Gibraltar Tax Exempt Company

The Tax Exempt Company is the most popular offshore vehicle in Gibraltar.

This type of company is normally used for property holding, private investments and for international trading situations in a tax efficient way. The low administration and set up costs of the exempt company make it an ideal vehicle for:

  • A property holding company.
  • An investment holding company.
  • Sales agency company, of particular benefit where trade is being carried on between two high tax jurisdictions.
  • An international trading company.

Exempt Status

Subject to the conditions set out below, a company incorporated in Gibraltar or a registered branch of an overseas company may apply for a Tax Exemption Certificate. Possession of such certificate will, in return for the payment of a fixed annual tax, exempt the company or branch from further taxation in Gibraltar.

Conditions

For a company to obtain and retain its tax exempt status it must fulfil the following conditions:

  • It must at all times have a paid up share capital of £100 or the foreign equivalent thereof.
  • No Gibraltarian or Gibraltar resident may have a beneficial interest in the shares of the company.
  • The company may not, without the prior consent of the Gibraltar Financial & Development Secretary, trade or carry on business in Gibraltar with Gibraltarians or residents of Gibraltar. It may however trade with other exempt or qualifying companies or non resident persons.
  • The register of members must be kept in Gibraltar.
  • No shares are issued or transferred without the approval of the Financial and development Secretary.

Applicant companies are accorded Tax Exempt Status on the understanding that they remain Gibraltar resident companies, and pay an annual fee of £225 to the Government of Gibraltar in lieu of a 20% tax on profits that currently automatically applies to ordinary Gibraltar trading companies.

Fixed Annual Tax

The fixed annual tax payable is:

  • £225 if the company is ordinarily resident.
  • £200 if the company is not ordinarily resident.

Management and Control

An exempt company can be resident, managed and controlled in or from Gibraltar without affecting its tax exempt status. There are no restrictions as to the nationality or residence of its directors.

Companies incorporated in Gibraltar may apply for exemption from Gibraltar taxes under a special exempt status provided:

  • The company has a minimum issued capital of £100.
  • No Gibraltarian or resident of Gibraltar own shares in the company either directly or beneficially.
  • It must not trade or carry out business in Gibraltar or with Gibraltarians or residents of Gibraltar (Banking and other support services are not deemed as 'trade').
  • No changes in its shareholders, beneficial ownership or objects for which the company was incorporated can be made without the approval of the Financial & Development Secretary.
  • The exempt status runs for 25 years from the date granted providing the fixed annual fee is paid and the company continues to comply with the legislative requirements.

Tax Exemption is applied to the company on the understanding that the Beneficial Owners of the company are non-resident and non-Gibraltarians, but that the company itself will remain resident. For this reason, the Registered Office, Company Seal, Statutory Books and Secretary for the Gibraltar Tax Exempt Company are always expected to remain in Gibraltar.

A minimum of one director is required. The director may reside in or outside Gibraltar and may be a body corporate.  Board and shareholder meetings, including annual general meetings, may be held anywhere.

A company incorporated in Gibraltar which is owned by non-residents of Gibraltar is eligible to apply for tax exempt status.

Upon successful application issued with a certificate which guarantees exemption from Gibraltar taxation for a period of 25 years provided that the company complies with the conditions of tax exempt status and pays an annual duty to the Gibraltar Government.  At the end of every year the exempt company must file a statement attesting to the fact that the company has complied with the conditions applicable to its exempt certificate.

An exempt company is convenient to administer due to the fact that it may have locally appointed directors and may maintain Bank accounts within Gibraltar.  Thus the whole of the administration may be located within Gibraltar which helps to prevent the assumption that the company may be tax resident anywhere else.

Benefits

The benefits deriving from having tax exempt status are that the company or branch will be exempt from the following:

  • Corporate taxation on profits.
  • Fees paid by an exempt company to its non-resident directors and dividends payable to its shareholders are not subject to a withholding tax.
  • Estate duty on the value of shares on the death of a shareholder.
  • Stamp duty on the transfer of shares.

Applying for Tax Exempt Certificate

The reference letters which accompany the applications of those local companies applying for tax exempt status must be issued by a bank, lawyer or qualified accountant. The information must be typed on their letter headed paper and must confirm that the person or persons in question are of good financial standing and repute. Applying for Tax Exempt Certificate:

Director Licensing Unit

Finance Centre

Suite 761A Europort

Gibraltar

Tel: 00 350 51164 - Fax: 00 350 76599