prohibited from any beneficial interest in the shares of the Exempt Company except as a shareholder in a public company which is registered in a country other than Gibraltar;
  • If the company is incorporated in Gibraltar, it must keep its register of shares within Gibraltar and have a provision in its Memorandum and Articles of Association to the effect that its register will not be kept elsewhere. If the company is incorporated outside Gibraltar, it must keep a true copy of its register of members within Gibraltar;
  • The company must not, without the approval of the Financial and Development Secretary, carry on any trade or business in Gibraltar or with Gibraltarians or residents of Gibraltar except where these are other exempt companies. An exempt company may, however, manage and control its business from Gibraltar and have an office and staff locally; and
  • Its auditors must be approved by the Government of Gibraltar, who must confirm annually that the company is not in breach of the provisions of the Companies (Taxation and Concessions) Ordinance.
The legal requirements are as follows:

  • All Gibraltar companies require a local registered office for the service of process but there is no specific requirement for the appointment of a registered agent;
  • Both registered and bearer shares can be issued. There must be at least one director. A director can either be a real person or a corporate entity. Details are on public record. Nominee directors can be supplied internally or externally;
  • There are no nationality or residence requirements;
  • There must be at least one shareholder. A shareholder can be a corporate entity and there are no nationality or residence requirements;
  • There is a disclosure requirement for Exempt companies of the name and address of the beneficial owner but all such information is protected by a legal guarantee of confidentiality;
  • The name of the required company should be checked with the Registrar and the ending will be either Limited or Public Limited Company;
  • No-accounts or annual returns to be filed with the Government in the case of Exempt companies.



Trust management, particularly for wealthy UK individuals, has been a traditional business for Gibraltar. Gibraltar has a well-developed legal and financial infrastructure for trust management. With a large established base of trusts, and a growing reliance on corporate work, the volume of trust litigation is becoming significant. Trust income is exempt from tax. Under the Income Tax Interest, income received from a Gibraltar bank is normally exempt from taxation

Trustees are required to be licensed by the Financial Services Commission.


Gibraltar is one of the cheapest European offshore jurisdictions and one of the first of the British dependent territories to develop tax-exempt corporate forms for offshore business. It has quite high internal income taxes, but offers low-tax regimes to both companies.

Exempt Companies are exempted from all taxes; Qualifying Companies are liable for tax on worldwide income at rates between 2% and 35% and 1992 Holding Companies subject to 35% tax on profits but the liability to withholding taxes on distributed dividends is limited to no more than 1 %.


The banking sector is well established in Gibraltar in both the offshore and local market with assets in the vicinity of G£6.5 billion. The advantages of offshore banking in Gibraltar include its attractive tax status, the lack of exchange controls, excellent communications, stable government, and EU membership. Much of the banking activity in Gibraltar is directed to asset management for high-net-worth individuals, not least because Gibraltar has tried hard to attract such people with special tax regimes.

Employment law

Gibraltar's employment legislation largely mirrors that of the UK. there is legislation which permits statutory determination of wage levels in the event of an impasse between management and workers. The statutory minimum of holidays is 2 weeks, rising to 3 weeks after 5 years, in addition to public holidays. There are also Industrial Tribunals to deal with cases of unfair dismissals

Businesses in Gibraltar are required to register their and their employees' details with the Employment and Training Board - details of the business within 3 months of commencement, and details of employees within 14 days of engagement. Job vacancies must also be notified to the Board, since it administers the work permit system. This is no mere bureaucratic form-filling exercise: the Board's stamped and signed Notice of Terms of Engagement is needed for an employee to obtain a Registration Card from the Immigration Department, or a Social Insurance Card from the Department of Labour and Social Security. An employer pays G£26 per employee per annum to the Board's Employers' Insolvency Fund, which compensates the employees of insolvent enterprises for unpaid wages, etc.

Social security contributions are compulsory for employed persons, but voluntary for the self-employed. There is a normal range of benefits, but access to them is tied to contribution record in many cases. Insurance contributions are payable at a standard flat rate for each week of employment. The standard rate is £42.69, of which £18.87 is paid by the insured person and £23.82 is paid by the employer.

As Gibraltar is part of the EU, EU nationals have the right of free movement of labour and should have no difficulty in obtaining a resident's card.

Geography, People, and Culture

The population estimated at July 2004 was 27,833. The climate is Mediterranean with mild winters and warm summers. The terrain narrow coastal lowland borders the Rock of Gibraltar. The ethnic groups are Spanish, Italian, English, Maltese, and Portuguese. English is the official language, but more commonly spoken is what sounds to an outsider like perfect Andalucian Spanish. It is in fact llanito, an Andalucían dialect with borrowed words that reflect its diverse origins.

Immigration and Residency

Nationals of EU member states have the right to enter, live and work in Gibraltar. Initially a six-month visa is given, and then a 5-year renewable residence permit, provided that they have found suitable employment or have started a business. Work permits cannot be denied to EU citizens.

Other nationals have to apply for residency under the Immigration Control Ordinance and permission is issued by the Governor. Government guidelines indicate that an applicant for residency must be ready and able to purchase a property of sufficient size to accommodate his dependents, must be in good health, and must have adequate financial resources. The Government looks more favourably on those applicants who purchase luxury property in Gibraltar.

If Non-Gibraltarians need work permits, they are issued under the Control of Employment Ordinance. A work permit cannot be refused to an EU national.

Legal and Political System

Queen Elizabeth II is the Head of State and is represented in Gibraltar by the Governor and Commander-in-Chief Sir Francis Richards (since 27 May 2003).
Following elections, the leader of the majority party or the leader of the majority coalition is usually appointed chief minister for a four year term by the Governor
A Council of Ministers is appointed from among the 15 elected members of the House of Assembly by the governor in consultation with the chief minister. The last held elections were on 27 November 2004. The current ruling party is the Gibraltar Social Democrats which received 58% of the vote. The opposition party is Gibraltar Socialist Labour Party.


The currency is the Gibraltar pound which is at par with the British pound. Gibraltar benefits from an extensive shipping trade, offshore banking, and its position as an international conference centre. The financial sector, tourism (almost 5 million visitors in 1998), shipping services fees, and duties on consumer goods also generate revenue. The financial sector, the shipping sector, and tourism each contribute 25%-30% of GDP. Telecommunications accounts for another 10%. In recent years, Gibraltar has seen major structural change from a public to a private sector economy, but changes in government spending still have a major impact on the level of employment.

Legislation relating to offshore and non-resident business

If you require more information on any particular statute please contact us.

Banking (Accounts Directive) Regulations 1997
Banking (Auditors and Information) Ordinance 1997
Banking Ordinance 1992
Bankruptcy Ordinance
Companies Ordinance as amended
Companies (Taxation and Concessions) Ordinance
Deposit Guarantee Scheme Ordinance 1997
Development Aid Ordinance
Estate Duties Ordinance
Financial Institutions (Prudential Supervision) Ordinance 1997
Financial Services (Accounting and Financial) Regulations
Financial Services (Collective Investment Schemes) Regulations 1991
Financial Services (Conduct of Business) Regulations 1991
Financial Services Ordinance 1998
Immigration Control Ordinance
Income Tax Ordinance 1984 as amended
Income Tax (Allowances, Deductions and Exemptions) Rules 1992
Income Tax (Qualifying Companies) Rules 1992
Insurance Companies Ordinance 1987
Limited Partnership Ordinance as amended
Partnership Act 1890 (UK)
Perpetuities and Accumulations Ordinance 1986
Private Foundation Ordinance 1999
Qualifying (High Net-Worth Individuals) Rules 1992
The Registered Trust Ordinance 1999
Trust Recognition Ordinance

EU Directives having direct effect in Gibraltar:

Directive 78/660/EEC (The Fourth Directive) as amended
Directive 83/349/EEC (The Seventh Directive) as amended
Directive 83/350/EEC (sharing of confidential banking information)
Second Banking Co-ordination Directive 89/646/EC (passporting)

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