Gibraltar Tax & Business Guide - Deloitte

Basic facts
Population 28,800 Inflation 3.2% (year to October 2005)*
Main languages English, Spanish GDP per head US$32,393 at PPP (2005)
Currency Gibraltar pound (in monetary union with sterling) GDP growth 8% (year to March 2004)*
Economic communities EU
*Government sources.
Political environment

Gibraltar is an overseas territory of the UK and as such is a member of the European Union (EU). The head of state is Queen Elizabeth II, who is represented by a governor, currently Sir Francis Richards. A unicameral House of Assembly consists of 15 members elected by popular vote and three members appointed by the governor who serve under contract of employment with the government. The chief minister, currently Peter Caruana, is head of the government.
Foreign trade and investment
Exports n/a Imports n/a

Leading export markets: Germany, France and the UK.

Major exports: Petroleum and manufactured goods (primarily re-exports).

The government encourages investment particularly in areas that generate significant job opportunities for the local workforce. There is a wide range of fiscal incentives. Financial incentives such as cash grants and loan assistance are also available under various government schemes.

The government is promoting awareness of Gibraltar as an attractive manufacturing and distribution centre for non-European companies seeking to develop and maintain trading relationships within the single currency area.
Business and financing
Business forms Exempt company, company limited by shares (public or private), company limited by guarantee (with or without share capital), unlimited company (with or without share capital)

The exempt company is the main offshore vehicle in Gibraltar. Subject to certain conditions, a company incorporated in Gibraltar or a registered branch of an overseas company may apply for exemption, which will, in return for the payment of a fixed annual fee of £450, exempt the company or branch from further taxation in Gibraltar. The exempt-company tax regime, however, is to be phased out by 2010 (2007 for new companies) and a low-tax regime is expected to be introduced. Companies can apply for exempt status up to June 30th 2006.
Labour environment
Unemployment rate 2% (2005)* Minimum wage £4.50 (hourly)
*Government sources.

Labour legislation largely resembles that of the UK, with a system of industrial tribunals to address cases of unfair dismissal, etc. Social security contributions are compulsory for employed or self-employed persons and are payable at a fixed weekly amount of £46.95 for employed persons (£26.20 payable by the employer and £20.75 payable by the employee) and £23.98 for self-employed persons.
Taxation
Corporate tax
Main rate 35% (20% for profits under £35,000)

Resident companies are taxed on income accruing in, derived from or received in Gibraltar. Profits derived from activities undertaken outside of Gibraltar will generally not be subject to taxation in Gibraltar unless such activities are an extension of activities conducted in Gibraltar. Unilateral relief is granted for tax incurred in a foreign country. Non-resident companies pay tax only on income sourced in Gibraltar. The tax rate is 35%, with a lower 20% rate for profits of small companies up to £35,000. Marginal relief is available up to £105,000.
Individual tax
Progressive rates to 45%

Resident individuals are taxed on their worldwide income; non-residents are taxed only on income sourced in Gibraltar. A resident is a person who is living in Gibraltar apart from temporary absences. Savings income such as dividends (from listed companies) and interest are tax-exempt. The tax rates rise progressively from 17% to a top rate of 45%. ÏCategory 2Ó status is available to high-net-worth individuals who comply with certain criteria, resulting in a maximum assessable income of £50,000; income exceeding £50,000 is not subject to tax.
Capital gains
No capital gains tax

There is no capital gains tax and gains are not included in taxable income.
Indirect tax
No sales tax or VAT

There is no sales tax or value-added tax (VAT).
Tax administration and compliance
Tax year Corporations: accounting period; Individuals: year to June 30th

The tax year runs from July 1st to June 30th. Companies are assessed on a preceding-year basis, the profits for an accounting period forming the basis of the assessment for the following tax year. Tax is payable following the issue of an assessment and is payable by the deadline on the notice of assessment. Employment income of individuals is assessed on a current-year basis and is taxed by withholding, ie PAYE. Other income of individuals is assessed on a preceding-year basis. Tax on other income is paid in two instalments.
Additional tax information
Withholding taxes Dividends and Interest 0%, Royalties 35% (30% if paid to individuals).
Tax treaties Gibraltar has not concluded any double-tax treaties.
Dividends Dividends are tax-exempt in certain cases.
Revenue protection There are transfer-pricing and general anti-avoidance rules.
Groups There is no provision for group taxation.
Incentives Exempt companies (to be phased out by 2010); category 2 status individuals; economic development.
Other taxes Local property rates and stamp duty on real estate transactions.