Within the European Union Single Market
Gibraltar
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Gibraltar: The Perfectly Placed EU IFC By Darren Anton, Senior Tax Manager, KPMG Advisory Limited, Gibraltar
G
Ibraltar offers an alternatIve to the usual
IFC candidates with an international, mainstream finance centre that is located next to Africa but is part of the European Union. It also boasts other attractions such as its strong regulatory regime, low taxes, business infrastructure and Mediterranean climate. Gibraltar is a part of the EU as an Overseas Territory for whose external relations a Member State is responsible, in this case the UK. Therefore, Gibraltar companies are able to “passport” their services throughout the EU. However, Gibraltar is not part of the EU VAT or Customs Union and so there is no VAT in Gibraltar. Gibraltar has signed up to both UK and US FATCA, the multi-lateral convention with the G5 on exchange of information, and numerous Tax Information Exchange Agreements, and is on the OECD whitelist for internationally agreed tax standards.
Company Tax Rate: 10%
From 1 January 2011, in Gibraltar the majority of companies pay tax at a rate
of only 10 per cent on their taxable income, except, according to the legislation, for certain companies such as “utility” companies that are taxed at the rate of 20 per cent. The territorial basis of taxation operates in Gibraltar so companies are only taxed on income that “accrues in or derives from” Gibraltar. When considering if income is “accrued in or derived from” Gibraltar reference is made to the location of the activities which generate the income, although for companies that are licensed and regulated in Gibraltar, the activities giving rise to the profits are deemed to be undertaken in Gibraltar. This extends to branches and permanent establishments of entities, which are licensed in another jurisdiction but enjoy ‘passporting’ rights into Gibraltar and which would otherwise be required to be licensed and regulated in Gibraltar. However, a branch or permanent establishment of a Gibraltar company undertaking activities outside of Gibraltar would not be subject to tax in Gibraltar. Companies are not subject to www.ifcreview.com/Gibraltar
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IFC Review • 2014
Companies Act
The Gibraltar Companies Act 1930 sets out the requirements for the incorporation, registering, constitution, operations and the winding up of corporate bodies registered in Gibraltar. Subsidiary legislation such as the Gibraltar Companies (Accounts) Act and the Companies (Consolidated Accounts) Act cover the accounting and filing requirements of Gibraltar companies and groups. The legislation is based on the UK Companies Act 1929 with subsequent amendments to reflect all relevant EU Directives. A Gibraltar company can usually be incorporated within two to three days. However, same day incorporation can be effected. A Gibraltar company is required to maintain a registered office in Gibraltar, where the statutory records must be kept. In the case of a private company, a sole director is permitted. A public company, on the other hand, must have at least two directors. In December 2013, the Government issued a Command Paper on a draft bill to revise, reform and consolidate relevant legislation on companies into a new Companies Act. It is expected that the new Companies Act 2014 will be enacted during the first half of 2014. Re-Domiciliation
A company domiciled in another jurisdiction is permitted by the Gibraltar Companies (Redomiciliation) Regulations 1996 to re-domicile to Gibraltar provided it is permitted to do so by its constituting documents and by the applicable laws in the jurisdiction of incorporation. The Fund Industry
In August 2005, the Experienced Investor Fund (EIF) legislation was introduced, which allows certain funds to be set up in a matter of days. Since then, Gibraltar has provided the perfect environment for the industry due to ease of entry, good regulation, low taxes www.ifcreview.com/Gibraltar
“Gibraltar has signed an Inter-Governmental Agreement with the UK which will enable information to be exchanged with HMRC by financial institutions in Gibraltar.” and access to the European Union. The EIF, as the name suggests, is aimed at experienced investors or high net-worth individuals. These funds have the advantage of protective regulation, speed of establishment and competitive set-up and running costs. There are certain criteria for investing in an EIF: the investor must have in excess of €1 million in net assets, or be a professional/experienced investor, or be investing in excess of €100,000 into the fund. Another advantage of using Gibraltar in setting up a fund structure is the ability to use a Protected Cell Company (PCC). A PCC is a company, which allows the segregation of assets and liabilities between different cells, so that in the case of a fund each cell can serve as a sub-fund. Sub-funds can then be used by separate investors or by one investor wishing to promote several investment strategies. The segregation of assets means that if one cell incurs liabilities such that the obligations cannot be met, the creditors of that cell cannot satisfy their debt from the assets of another cell. The use of a PCC must be approved by the Financial Services Commission prior to the fund being launched. Directive on Alternative Investment Fund Managers
As noted above, the funds sector is one of the key strengths of Gibraltar’s financial services industry and, as such, activity in respect of the EU’s Alternative Investment Fund Managers Directive is being closely monitored and responded to by Gibraltar’s Financial Services Commission. Compliance with the Directive requires affected fund managers to apply for authorisation in order to manage alternative investment funds and with compliance will come the ability to passport management and marketing services for these funds into the EU. The FSC has issued the Financial Services (Alternative Investment Fund Managers) Regulations 2013, which came into force on 22 July 2013.
These Regulations set out the scope of the Directive and also detail the authorisation process as well as what will be required from an operational perspective. The FSC’s website has a range of papers to assist licence holders in understanding the requirements, thereby ensuring that the Gibraltar funds sector continues to be able to respond proactively and positively to regulatory developments. FATCA & Exchange of Information
Gibraltar, like many other jurisdictions around the world, has had to take action to enable its financial institutions to address the requirements of the US’ Foreign Account Tax Compliance Act (FATCA). Whilst FATCA has its genesis in the exchange of information on US citizens, Gibraltar, as an Overseas Territory of the UK, also has to comply with what is known as UK FATCA ie, the exchange of information requirements introduced by the UK’s HMRC in respect of UK residents. UK FATCA applies to all of the UK’s Crown Dependencies and Overseas Territories. Gibraltar has signed an Inter-Governmental Agreement with the UK which will enable information to be exchanged with HMRC by financial institutions in Gibraltar. The signing of a similar agreement with the US is still pending. The implementation of both agreements will be subject to local regulation and the industry bodies are working closely with the Gibraltar Finance Centre to ensure that there is a cohesive approach to the requirements, particularly for those financial institutions which may have a multi-jurisdictional footprint. Conclusion
The Gibraltar Government has taken steps to position Gibraltar’s finance centre in the mainstream EU financial services market but with a favourable tax system. Taking into account all of the above, Gibraltar makes for a highly attractive location for both individuals and businesses.
Gibraltar
tax on certain investment profits, including dividends and capital gains, and there is no withholding tax on dividends, royalties, and generally, interest payments made by a Gibraltar company. Individuals benefit from low taxes generally and special tax regimes for certain categories of persons.
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Gibraltar
Gibraltar - Fact File GENERAL OVERVIEW Location Time Zone Population Capital Airport(s) Language Currency Political system International dialling code Legal system Centre’s expertise
Peninsula at southern tip of Spain, Self Governing British Overseas Territory, part of European Union . GMT +1. 29,000. Gibraltar. Gibraltar. Malaga and Jerez both within 1.5 hours. Business Language –English. Social language English or Spanish. Pound Sterling; local notes also in issue. Euros widely accepted. Parliamentary democracy. +350. Common Law based on English law with local variations. Internet gaming centre, trusts, insurance, captives, protected cell companies, funds, wealth management, yacht and vessel registration, Radio licensing, Fiduciary Services (Trust and Company Management).
TAX Personal income tax
All individual taxpayers will pay an effective rate of less than 25%. Marginal tax rates then start to decrease when income exceeds £105,000 per annum, with any annual income over £1m being charged at 5%. There are beneficial regimes also available for High Net Worth Individuals and High Executives possessing Specialist Skills.
Corporate income tax
10% - but only where income is accrued in or derived from Gibraltar
Exchange restrictions
None.
Tax Information exchange agreements
For full details, please go to www.ifcreview.com/TIEA.
SHARE CAPITAL Permitted currencies Minimum authorised capital Minimum share issue
All major currencies. No minimum specified. One.
TYPE OF ENTITY Shelf companies Timescale for new entities Incorporation fees Annual fees
Available. Approximately 3 days but can be accelerated to 1 day on an urgent basis. £380 to £635 approximately (by company managers). Basic maintenance cost £445 to £750 approximately - but depends on the need of the client.
DIRECTORS Minimum number Residency requirements Corporate directors Meetings/frequency
Private company –one, Public company- seven. None. Yes. There is no requirement as to frequency of directors meetings.
SHAREHOLDERS Disclosure Bearer shares Minimum number Public share registry Meetings/frequency
Yes. No. One.
Yes, Companies house. There is no requirement as to frequency of members meetings.
ACCOUNTS Annual return Audit requirements
Yes. Companies are classified as small, medium-sized or large. Documents to be filed at the Companies Registry vary according to their classification;- Large companies — to file full accounts including the balance sheet, profit and loss account, notes, directors’ report and auditors’ report Medium-sized companies — filing as for large companies except that the profit and loss account may be in abridged format Small companies — required to file abridged balance sheet only
OTHER Registered office Domicile issues Company naming restrictions
Required. Re-domiciliation in or out available in appropriate cases. Yes (eg, Royal or Bank). www.ifcreview.com/Gibraltar
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five places to 63rd, and the Bahamas The global average assessment for the improved by 35 points and two places Cayman Islands is 643 and its ex-regional to 65th. assessment is 640, both considerably up Performance by the other leading from GFCI 14. Assessments from other three centres – Jersey, Guernsey and the Offshore respondents and from North Offshore Offshore centres have seen their ratings Cayman Islands – converges in GFCI America were only slightly better than 28 The Global Financial Centres Index 15 improve since GFCI 14 but most have 15. the overall mean. The global average assessment for The global average assessment of the experienced a decline in their position relative to other financial centres; several Jersey is 676, slightly up from 670 in BVI is 635, the same as in GFCI 14; its exlosing more than ten places. Jersey GFCI 14; its ex-regional assessment is regional assessment is 620, significantly retained its rating from GFCI 14 but was 641, a strong improvement from 618 better than 587 in GFCI 14. The BVI overtaken by 13 other centres and fell previously. Other Offshore centres along get higher than mean assessments from from 28th to 41st place. It nonetheless with Asia/Pacific, the Middle East/ four regions but European respondents retained the top spot in the Offshore Africa region and North America rate were much less favourable. group because Guernsey also lost six Jersey more favourably than the mean. places to 42nd while the Cayman Islands The global average assessment of Extracts from The Global Financial lost four places to 43rd. Guernsey is 661, two points lower than Centres Index 15 courtesy of Z/Yen Group The British Virgin Islands (BVI) GFCI 14; its ex-regional average is 617 MostFive Offshore centres have seen their ratings improve GFCI 14region but most Copyright of Z/Yen Group Limited entered the Top Offshore centres (up from 599). Europesince is the only haveplaces. experienced a decline relative to otherless financial centres; © 1994-2014 - The Z/Yen Group of moving up four Mauritius sawin their thatposition assesses Guernsey favourably several losing more than ten places. Jersey retained its rating from GFCI 14 butCompanies. All rights reserved. a rise of 40 points in the ratings and than the mean.
Appendix
Top Ten. Panama also saw a significant improvement of 39 points and rose four places to 59th.
Offshore Centres
was overtaken by 13 other centres and fell from 28th to 41st place. It nonetheless retained the top spot in the Offshore group because Guernsey lost six places to 42nd while the Cayman Islands lost four places to 43rd. table 2: topalso offshore centres The British Virgin Islands (BVI) entered the Top Five Offshore centres moving up four places. Mauritius saw a rise of 40 points in the ratings and five places to GFCI 15 GFCI 15 GFCI 14 GFCI 14 63rd, and the Bahamas improved by 35 points and two places to 65th.
rank
Jersey
42
Cayman Islands Jersey
43
British VirginGuernsey Islands Gibraltar
rank
Table 9 | Offshore Centres 41 in GFCI 15 657
Guernsey
Isle of Man
rating
Cayman Islands British Virgin Islands (BVI)
41
655 657
44
42
51
43
53
Isle of Man
28
GFCI 656 15 rating
GFCI 15 rank
39
656 654
36
655
39
654
48
642
41
642
44
639
51
657
GFCI 14 36 rank 28
Change in rank
rating
GFCI 14 rating
Change in 649 rank
Change in rating
▼13
-
Change ▼ 6 in rating
▲ 7
▼– 4
▲13
657
642▼ 13
48
649
626 ▼ 6
▲ 74 ▲
▲28
41
642
▼4
▲ 13
▲4
▲ 28
▲ 4
▼ 10
▲4
626
70
638
638 572
▼10
▲17
▲67
Hamilton
Gibraltar
56
53
631 639
70
40
572
641▲ 17
▼16 ▲ 67
▼10
Mauritius
Hamilton
63
56
631 621
40
68
641
581▼ 16
▼ ▲105
▲40
Bahamas
Mauritius
65
63
621
68
▲5
▲ 40
618
67
67
581
▲2
▲ 35
Malta Cyprus
Bahamas Malta
67
Cyprus
79
618
65 67
614 614
79
541 541
53
53
74
74
583
583
608
608▼ 14
536
536 ▼ 5
▲ 2
▲35
▼14 ▲6
▲ 6
▼ ▲ 55
▲ 5
Chart 27 | Selected Offshore Centres over GFCI Editions Top offshore centres over GfCI editions 750 700 650 600 Jersey ■ Guernsey ■ Cayman Islands ■ BVI ■ Isle of Man ■
550 500 450 I9 FC
I8 FC
I7 FC
I6 FC
I5 FC
I4 FC
I3 FC
I2 FC
I1 FC
5 I1 FC G 4 I1 FC G 3 I1 FC G 2 I1 FC G 1 I1 FC G 0 I1 FC
G
G
G
G
G
G
G
G
G
G