Doing Business In Gibraltar

The 2018-19 handbook

Preface
L`]<gaf_:mkaf]kkAf?aZjYdlYj2l`]*()0%)1`Yf\Zggchas been prepared by EY Limited.

It has been written to give the busy executive an overview of the investment climate, taxation,
forms of business organisation and business accounting practices in Gibraltar. Making
decisions about foreign operations is complex and requires detailed knowledge of a country’s
commercial climate, with a realisation that the climate can change overnight. Companies and
individuals doing business in Gibraltar, or planning to do so, are advised to obtain the latest
and detailed information from experienced professionals.

Unless otherwise indicated, this handbook presents information current as at 30 September

2018. For additional copies or for further information on our complete range of services,
please contact EY Limited at the following address:
Regal House,
Queensway, Gibraltar
Tel: + 350 200 13 200
Fax: + 350 200 13 201
P.O. Box 191
www.ey.com/gi
Brexit developments
Over two and half years on from the UK’s vote in favour of leaving the EU in the
Referendum of 24 June 2016, the fog and the uncertainty regarding Brexit have barely
lifted.
The tortuous negotiation process for the UK and EU to agree a legally binding
Withdrawal Agreement (including the Protocol on Gibraltar) plus the political declaration
about the future relationship between the UK (including Gibraltar)/EU, will have been in
vain if the UK Parliament rejects once again the PM’s deal, in spite of any further
assurances she might secure from the EU.
Several scenarios would then come into play: no-deal cliff edge, Parliament taking
control of the Brexit process, extension of Article 50, general election, a second
referendum or no Brexit at all.
The Prime Minister has provided repeated assurances that the UK will negotiate both the
withdrawal and the future relationship with the EU on behalf of and for the benefit of the
whole UK family, including Gibraltar.
In addition, the Secretary of State for International Trade, Liam Fox, and its Minister for
Exiting the EU, Robin Walker, have been clear in stating that, when it comes to financial
markets, there are strong mechanisms already underpinning Gibraltar’s access to the UK
market which are enshrined in UK law and that the UK government will maintain that
access.
The clear commitment from the UK to maintain access to its markets, which are the
mainstay of our business in key sectors such as Insurance and e-gaming, underpins
Gibraltar’s positive outlook that we can navigate the challenges and take advantage of
the opportunities as we leave the EU together with the UK.
Contents
Executive summary 4-9
1 Introduction and general
information 10-21
2 Business entities and accounting 22-42
3 Finance and investment 43-52
4 Residency, employment regulations
and social security contributions 53-61
5 Taxation 62-103
6 Appendices 104-119
Executive summary on Gibraltar

A. General
Location Ź Southern tip of the Iberian Peninsula
Land area Ź 7 sq. km (approximately)
Population Ź 33,600 (approximately)
Languages Ź English (official), Spanish
Climate Ź 23°C-35°C (summer), 10°C-25°C (winter)
Time zone Ź GMT +1
Status Ź UK overseas territory
Ź Local government responsible for internal affairs
Ź UK Government responsible for defence, external affairs
and internal security
Economy Ź Leading activities: financial services, tourism, shipping
and online gaming
Ź Joined the European Union (EU) with the UK in 1973 but
exempted from Common Customs Tariff, Common
Agricultural Policy and harmonization of turnover taxes
(notably VAT)
Legal system Based on common law and the rules of equity (as the UK)
GDP £2.18 billion (estimate for year to 31 March 2018)
Inflation 2.6% (year to July 2018)

4 4 business in Gibraltar
Doing
B. Foreign investments
Currency and Ź Official currency — Sterling
exchange controls Ź No exchange controls
Ź Residents and non-residents permitted to maintain accounts
denominated in foreign currencies
Banking services Ź Well established
Ź Regulatory and supervisory practices that match UK
standards
Ź Many major banks (including one UK clearing bank)
represented in Gibraltar
Ź Services offered: retail, private and corporate banking,
loans, import finance and mortgages on real estate
Investor protection Ź Deposit Guarantee Scheme (in compliance with the EU
Deposit Guarantee Directive)
Ź Investor Compensation Scheme (in compliance with the EU
Directive on Investor Compensation Schemes)
Ź UK standards of supervision and regulation
Import and export Ź Not part of customs territory of the EU
procedures Ź Few restrictions
Ź Import duties generally at rates of 0% (exempt) and a newly
introduced rate of 200% for disposable plastic products
Ź No VAT or other sales taxes
Excise duties Ź Levied mainly on spirits, wines and tobacco

Doing business in Gibraltar 5

 C. Key financial products
Trusts Ź Recognised and widely used in Gibraltar
Ź Trust legislation based on English law of equity
Ź Residency of trust established by the residency of the
beneficiaries only (excluding Category 2 individuals, see
below); non-resident trust only liable to tax on income
accrued in or derived from Gibraltar
Foundations Ź Introduced in 2017, by the Private Foundations Act 2017
Ź An entity with a separate legal personality
Ź Tax treatment very similar to that of a trust
Asset protection Ź Designed to protect a settlor’s assets from certain trust
situations
Ź Aims to provide a higher degree of certainty in
determining legal propriety
High net worth Ź Only the first £80,000 of assessable income taxable,
individual (Category (Category 2 individuals) resulting in maximum tax payable
2 individuals) of £27,560. Subject to a minimum of £22,000.
Additional tax payable on certain income accrued in and
derived from Gibraltar
High Executive Ź Tax payable limited to the first £120,000 of earned
Possessing income
Specialist Skills Ź Conditions relating to skills, residential accommodation,
(HEPSS) previous non-residency and managerial position apply

6 Doing business in Gibraltar

D. Local Tax
Income tax
Taxpayers may choose between the traditional allowance-based system (ABS) and the
gross income based system (GIBS) (see Section 5.4.1).
Income tax rates GIBS Ź See Section 5.6
ABS Ź See Section 5.7
In almost all cases, the effective (overall) rate never exceeds
25%
Principal Ź See Sections 5.6.2 and 5.7.2
allowances
Corporation tax Companies with income taxable in Gibraltar are taxed on an
actual basis so that the tax period of assessment is the same
as the financial year of the company.
The standard rate of corporation tax is 10% (20% in the case
of utility, telecom and petroleum companies and companies
which abuse a dominant market position).
Companies are taxed on profits accrued in or derived from
Gibraltar (i.e., territorial basis of taxation).
In case of companies licensed and regulated in Gibraltar,
profits are deemed to accrue in and be derived from Gibraltar,
except for profits from activities conducted outside Gibraltar
by a branch or permanent establishment.
No tax is payable on dividends paid between companies.
Non-Gibraltar In the case of companies, income that is not accrued in or
income derived from Gibraltar is not subject to tax. Upon distribution
to individuals or to trusts, only such shareholders who are
resident would be liable to tax in Gibraltar.
Resident individuals, trusts and foundations are generally
subject to tax on a worldwide basis.
Withholding tax There is no withholding tax on dividends, interest or royalties.

Doing business in Gibraltar 7

 Wear and t
Wear and tear Initial allowance Additional allowance
Plant and machinery 100% on first £30,000 At 15%* p.a.(including
(including fixtures and (except for non- fixtures (except for non-
fittings) commercial motor commercial reducing
vehicles) balance
Computer equipment 100% on first £50,000 At 15%* p.a. on
reducing balance
Industrial buildings 4% p.a. straight line on
(including factories and cost
similar premises)
Assets are pooled for the purposes of calculating capital allowances and reduced by
the proceeds of any disposals.
*The annual capital allowance is given at 20% of the pool value for any company taxable at
20% on profits (for example, utility and energy companies).

Taxation of capital Ź No estate duty, capital gains tax or other capital

taxes

Savings income Ź Income of a passive nature is not liable to tax

Pensions Ź Income from approved occupational pensions is

tax-free
Ź Income from Approved Qualified Recognised
Overseas Pension Schemes (QROPS) are taxed at
2.5%
Ź Contributions to approved occupational and
personal pension schemes are eligible for tax
relief (subject to limits)
Ź No requirement to buy an annuity — 100% of the
capital may be withdrawn tax-free on retirement
age

8 Doing business in Gibraltar

Stamp duty Stamp duty is payable only on real estate and capital
transactions at the following rates:
Ź Share capital £10 (flat rate)
Ź Loan capital £10 (flat rate)

It is payable on purchase of real estate as follows:

First and second-time buyers
First £260,000 of purchase price Nil
Balance above £260,000 to £350,000 5.5%
Balance above £350,000 3.5%

Other buyers
Where purchase price does not exceed Nil
£200,000
Purchase price ranging between 2% on first
£200,001 and £350,000 £250,000 and
5.5% on balance
Purchase price exceeding £350,000 3% on first
£350,000 and
3.5% on balance
a
Gaming tax Levied at the rate of 1% on relevant income (gaming yield for
online casinos and bets placed for online bookmakers), capped
at £425,000 with a minimum payable of £85,000 p.a., per
licence

Doing business in Gibraltar 9

1| Introduction and general information
1.1 Geography and climate
Gibraltar lies at the southern tip of the Iberian Peninsula and covers 7 sq. km. The famous
Rock of Gibraltar rises to 426 meters (1,396 feet) above sea level at its highest point and
towers above the Strait of Gibraltar, the strategic waterway that connects the
Mediterranean and the Atlantic Ocean.
The Spanish enclave of Ceuta in North Africa lies directly opposite just 14 Km (9miles) away
and the Moroccan city of Tangier is 51 Km (32 miles) away at the western end of the strait. The
Spanish town of La Linea de la Concepción lies beyond the narrow isthmus joining Gibraltar to
the Spanish mainland. Gibraltar airport is built across this isthmus.
The temperature can reach as high as 40°C in the summer months of July and August,
with lows of 10°C in January and February. Normally, though, the winter temperature does
not fall below 13°C and in summer, it generally ranges between 28°C and 33°C. Climatic
conditions are further affected by the pressure differences that can exist between the
Mediterranean and the Atlantic, resulting in strong winds. Westerly and southerly winds
bring hotter, drier weather, whereas the easterlies produce cooler humid conditions.

1.2 Population and language

Gibraltar’s population is of diverse origin, but most are local and of mainly English, Spanish,
Portuguese, Maltese or Genoese origin.

English is the official language. However, most Gibraltarians are bilingual in English and
Spanish.

1.3 History
Gibraltar has long been a dramatic landmark at the western end of the Mediterranean.
There is archaeological evidence of Neanderthal habitation, and in ancient times the Rock of
Gibraltar became a place of worship where sailors would offer sacrifices to the gods before
venturing into the Atlantic.
However, the modern history of Gibraltar begins in 711 AD when an Islamic force led by the
Berber general, Tariq ibn Ziyad, landed at the foot of the Rock and then proceeded to
conquer most of the Iberian Peninsula. The Rock was then named Gibel Tariq, the mountain
of Tariq, from which the modern “Gibraltar” is derived.
The Moors remained in Iberia for more than seven centuries and Gibraltar did not fall into
Spanish hands until 1462. Spain controlled Gibraltar until 1704 when, during the War of
the Spanish Succession, it was captured by a combined Anglo-Dutch force. Gibraltar was
formally ceded to Britain, in perpetuity, at the end of that war by Article X of the Treaty of
Utrecht of 1713. Britain’s title was reaffirmed in 1783 by the Treaty of Versailles.

10 Doing business in Gibraltar

During the subsequent three centuries (2004 marked the tercentenary of British Gibraltar),
the Rock has been, and continues to be, an important British defence asset. It has played a
key role in conflicts such as the Revolutionary and Napoleonic Wars of the late 18th and early
19th centuries, the First and Second World Wars, and more recently, the Falklands and Gulf
Wars. At the start of the 21st century, the importance of Gibraltar in the defence of one of
the world’s most important strategic locations remains unchanged.
In the years following the British capture of Gibraltar, Spain repeatedly sought to recover
the territory. During the 18th century, these attempts were of a military nature, but more
recently the Spanish Government has sought to further its claim by applying economic and
diplomatic pressure, culminating in the closure of the frontier from 1969 to 1985.

The Spanish claim over Gibraltar has been impeded by the refusal of the people to
countenance any change of sovereignty, and by the British Government’s refusal to impose
any such change against local wishes. The people of Gibraltar overwhelmingly manifested
their desire to preserve their links with the UK in the referenda held in 1967 and 2002.
Despite these political differences, cross-border business and social relations are friendly
and extensive, with circa 7,000 Spanish nationals working in Gibraltar and many
Gibraltarians owning holiday homes in Spain.
On 14 December 2006, after a long process of negotiation between the Gibraltar and
the UK Governments, a new constitution was granted to Gibraltar. This new constitution
provides Gibraltar with a much higher degree of self-government while preserving British
sovereignty. The UK remains fully responsible for Gibraltar’s external relations.

1.4 Government and judiciary

Gibraltar is a self-governing UK overseas territory. The 2006 Constitution Order provides
for a governor as Her Majesty’s representative in Gibraltar. The governor is responsible for
external affairs, defence, internal security and various public appointments as specified
in the Constitution. Elected ministers are responsible for any matters that fall outside the
governor’s responsibilities.

The Constitution includes an updated chapter on the fundamental rights and freedoms
of the individual. It establishes a legislature for Gibraltar consisting of Her Majesty and an
elected parliament, and a council of ministers appointed from among the elected members
of the parliament. It provides for a supreme court and a court of appeal for Gibraltar, and
for appeals to Her Majesty in council. It also makes provision for public finance and for the
public service of Gibraltar.

Doing business in Gibraltar 11

i. The legislature

The legislature for Gibraltar consists of Her Majesty and the Gibraltar Parliament. The
Parliament consists of the speaker and 17 elected members. The maximum life of
the Parliament is four years. Those entitled to vote in elections for members of Parliament
are British citizens, British dependent territories citizens, British overseas citizens or British
subjects under the UK Nationality Act 1981 who have been ordinarily resident in Gibraltar
for a continuous period of six months ending on the registration day and who are 18 years
of age and above.

ii. The executive

The executive authority of Gibraltar vests in Her Majesty and may be exercised by the
Government of Gibraltar. The council of ministers (comprising the chief minister and at least
four other ministers), together with the governor (representing Her Majesty), constitute the
Government of Gibraltar.

iii. The judicature

The Supreme Court of Gibraltar has unlimited jurisdiction to hear and determine civil or
criminal proceedings. It consists of the chief justice and a puisne judge.
Appeals are made to the Court of Appeal, consisting of a president and two justices of
appeal, and the chief justice of the Supreme Court as an ex officio member. In certain cases,
there is a right of further appeal to the Judicial Committee of the Privy Council in the UK.
The Court of First Instance and the Magistrate’s Court in Gibraltar correspond, respectively, to
the county courts and the Magistrate’s Court in England.

Judicial appointments are made by the governor, acting upon the advice of the Judicial
Services Commission. However, the governor, with the prior approval of a secretary of state,
may disregard the advice of the commission if the governor judges that compliance with that
advice would prejudice Her Majesty’s service.

iv. Legal system

Gibraltar’s law is based on common law and the rules of equity, as in England. Therefore, it
differs from the Spanish legal system which is based on the Roman Law and the Napoleonic
Code.
The application of these general principles and certain specific enactments of English law
are covered by the Application of English Law Act 1962. However, statute law is for the
most part, based on acts passed by the Gibraltar Parliament.

12 Doing business in Gibraltar

1.5 Economy

1.5.1 Overview
The Gibraltar economy is largely based on financial services, tourism and shipping. More
recently, Gibraltar has attracted a large number of blue chip gaming companies, to the
extent that this industry is now an important part of the Gibraltar economy. A brief synopsis of
each sector is given below.
The economy has grown steadily over recent years, with Gibraltar’s GDP for the year to
31 March 2018 estimated at £2.18 billion, up by 8.6% year-on-year.
The number of jobs in Gibraltar recorded as at October 2017 was 28,029, representing an
increase of 3.5% since October 2016. This effectively represents full employment for
Gibraltarians actively and constructively seeking employment. Of the total number of persons
employed, approximately 12,000 are frontier workers – people living in Spain who cross daily
to work.
During the year to 31 July 2018, the rate of inflation was 2.6%.

Finally, as regards government finances relating to the year ended 31 March 2018, the
Government of Gibraltar announced a budget surplus of £36.1 million (for 2017, £75.8
million) and estimates a surplus of £24 million for the year 2018-19. Further, Gibraltar’s net
public debt stood at £324 million on 31 March 2018.

1.5.2 Financial services

Financial services form a vital segment of the economy. In recent years, the insurance
sector has seen the fastest growth, with the number of licensed insurance operations
currently standing at 56. Gibraltar is firmly established as a mainstream insurance
domicile within the EU.

1.5.3 Tourism
The reopening of the frontier in the mid-1980s was a major catalyst for the tourism
industry, with the number of visitors rising from 300,000 before reopening to 2.8 million in
1986 to over 12 million currently.

1.5.4 Shipping
The port of Gibraltar has traditionally been a major contributor to the economy, particularly
in bunkering where it has become a major fuelling port for the Western Mediterranean. Its
operations are monitored and supervised by a bunkering superintendent, which is one of a
number of security and best practice measures included in the Bunkering Code of Practice.
Gibraltar also forms part of the Category 1 Red Ensign Group Register and is an attractive
register for ships. More recently, the port has seen expanded passenger ferry links and
services that should further boost its contribution to the economy.

Doing business in Gibraltar 13

1.5.5 Online gaming
Gibraltar is firmly established as a leading, reputable and well-regulated jurisdiction for
online gaming activities. The industry has witnessed remarkable growth over the last 15
years or so, to the extent that it has now become a significant part of the Gibraltar economy.
The Gibraltar Government is very selective in its criteria and only considers licensing blue chip
entities with a proven track record in gaming. Licensees are required to physically
operate and be managed in Gibraltar.
As of 1 October 2018, there were 32 licensed operators and the number of people
employed directly by this sector has grown from about 185 in 1996 to over 3,000.
Details on the regulation of the industry are given in Section 3.4.

1.6 Currency and exchange controls

The official currency is sterling. However, the Government of Gibraltar issues sterling notes
and coins locally, which circulate alongside those issued by the Bank of England. One local
bank is linked to the UK clearing system.

There are no exchange controls and both residents and non-residents may maintain accounts
denominated in foreign currencies.

1.7 Housing and office accommodation

Historically, Gibraltar has suffered from an acute shortage of housing. However, with the
completion of some luxury developments and some aimed at the local population, this
shortage has been alleviated. A large section of the population now lives in privately owned
housing.

Demand for residential accommodation has been quite strong in recent years with high
property prices. The cost of a three-bedroom apartment can range from £150,000 to
£750,000. Some people have opted to buy or rent property in Spain and commute across the
land frontier daily.
Gibraltar also boasts an extensive range of quality modern office accommodations available
at rents ranging from £21 to £40 per square foot p.a.

1.8 Medical services

1.8.1 Medical health scheme

The scheme is funded by grants and compulsory weekly contributions through social
insurance. Under this scheme, in cases of illness that cannot be treated locally, patients are
sent for specialist treatment in the UK or Spain.

14 Doing business in Gibraltar

1.8.2 Private sector
There are a number of doctors and medical centres that provide medical diagnosis and
treatment. Private medical insurance is available through schemes, such as the Hospital
Savings Association (HSA) and the British United Provident Association (BUPA).

1.9 Telecommunications
The telecommunications industry was liberalised in 2001.
And an independent regulatory authority, the Gibraltar Regulatory Authority, was
established.
Its functions include licensing of operators and the general monitoring and control of
electronic communications issues. Currently, there are five authorised entities to provide
electronic communications networks and services (including internet services) in Gibraltar.

The principal Internet Service Provider in Gibraltar is Gibtelecom, which is a wholly owned
government company following the Government’s acquisition of the remaining 50% stake
held by Telekom Slovenije. Gibtelecom provides the main local fixed line and mobile phone
services, as well as internet solutions, including delivery of IP bandwidth and ADSL
broadband.

In recent years, other players have increased their market profiles, the likes of Sapphire,
U-mee and Gibfibrespeed.

1.10 Education
Education in Gibraltar is modelled on the UK system, with comprehensive schools providing
free compulsory education in accordance with the national curriculum standard. Children
of ordinarily resident individuals for up to 15 years of age are provided education, which
concludes with examinations and coursework for obtaining the General Certificate of
Secondary Education (GCSE).

Students may continue for a further two years to sit for their A-level examinations. Grants
or scholarships are given for further study at UK universities and institutions for further
education.

Private schooling is also available in Gibraltar and Spain.

In September 2015 the new University of Gibraltar opened its doors to the community. It
offers both undergraduate and post-graduate programmes in collaboration with first class
universities ensuring a high quality offering to students. The University has extended its
academic facilities to include several Associate Campuses including the Gibraltar Botanic
Gardens, the Gibraltar Museum and the Gibraltar Garrison Library.

The University of Gibraltar currently hosts the following faculties and institutes:

 Faculty of Health Studies and Sports Science

 Faculty of Business

Doing business in Gibraltar 15
 Faculty for Tourism and Hospitality
 Institute of Life and Earth Sciences
 Institute for Gibraltar and Mediterranean Studies
 Institute of Professional Development and Continuing Education

The faculties also offer locally developed programmes including courses for Certificates in
Gibraltar Tax and Gibraltar Law. The University convenes research in key areas associated
with Gibraltar’s culture, environment and heritage.

1.11 Leisure and tourist information

Tourist and leisure facilities are fairly extensive and can be categorized as follows.

1.11.1 Sports and recreation

Gibraltar boasts a few small, but picturesque beaches, two sailing clubs (one under the
control of the armed forces), and health and fitness clubs with training and sauna facilities.
Other sports include amateur boxing, athletics, martial arts, cricket, football, hockey,
badminton, tennis and squash.
In recent years, a state-of-the-art sports centre was built. Its facilities include tennis and
paddle tennis courts, a five-a-side football pitch, golf practice area, an archery range, a
fitness trail and a water sports centre building with adjoining pontoon and slipway, together
with play areas for children and picnic areas. The Gibraltar Football Association attained FIFA
membership in 2016, having previously secured UEFA membership and is now focused on
upgrading football facilities to UEFA standards.

In 2008, a leisure centre was built at the King’s Bastion providing leisure and entertainment
facilities. The leisure centre has ten-pin bowling alleys for adult and children, restaurants
and cafés, an amusement arcade area, two cinemas, an ice-skating rink and a discotheque.

Ocean Village, comprises luxury residential units, and a state-of-the-art marina, including a
diverse range of amenities, such as shops, restaurants, cafés and leisure areas.
Rowing is very popular in Gibraltar. Two clubs provide good competition to each other: the
Calpe (founded 1876) and the Mediterranean (founded 1899) Rowing Clubs. The Royal
Gibraltar Yacht Club, founded in 1829, is one of the oldest sailing clubs in the world.
The western Costa del Sol, which is within a half-hour drive from Gibraltar, boasts some of
the best golf courses in Europe and excellent leisure and entertainment facilities.

1.11.2 Shopping
Main Street and its adjoining streets form a large shopping centre, covering foodstuffs,
electronics, jewellery, alcoholic beverages and other goods sought after by the duty-free
bargain hunter. However, if the shopper has entered from Spain duties may be imposed on
goods taken across the land frontier in some circumstances.

16 Doing business in Gibraltar

1.11.3 Travel and sightseeing
Gibraltar offers visitors a wide variety of attractions and sights, such as St Michael’s Cave,
the Moorish Castle, the Nature Reserve on the Upper Rock (where the famous Barbary Apes
may be observed) and the 1380ft cable car ride to the top of the Rock. Other popular places
include the Alameda Botanical Gardens, the City Gates and Fortifications, the Great
Siege Tunnels of 1782 and the recently constructed Windsor Bridge, Gibraltar’s first
suspension bridge. The Gibraltar Museum is also worth a visit.
The Ocean Village Marina hosts numerous pubs, restaurants, nightclubs, as well as an
international gaming casino and the Sunborn 5-star Superyacht Hotel.
There has been a vast improvement in the road network in southern Spain, and the whole of
the Costa del Sol is now within easy driving distances (Malaga is just over an hour’s drive
away from Gibraltar).

1.11.4 Time zone

Gibraltar is on Greenwich Mean Time plus one hour, with clocks being advanced by an hour
between March and October.

1.11.5 Business hours

Most businesses are open between 9:00 a.m. and 6:00 p.m.
Banks are open for business between 8:30 a.m. and 4:30 p.m.
Most government offices are open from 8:00 a.m. to 3:30 p.m.

1.11.6 Public holidays

Public holidays include the eight public holidays of England as well as Commonwealth Day,
Workers Memorial Day, the Queen’s Birthday and Gibraltar National Day. Public holidays for
2018 are as follows.
New Year’s Day Monday, 1 January
Commonwealth Day Monday, 12 March
Good Friday Friday, 30 March
Easter Monday Monday, 2 April
Workers Memorial Day Monday, 30 April
May Day Tuesday, 1 May
Spring Bank Holiday Monday, 28 May
Queen’s Birthday Monday, 11 June
Late Summer Bank Holiday Monday, 27 August
Gibraltar National Day Monday, 10 September
Christmas Day Tuesday, 25 December
Boxing Day Wednesday, 26 December

Doing business in Gibraltar 17

1.11.7 Transport and communications
Links by air are currently maintained with London, Manchester and Luton in the UK. Airlines
operating between Gibraltar and the UK are British Airways and easyJet.

Malaga airport, which has direct flights to key hubs, is an hour and fifteen minutes’ drive from
Gibraltar.
A ferry service operates from the Gibraltar port to Tangier. Gibraltar is also a port of call for
container ships and some of the world’s most prestigious cruise liners. A cruise liner terminal
provides modern facilities for passengers.

1.11.8 Duty-free allowances

The main duty-free allowances for residents and non-residents importing certain goods into
Gibraltar are summarized as follows.
Tobacco  200 cigarettes
 100 cigarillos
 50 cigars
 200 grams of smoking tobacco
Wine and spirits  1 litre of spirits, liqueurs, cordials
 2 litres of fortified wines and
sparkling wines
 2 litres of still wines (other than
fortified wines)
Perfume  50 grams of perfume
 0.25 litre of toilet water
Other goods  Articles of any other descriptions to a
total value of £32.00
No allowance is given to individuals under the age of 17 years with respect to tobacco
products, alcoholic beverages or perfume.

Individuals who regularly (defined as more than once in any calendar month) enter or return
to Gibraltar, or have been in Gibraltar during the previous 24 hours, are not entitled to duty-
free allowances.

18 Doing business in Gibraltar

1.12 Civic rights and data protection
Gibraltar has established the Office of the Ombudsman and introduced a Citizens Advice
Bureau.
The Office of the Ombudsman was established and is regulated by the Public Services
Ombudsman Act 1998. The primary function of the Ombudsman is, in general, the provision
of impartial investigations on behalf of citizens who feel unjustly treated through the actions
or omissions of the public administration. Corrective action may be recommended if the
complaint is justified. The Ombudsman’s mandate is contained in the Ombudsman’s Charter.

The Citizens Advice Bureau was launched in April 2003 and is designed to offer similar
services to those available and operating in the UK. The services include the provision of
free, confidential, impartial and independent advice on citizen’s rights to services and
benefits within the public and private sector in Gibraltar.

During 2004, Gibraltar transposed the EU directive relating to the protection of individuals
with regard to the processing of personal data and on privacy rights of that data. The
act came into force in 2006 and required all organisations that process and keep personal
information to register with the Data Protection Commissioner and have measures in place to
ensure that the data is secure and accurate, for defined purposes only and accessible to those
individuals about whom information is held.

Data protection has now entered a period of unprecedented change driven by an increasing
number of high profile data breaches reported in the media that has led consumers and
regulators to be concerned about how personal data is managed.

On 17 December 2015, an informal agreement has been reached between the European
Parliament and Council of the European Union on a final draft of the new EU General Data
Protection Regulation (GDPR) which became effective on 25 May 2018. The Regulation will
have a significant impact on businesses in all industry sectors, bringing with it both positive
and negative changes for business in terms of cost and effort.

1.13 Gibraltar, a premier European finance centre

1.13.1 General
Gibraltar’s tax legislation underwent a significant overhaul several years ago, resulting in the
Income Tax Act 2010. This Act, which includes a number of updates to reflect EU Directives
helps to ensure Gibraltar’s position as a key European financial services centre.

All companies, however owned, are taxed on profits accrued in or derived from Gibraltar,
thereby preserving the territorial basis of taxation. The activities of companies licensed and
regulated under Gibraltar law are deemed to take place in Gibraltar, except for any income
from the activities of a branch or permanent establishment outside Gibraltar.

In addition to a favourable fiscal environment, Gibraltar offers a high-quality legal and

regulatory infrastructure underpinned by a stable government and the availability of a
well-qualified labour force. Gibraltar’s attraction is enhanced by its status within the EU and
particularly from passporting opportunities (see below).
Doing business in Gibraltar 19
1.13.2 The EU dimension
Gibraltar is within the EU (unlike Jersey, Guernsey and the Isle of Man), by virtue of Para
(4) of Article 355 (3) of the Treaty on the Functioning of the European Union, which provides
that the treaty will (with certain exceptions) apply to “European territories for whose
external relations a member state is responsible.”
In general, therefore, Gibraltar is treated as a part of the United Kingdom of Great
Britain and Northern Ireland. Gibraltar must therefore comply with whatever community
agreements are adopted by the UK, as the European Commission will not afford special
treatment to separate parts of a member state. The Government of Gibraltar does, however,
make representations to the UK Government to safeguard Gibraltar’s interests when the UK is
considering new EU edicts.
Gibraltar’s special circumstances were taken into account on accession and Article 28 of
the Act of Accession granted three derogations. Gibraltar does not have to apply
community rules on:

a. Common customs tariff

b. Common agricultural policy

c. Harmonization of turnover taxes (notably VAT)
The detailed provisions of the various EU treaties were adopted in Gibraltar by passing of
the European Communities Act 1972.

Enabling legislation has been enacted to give legal effect to all EU directives. As a result,
for instance, Gibraltar can take advantage of the Single European Passport for banking,
insurance and investment services (see Sections 3.1 to 3.3).

The implications of the outcome of UK’s Referendum on continued EU membership are

covered on page 2.

1.13.3 Tax transparency

Gibraltar’s success as a finance centre is underpinned by its commitment to ensuring
highest standards of regulation, business ethics and mainstream international consensus.
Tax transparency has become a focal point in recent years for the G20 and the wider
international community, as countries have sought to underpin confidence in the fairness
and effectiveness of their tax systems and to bolster their tax revenues.
Gibraltar is fully committed to the tax transparency agenda and the fight against tax evasion
and fraud.

The OECD Global Forum on transparency and exchange of information gave Gibraltar a rating
of “Largely Compliant” in their Phase II report – the same rating as that of the UK, Germany
and the US.

20 Doing business in Gibraltar

Gibraltar was one of the “Early Adopters” that gave a formal commitment to the OECD
Common Reporting Standard on the automatic exchange of information.

It is on the G20-instigated OECD “White List,” having signed a total of 27 tax information
exchange agreements (TIEAs) to date (25 of which are in force).
Gibraltar has enacted legislation to put in place a number of tax transparency measures,
including:
 US and UK (“CDOT”) FATCA
 The OECD Common Reporting Standard (“CRS”)

 The EU “Common Reporting Standard” or “DAC”

 EU Council Directive 2011/16/EU on administrative co-operation

 The OECD and Council of Europe Convention on Mutual Administrative Assistance in Tax
Matters.
 Country by Country Reporting (an initiative by the OECD)

See 5.2.1 for further details.

Doing business in Gibraltar 21

2| Business entities and accounting
2.1 Companies
Until 30 October 2014, company legislation in Gibraltar was based on the 1930 Companies
Act (that was principally based on the 1929 Companies Act of England and Wales). On
01 November 2014, the Companies Act 2014 came into force and the 1930 Companies Act
was repealed.
There are four types of companies that can be incorporated in Gibraltar:

 A company limited by shares

 A company limited by guarantee and having a share capital

 A company limited by guarantee and not having a share capital

 An unlimited company with or without a share capital

A private company limited by shares needs to have only one subscriber, whereas a public
company limited by shares must have at least seven. The distinction between public and
private companies is much the same as in England, the latter being companies that by their
memorandum or articles:
 Restrict the transfer of shares
 Prohibit any invitation of the public to subscribe for any shares or debentures of the
company

All companies must file accounts at the Companies Registry (see Section 2.12). In general,
the extent of documents that need to be filed is determined by the size of the company. A
company classified as “small” is only required to file an abridged balance sheet. The
exemption does not apply to FSC-licensed entities.
A company must register the name under which the trade is carried on at the Registry
of Companies and Business Names (see Section 2.13.1). In general, a company must
also be registered with the Employment Service (see Section 2.13.2), the Department of
Social Services (see Section 2.13.3) and the Income Tax Office (ITO) (see Section 2.13.4).
In addition, the company may need to be licensed by the Business Licensing Authority (see
Section 2.16).

2.2 Partnerships
A partnership may be created simply by the execution of a deed by all the partners
concerned or even by mutual oral agreement.
Partnerships are subject to similar requirements to companies (and sole traders) insofar as
the business must be registered and, if applicable, must obtain a trade license as explained
in Sections 2.13 and 2.16, respectively.

22 Doing business in Gibraltar

Daeal]\hYjlf]jk`ahk

Limited partnerships may also be formed under the Limited Partnerships Act. A limited
partnership must have at least one person known as the “general partner,” who is liable for
all debts and obligations of the firm. The remaining partners, known as “limited partners”,
are normally only liable to the extent of the capital contributed to the partnership.
However, a limited partner will be deemed to be a general partner if they are involved in the
management of the partnership’s business. Application for registration must be made to
the Registrar of Limited Partnerships at the Registry of Limited Partnerships.

The Limited Partnerships Act requires a limited partnership to have a registered office in
Gibraltar, and if none of the partners are residents of Gibraltar, it requires the appointment
of a secretary resident in Gibraltar. The act provides, inter alia, for:
 The registration as a limited partnership of a company previously registered under the
Companies Act and for the limited partnership so registered to be a continuation of the
company
 Giving separate legal existence to the registered limited partnership

Daeal]\daYZadalqhYjlf]jk`ahk
Limited liability partnerships are regulated under the Limited Liability Partnerships Act
2009. All of the partners in a Limited Liability Partnership benefit from limited liability in
respect of the partnership. Their liability is limited to funds they have invested in the
partnership, undrawn profits and any guarantees they have given to raise finance. All of
the partners may participate in its management.

On 20 July 2015, the Partnerships and Unlimited Companies (Accounts) Regulations 2015
came into force. These regulations cover the statutory provisions governing the
preparation and filing of accounts for qualifying unincorporated businesses (see section
2.11.3 and 2.12).

2.3 Sole proprietorships

Sole traders are subject to similar requirements to partnerships and companies insofar as the
business must be registered and, if applicable, must obtain a trade license as explained in
Sections 2.13 and 2.16, respectively.
There is no public filing requirement, though a copy of the accounts must be submitted to
the ITO for the purpose of verifying liability to tax.

Doing business in Gibraltar 23

2.4 Trusts and Foundations

2.4.1 Trusts
Gibraltar trust law, which is based on Anglo-Saxon legal concepts, recognises and gives full
legal effect to the concept of a trust. The Trustee Act, the main legislation governing trusts
in Gibraltar, is based on the English legislation incorporated in the Trustee Act 1893.

There have been certain amendments to the legislation, and the Variation of Trusts Act
1958 has been introduced in Gibraltar under the English Law (Application) Act.
The concept of a discretionary trust is known and widely applied in Gibraltar and the
provisions of the Perpetuities and Accumulations Act 1964 in England apply with some
amendments. The perpetuity period and the accumulation period now stand at 100 years
(see also Section 2.4.2 on Asset Protection Trusts).
The Registered Trust Act 1999 provides a facility for the registration of a trust deed (where
registration is required by the trust deed) and for the keeping of an index of the names of
such trusts. A prescribed registration fee is payable together with the submission of a form
of Short Particulars and the Deed of Trust. The latter is simply endorsed with the date of
registration and returned; no copy is retained. The register will thereafter contain only
the following details for public inspection: the name and date of creation of the trust, the
amount of the initial settlement, the name of the trustee(s), a Gibraltar address for service
and the date on which registration was made.

Until 31 December 2010, the income received by any trust or beneficiary under a trust was
exempt from taxation provided the following conditions were met:
 The trust was created by or on behalf of a non-resident of Gibraltar (other than Category 2
individuals)

 Residents of Gibraltar (other than Category 2 individuals) were expressly excluded as

beneficiaries either specifically or under the discretionary powers of the trustees

The capital of a trust is also not liable to tax in Gibraltar.

The position regarding residency and tax of a trust as from 1 January 2011 is explained in
Section 5.12.

2.4.2 Asset protection trusts

This type of trust seeks to protect the assets of a settlor from such situations as political
strife, forced repatriation, confiscatory taxes, exchange controls and, most recently, risks
associated with litigation arising from malpractice or negligence suits or from vexatious
litigants.
Such a trust may be invaded by a creditor of the settlor, should it be shown that transfers
into the trust lacked legal propriety. Gibraltar has sought to reduce the uncertainties that
can arise when determining propriety by shifting the focus to the objective test of solvency
contained in the Insolvency Act 2011, Section 419A.

24 Doing business in Gibraltar

Under the provisions contained in the Bankruptcy (Register of Dispositions) Regulations
1990, an application may be made to register the trust by an approved trustee who has
demonstrated adequate financial and administrative resources and professional indemnity
insurance. Thereafter, the trustee must be able to show that due and sufficient enquiry was
made to establish the propriety of the disposition and the solvency of the settlor at the time
it was made. The registration of the disposition is renewable annually on payment of an
annual fee.

This higher degree of certainty makes Gibraltar a favourable location for setting up asset
protection trusts.

2.4.3 Private Trust Company

Until recently, Private Trust Companies could be established in Gibraltar and any limited
company could act as a trustee provided that it was not carrying on a licensable activity.
Typically, however, such a company would notify the Gibraltar Financial Services
Commission that it had been formed to administer a trust set up by one or more individuals,
that that was its sole purpose, and that it would not receive remuneration for providing
trusteeship.
Whilst that mechanism provided a simple and cost effective process for establishing a private
trust company, the lack of a formal registration procedure was a drawback, given that there
was no legislative or regulatory framework from within which the private trust company
could be formally recognised and could operate.

The Private Trust Companies Act 2015governs the operation of private trust companies and
provides greater legislative protection and certainty. It also establishes a voluntary system
of registration which could benefit certain private trust companies in submitting to a legal
framework within which it can be officially established and operated.
This legislative developments positions Gibraltar as an attractive jurisdiction in which to
establish a private trust company structure.

2.4.4 Purpose Trusts

The Purpose Trusts Act 2015 provides for the creation and enforcement of trusts whereby
the trustees hold property on trust to carry out a specific purpose which is not of a charitable
nature. Under the new legislation a purpose trust must be established for purposes that are
capable of being carried out and are sufficiently certain to be capable of being carried out. It
is also a requirement that at least one trustee of a purpose trust must be a licensed trustee.
The legislation also sets up particular powers that a trustee will need in the context of a
purpose trust, such as, the discretion to formulate the means by which to give effect to the
purpose trust. In common with other jurisdictions that had adopted purpose trust legislation
the law also provides for the disapplication of the rule against perpetuities.

Doing business in Gibraltar 25

2.4.5 Trusts (Private International Law) Act 2015
The trusts industry worldwide is a large, mature and increasingly competitive one. In this
marketplace many jurisdictions have enacted so-called firewall legislation designed to attract
substantial investment and deposited trust funds, by providing a secure environment in
which local law trusts are free from attack by foreign laws and foreign courts.

This legislation sets out rules that limit the circumstances under which any foreign law can
affect a local law trust; and secondly, it prevents the enforcement of foreign judgements
that undermine these principles. The passing of this legislation, which sets out the conditions
under which Gibraltar courts will have jurisdiction over trusts and, further, the extent to
which foreign law will have an impact on local law trusts (in the specific and peculiar contexts
of Gibraltar’s membership of the EU, the requirement of recognition of judgement and the
applications of the Hague Convention), is considered a milestone in the plan to strengthen
Gibraltar as a finance centre.

2.4.6 Private foundations

Foundations were introduced in Gibraltar in 2017 by the Private Foundations Act 2017. This
Act provides the legal framework for the establishment and operation of foundations. A
foundation has a separate legal personality and as such can hold property in its own right, as
the absolute and beneficial owner.

The Foundation Charter and Foundation Rules establish the foundation and set out its
purposes and rules for its administration. They also set out details of the beneficiaries and
the guardian of the foundation.

The founder provides the initial assets as an irrevocable endowment. They may reserve
powers for themselves, for example, to appoint or remove the Guardian or Councillors, or to
amend the constitution.
The Foundation Council manages the foundation and makes distributions to the
beneficiaries. The Council comprises of a number of Councillors, which must include a
Gibraltar resident company that is licensed as a Professional Trustee in Gibraltar.

Beneficiaries may be either enfranchised or disenfranchised. The former are entitled to

copies of the accounts and other documents relating to the Foundation.
A guardian may be appointed to provide protection for the beneficiaries. In certain cases,
for example, if there are no designated beneficiaries, or more than 50 beneficiaries, a
guardian is required to be appointed.

The Income Tax Act 2010 was amended to provide for the manner in which foundations and
beneficiaries are treated in respect of taxation in Gibraltar. This closely follows the
treatment of trusts and their beneficiaries – see Section 5.12.

26 Doing business in Gibraltar

2.5 Branches
Overseas companies wishing to set up a branch in Gibraltar register by filing a notarized
or suitably certified copy of its memorandum and articles of association (translated into
English if necessary), a list of directors and secretary, and the name and address of the
person authorised to accept service on behalf of the company in Gibraltar.

2.6 Captive insurance companies

(For general information on companies, see Section 2.1)
Insurance services and the conduct of insurance business, including an outline of the fiscal
and legal advantages of setting up and administering an insurance company in Gibraltar, are
covered in Section 3.2.
Gibraltar is in a unique position to offer the multinational insurance companies the
possibility for their captive unit to write one insurance policy for all their EU risks.
Additionally, a captive unit may write large nonlife risks in another member state, only
requiring them to advise those countries of the risk to be covered.
This “passport” through the EU is an invaluable tool for multinational companies
contemplating setting up a captive insurance company.

The annual base fee is £7,140 or £20,400 for captive insurers and open market insurers
respectively, with additional fees calculated on gross premium income brackets, gross
technical provisions and number of jurisdictions the insurer passports to.

2.7 Protected cell companies

The Protected Cell Companies Act provides, inter alia, that a protected cell company (PCC)
may create one or more cells for the purpose of segregating and protecting cellular assets.
As a result, the rights of creditors are limited to the assets of the cell of which they are
creditors.
In addition, the PCC may, with respect to any of its cells, create and issue shares (cell shares)
the proceeds of which (cell share capital) are comprised in the cellular assets attributable
to the cell with respect to which the cell shares were issued. A PCC may also pay a dividend
on individual cells (a cellular dividend), subject to available profits, and by reference to the
assets and liabilities of the cell.

A company may be incorporated as a PCC or converted, if permitted by its articles, into a

PCC. The name of the company must include reference to its PCC status and each cell must
have its own distinct name or designation.
Insurance companies and collective investment schemes require the consent and approval
from the FSC before operating as a PCC, although private collective investment schemes
cannot be PCCs as they are not deemed authorised collective investment schemes.

Doing business in Gibraltar 27

2.8 European public limited liability companies
The European Public Limited Liability Company Act 2005 transposed into Gibraltar law the
corresponding EU council directive.

The European Public Limited Liability Company (or Societas Europaea (SE)) is a corporate
structure introduced by the EU that enables the legal structure within which a business is
carried out to develop and reflect the economic framework of the single European market.
This will allow companies incorporated in different member states to merge or form a
holding company or joint subsidiary, while avoiding the legal and practical constraints
arising from member countries’ different legal systems.

An SE has legal personality and limited liability. Its issued share capital must be at least
€120,000 and it may be listed.
An SE may be formed in various ways, including conversion from the public limited liability
company status. It may be registered in any member state (including Gibraltar) and must
have both its registered office and central administration in that member state. In Gibraltar,
an SE is registered with the registrar at Companies House.
SEs are governed by national tax laws of the respective member state and specific and
detailed rules apply in relation to SE employees.

2.9 European economic interest groupings (EEIGs)

A European economic interest grouping (EEIG) is a vehicle that allows companies or
individuals of different member states to combine and register a grouping that has a legal
personality and can operate across national frontiers.
An EEIG is set up in much the same way as a company but has unlimited liability. A number
of restrictions apply in case of EEIGs. For example, they are prohibited from seeking funds
from the public.
Organisations from non-EU countries may not become members of an EEIG.
Any profits, losses or gains must be split between the members according to their share and
taxed on the members according to national law in the normal way. An EEIG is not subject
to any accounting or auditing requirements and does not need to file annual return with the
Registrar of Companies.

28 Doing business in Gibraltar

2.10 Re-domiciliation
The Companies (Re-domiciliation) Regulations provide that a company domiciled outside
Gibraltar and in a relevant state may, provided it meets certain conditions, establish its
domicile in Gibraltar. A re-domiciled company, once registered under Part XIII of the
Companies Act, becomes a Gibraltar company.
Similarly, a company incorporated or domiciled in Gibraltar may apply to establish domicile
outside Gibraltar in a relevant state. Upon completion and approval of all formalities to
establish a foreign domicile, a company registered under the Companies Act and to which a
certificate has been issued may apply to the Registrar of Companies, for consent to cease
being registered in Gibraltar.

Relevant states are defined as states that regulate companies in a manner compatible
with the provisions and regulations in Gibraltar in relation to re-domiciliation. It would also
include any states so prescribed by the minister.

Doing business in Gibraltar 29

2.11 Accounting and audit requirements

2.11.1 General
The Companies Act 2014 came into force on 1 November 2014 and has repealed all
previous Company Law legislation in Gibraltar as of this date. Companies with accounting
periods commencing on or after 1 November 2014 will apply the requirements set out
in Part VII of the Act. See Section 2.11.4 for the main changes to the Accounting and Audit
requirements introduced by the new Act. Companies with accounting periods commencing
before 1 November 2014, continue to apply the accounting and audit requirements
contained in Sections 180 to 182 of the Companies Act 1930, the Companies (Accounts)
Act 1999 and the Companies (Consolidated Accounts) Act 1999 (the Companies Accounts
Acts).
The Companies Act transposed into Gibraltar law the EU 4th and 7th Council
Directives on company accounts and consolidated accounts. The Act prescribes the
presentation and format of the balance sheet, the profit and loss account, and the necessary
disclosures. The Act requires the filing of accounts with the Registrar of Companies (see
Section 2.12).
The Act does not apply to banks or insurance companies. Instead, such companies must,
respectively, follow the accounting, auditing and filing requirements contained in the Financial
Services (Banking) Act (specifically the Banking (Accounts Directive) Regulations 1997) and
the Financial Services (Insurance Companies) Act (specifically the Insurance Companies
(Accounts Directive) Regulations 1997).
In addition, all companies licensed and regulated by the FSC under the Financial Services
(Investment and Fiduciary Services) Act must comply with any additional disclosure
requirements contained in that Act and with regulations made thereunder.

All companies are required by law to keep proper books and records. In addition, a company
must prepare annual accounts (including group accounts if applicable), which give a true and
fair view of the company’s (group’s) state of affairs and profit or loss for the financial
reporting period. A balance sheet and profit and loss account must be set before the company
in a general meeting not later than 18 months after incorporation and subsequently once at
least in every financial year.
The directors of a company must also prepare an annual report for each financial year. This
annual report should include a fair review of the development and state of affairs of the
company’s business (and its subsidiary undertakings, if applicable) and its financial position
as at the end of that financial year. The directors’ report must also contain particulars of,
inter alia, the principal risks and uncertainties facing the company, any important events that
may have occurred since the end of the last financial year, any likely future developments,
what dividend (if any) is recommended for payment, and the amount transferred to reserves.

On 20 July 2015, the Partnerships and Unlimited Companies (Accounts) Regulations 2015
came into force. These regulations cover the statutory provisions governing the
preparation and filing of accounts for qualifying unincorporated businesses (see section
2.11.3 and 2.12).

30 Doing business in Gibraltar

2.11.2 Accounting principles and standards

The Companies Act requires the use of generally applicable accounting standards in the
preparation of financial statements. Most Gibraltar entities use UK Financial Reporting
Standards issued by the Financial Reporting Council (“FRC”) as adopted by the Gibraltar
Society of Accountants (“GSA”).

The GSA has a formal process for adopting UK accounting standards. The current UK
accounting standards available for use in Gibraltar are FRS 100-FRS 104. These accounting
standards, together with interpretative notes developed by the GSA which deal with “the
recommended practice in situations where Gibraltar and United Kingdom legislation conflict
and also in situations where reference is made in FRC’s accounting standards to United
Kingdom legislation and no corresponding Gibraltar legislation has been enacted”* comprise
Gibraltar Accounting standards (“GASs”).
In the case of entities licensed or authorised by the FSC, accounts are typically drawn up in
accordance with GASs, UK GAAP or IFRS. At the FSC’s discretion, other reputable accounting
standards may be followed.

2.11.3 Audit requirement and the Auditors Public Oversight Body

General
In general, all limited companies must appoint auditors and have their accounts audited
except small companies (as defined in Section 2.12 below), which do not have income liable
to assessment for tax under the Income Tax Act, or trade or transact business in Gibraltar
in such a way as it is likely to generate such income in the future. However, banks, insurance
companies and other companies licensed by the FSC (licensed entities) are subject to audit
even if they are small. In general, therefore, all local limited trading companies require an
audit, but not small companies that have no or limited income liable to tax in Gibraltar (other
than licensed entities).

From 1 January 2011, the new Income Tax Act exempted companies (other than licensed
entities) that do have income assessable to tax, but whose turnover is less than £500,000,
from the requirement to submit audited accounts to the Commissioner of Income Tax in
Gibraltar. The threshold was raised to £1 million for accounting periods ending on or after
1 July 2013 and increased further to £1.25 million for accounting periods on or after 1 July
2015. Such companies are required to submit accounts accompanied by an independent
accountant’s report.

*Extract from the Explanatory Foreword to Gibraltar Accounting Standards

Doing business in Gibraltar 31

Where applicable, auditors must be appointed by the company annually in a general meeting.
No director, officer or secretary of the company may be appointed as its auditor. Every auditor
of a company has the right of access to the books, accounts and vouchers of the company at
all times, and is entitled to require from the directors and officers of the company such
information and explanations as may be deemed necessary for the performance of their
duties.
In certain circumstances, a company (excluding licensed entities) that is a subsidiary
undertaking may be exempted from preparing audited accounts. For the exemption to apply,
the company’s parent undertaking must, inter alia, include the Gibraltar subsidiary in its
consolidated accounts. The consolidated accounts must be filed with the Gibraltar Registrar
of Companies.
For financial years beginning on or after 1 January 2016, qualifying partnerships and
qualifying companies are subject to the same requirements as a limited company in respect of
preparation and filing of accounts. Qualifying partnerships and qualifying companies are
essentially those which are formed or incorporated under the laws of Gibraltar each of whose
members or general partners is a limited company or an unlimited company (each of whose
members is in turn a limited company). Exemptions applicable to limited companies are
generally also available to qualifying partnerships and qualifying companies.

Group accounts

There is a legal requirement for limited companies with subsidiary undertakings to prepare
consolidated accounts. These accounts must include a consolidated profit and loss account,
a consolidated balance sheet and notes. Small and medium-sized groups need not prepare
group accounts unless they include a listed company, a bank or an insurance company.
If advantage is to be taken of this exemption, then the auditors must confirm that they are
entitled to do so.

As from 1 January 2016 groups are classified according to the following parameters.

Small group Medium-sized group

Turnover Up to £10.2 million net* or Up to £36 million net* or

£12.2 million gross £43.2 million gross

Aggregate balance Up to £5.1 million net* or Up to £18 million net* or

sheet total £6.1 million gross £21 million gross

Total number of Up to 50 Up to 250

employees

*Net of consolidation set-offs and adjustments

In order to qualify as small or medium sized, a group must fall within two of the three
parameters listed above in the financial year in question and the preceding year. The rules for
applying the criteria are similar to those for establishing the size classification of an individual
company (see Section 2.12). All other groups are treated as large.

32 Doing business in Gibraltar

In addition, a company is not required to prepare group accounts if it is a subsidiary of a
parent undertaking, provided certain conditions are met.

The auditors are also entitled to attend any general meeting of the company at which the
statutory accounts examined or reported by them are to be laid before the company and to
make any statement or explanation they desire with respect to the accounts.

2.11.4 Key changes to the Accounts and Audit section introduced by the
Companies Act 2014

The Companies Act 2014 consolidated the previous Companies Act 1930, Company
(Accounts) Act 1999 and Companies (Consolidated Accounts) Act 1999 and has removed a
number of inconsistencies between those Acts and other legislation, including the Income Tax
Act.
Penalties faced by directors for not drawing up, signing or circulating the accounts now apply
to both IAS accounts and non-IAS accounts, whereas previously they applied only to non-IAS
accounts.
Accounts may now be filed at Companies House in a number of primary currencies (USD,
JPY, CHF, EUR). Directors are now permitted to voluntarily revise defective accounts.

On 20 July 2015, the Companies Act 2014 (Amendment) Regulations 2015 came into
force. The key amendments included a change in the period allowed for filing of accounts
of a private company as well as changes to the content of the auditor’s report.

The Auditors Public Oversight Body

The Financial Services (Auditors) Act 2009 (the Act) came into force on 28 May 2009 and
repealed the Financial Services (Auditors Approval and Registration) Act 1988. The Act,
which implemented the European Directive on Statutory Audits of Annual Accounts and
Consolidated Accounts, provides, inter alia, for the establishment of a Public Oversight Body
(POB) comprised of a majority of non-practitioners with responsibility for the oversight of:

 The approval and registration of auditors and audit firms

 The adoption of standards on professional ethics, internal quality control of audit firms
and auditing
 Continuing education, quality assurance, and investigative and disciplinary systems
Statutory auditors and audit firms approved under the Financial Services (Auditors Approval
and Registration) Act 1988 were automatically grandfathered under the transitional rules.

In September 2009, the FSC was appointed by the Government to be the POB (also referred to
as the Competent Authority). In March 2012, the FSC was accepted as a member of the
International Forum of Independent Audit Regulators.

Doing business in Gibraltar 33

2.12 Filing requirements
Companies (excluding banks and insurance companies) are classified as small, medium
or large, and the documents to be filed at the Companies Registry vary according to their
classification as set out below:

Small Medium-sized Large

Net turnover Up to £10.2 million Up to £36 million Over £36 million

(pro-rated if more
than or less
than a year)

Balance sheet Up to £5.1 million Up to £18 million Over £18 million

total (total assets)

Average no. of Up to 50 Up to 250 Over 250

persons employed

A new classification of “micro-entity” was also recently introduced, defined as a company

with net turnover, total assets and employees of less than £632,000, £316,000 and 10,
respectively. The filing requirements are the same as for “small” companies. Gibraltar has not
adopted FRS 105 “The Financial Reporting Standard applicable to the Micro Entities Regime”
accordingly such entities continue to apply Gibraltar Accounting Standards (see 2.11.2)

A company must fall within two of the three parameters in the financial year in question and
the preceding year in order to be classified as small or medium sized. However, if a company
exceeds or ceases to exceed the limits of more than one of the parameters, it will continue
to qualify for the relevant year unless that continues to be the case in two consecutive
years. For a newly incorporated company, the conditions need only be met in its first
financial year.
Large companies, Banks and Insurance companies: These must file full accounts, including
the balance sheet, profit and loss account, notes, directors’ report and auditors’ report.
Medium-sized companies: Filing for medium-sized companies is the same as that for large
companies, except that the profit and loss account may be in abridged format. The audit
report on the full accounts cannot be filed with the abridged accounts since the latter
cannot be deemed to give a “true and fair view.” Instead a special auditors’ report must
be filed confirming that, in the opinion of the auditors, the company is entitled to and has
properly prepared the accounts in accordance with the Companies Act 2014.
Micro and small companies: They are required to file an abridged balance sheet only.
The relevant documents must be filed within 12 months in the case of a private company
and 10 months of the financial year-end in the case of a public company. Special rules apply
in the case of a company’s first reporting period. The fee for filling of accounts is £17.50.
The penalty for late filing is £58.50 (if more than 13 months but not more than 24 months
of the financial year-end) and £117.50 (if more than 24 months of the financial year-end).

34 Doing business in Gibraltar

2.13 Business registration

2.13.1 Registration of business names

Whether trading as an incorporated company, or other type of corporate body, a
partnership, or simply a sole trader, the name under which the trade is carried on must be
registered at the Registry of Business Names within 14 days of commencement of business.
Application is made on the prescribed form for a fee of £20.00. The registrar may refuse
to register a name that bears too close a similarity to one already in existence or which is
considered sensitive or misleading. The words Limited, Ltd. PLC, SA or SL or similar may not
appear as a suffix to a business name.

Under the Business Names Registration Act, every business name registered on or after
1 January 2000 must submit an annual statement of particulars accompanied by a fee
of £15.00. When a business ceases to operate, a form of notice of cessation of business
must be presented to the registrar with a fee of £15.00. The term “business” includes a
profession, the establishment or operation of a website in or from within Gibraltar or via
an ISP in Gibraltar or the promotion of any trade, business or profession from Gibraltar
regardless of where it is situated.

2.13.2 Registration with the Employment Service

Businesses must register their own and employee details with the Employment Service at
the Ministry of Employment. Any business, whether a company, partnership or sole trader,
must register the following details with the Employment Service within three months of
commencement of business:
 The name(s) of the persons carrying on the business or, if it is a company, the name of the
company; in case of partnerships, the names of all the partners
 The business name under which the business is carried out

 The address of the place of business

 The nature of the business

 Other particulars as may be prescribed

Employment registrations expire within the first 12 months of registration, and thereafter,
the registrations must be renewed during the course of the first month after expiry.
The annual registration fee is £20, with a penalty of £20 if the fee is not paid within the first
month after expiry.

Doing business in Gibraltar 35

2.13.3 Registration for social insurance purposes
After the business or company has been registered with the Income Tax Department (see
Section 2.13.4), the latter notifies the Department of Social Services. The Employment
Service will notify the Department of Social Services (by sending a copy of the approved
terms of engagement form) of employees hired by a company or partnership, so that the
employees are registered for social insurance purposes. In the case of a self-employed
individual, they would need to complete an application form for a self-employed insurance
card at the Department of Social Services.

2.13.4 Registration for income tax (PAYE) purposes

To register for Pay As You Earn (PAYE) purposes, a company or business must submit the
following documentation to the Income Tax Office.
For a company:
 Certificate of Incorporation

 Employment Service Certificate of Registration

 Letter requesting that the company be registered for PAYE purposes, giving details of
directors and commencement date of trading
 Registered address

For a business:
 Business Registration Certificate
 Employment Service Certificate of Registration
 Letter requesting that the business be registered for PAYE purposes, giving
commencement date of trading

See Sections 4.2 and 4.3 on work permits and engagement (and dismissal) of employees,
respectively.

Various applications forms relevant to business employment can be downloaded directly

from the Gibraltar Government website. These application forms can be scanned and
emailed to the relevant departments for processing.

HM Government of Gibraltar announced the introduction of “E-Gov” whereby government

services would be fully accessible online. Visit ǁǁǁ͘ĞŐŽǀ͘Őŝ. for the current services
available.

36 Doing business in Gibraltar

2.14 Company formation
The Companies Act sets out the requirements by which any one or more persons may form
an incorporated company with or without limited liability. A company must have at least
one subscriber. The company name must be approved by the Registrar of Companies, and
a Gibraltar address must be given as the registered office where notice may be served
on the company and the statutory registers maintained and kept available for inspection.
Companies may be limited either by shares, by guarantee or be unlimited.
From 1st January 2018, the fee for incorporation, registration (including registration under
Part XII of the Act) or submission of any change in status of a company, that is to say, the
fact of its being public or private or limited or unlimited or limited by shares or by guarantee
or de-registering on registering as limited partnership (except on re-domiciliation) regardless
of share capital is £100. In addition, stamp duty is payable at a flat rate of £10 on any issue
or increase in nominal share capital or loan capital.
Other statutory requirements include filing of notices relating to:

 The situation of the registered office and any changes thereto

 The allotment of shares
 The registration of certain mortgages and charges, including a mortgage or charge on
real property, ships and book debts

 The names and addresses of the directors, secretary and shareholders of the company

Every company must submit an annual return in the prescribed format, the first within 12
months of incorporation and thereafter once every year. The current fee payable is £86. As
of 1 February 2015, all annual returns must be filed within 30 days of when they are made
up. Late filings carry a statutory penalty as follows:
 If return is filed within the first year: £36.5 (total £122.5)

 If return is filed within the second year: £71.5 (total £157.50)

 If return is filed within the third year: £106.5 (total £192.50)

 If return is filed after three years: £141.50 (total £227.50)

2.15 Purchase of own shares

Gibraltar company law permits companies to purchase their own shares subject to having an
express power to do so in the articles of association and following statutory requirements.

In general, the purchase price must be drawn out of the company’s distributable profits,
although it may be possible to fund the purchase price from the proceeds of a fresh issue
of shares or even “out of capital” (though, the latter only applies to private companies and
triggers additional requirements, such as, inter alia, a statutory declaration of solvency by
the directors, passing of a special resolution by the members of the company, preparation
of accounts, an auditors’ report and publication of a notice in the Gazette. The statutory
declaration and auditors’ report must be delivered to the Registrar of Companies).
Doing business in Gibraltar 37
2.16 Competition policy
Business licensing

The Fair Trading Act 2015 was enacted on the 1st July 2015. The Act streamlined and
simplified the business licensing system by, among other things, establishing a single point of
contact as part of the business licensing procedure. The functions of the old Trade Licensing
Authority were transferred and subsumed within the remit of the Office of Fair Trading and
renamed the Business Licensing Authority (“BLA”).

Any person who wishes to buy or sell, whether wholesale or retail, any goods by way
of business, or importing of goods in commercial quantities, or who wishes to provide services
(widely defined in the Act), must be the holder of a license issued by the BLA.
However, persons carrying on investment business, regulated or controlled activities as
defined in financial services legislation do not require to be additionally licensed under the
Fair Trading Act 2015.
Application for a new license involves the following:

1. A notice of intention in the prescribed form must be published in the ?aZjYdlYj?Yr]ll]

 and at least one other newspaper circulating in Gibraltar, seven days before the
application
is made.
2. Any individual wishing to object to the issue of the license must give notice of such to
the BLA and to the applicant within seven days from the date of the above
publications.
This written notice must state the grounds for objection.

3. The application and objections (if any) are considered at a hearing, of which not less
than five days’ notice has been given to the interested parties.
Both the applicant and the objector and their legal advisors have the right to attend the
hearing, give evidence and call witnesses and cross examine witnesses for the other party
and address the BLA. They may not be present, however, during any subsequent
deliberation of the BLA.

A license is issued for the premises and not for the applicant; an application will not be
accepted unless suitable commercial premises have been obtained. Businesses that do not
need premises from which to operate may apply for a waiver.
Licenses are in force for a year from the date of issue and are renewable annually.

38 Doing business in Gibraltar

2.17 Financial services: regulatory framework and licensing
The Gibraltar Financial Services Commission is a statutory corporation comprising eight
members, including the chief executive officer. The work of the commission is subject to
independent audit by experts appointed by the minister responsible for financial services.
The chief executive officer is responsible for the supervision of banks and insurance
companies under the requirements of the corresponding acts. The commission’s structure is
divided into four sections which cover (1) Legal, enforcement and policy; (2) Regulatory
operations; (3) Strategy and planning; and (4) Operations. Regulatory operations cover the
areas of fiduciary and business services supervision, conduct of business supervision,
prudential supervision, and authorisations over banking, e-money, investment services and
funds, fiduciary, insurance and other controlled activities.
Most classes of financial services businesses in Gibraltar require licensing by the FSC in
accordance with the regulatory framework. The following are the Supervisory Acts
established under the Financial Services Commission Act:

 The Financial Services (Insurance Companies) Act

 The Financial Services (Investment and Fiduciary Services) Act

 The Financial Services (Banking) Act

 The Financial Services (Collective Investment Schemes) Act 2011

 The Financial Services (Occupational Pensions Institutions) Act 2006

 The Financial Services (Markets in Financial Instruments) Act 2006

 The Financial Services (Listing of Securities) Act 2006

 The Financial Services (Auditors) Act 2009

 The Financial Services (Temporary Administration of Companies) Act 2010

 The Financial Services (Insurance Companies) (Solvency II Directive) Act 2015

Regulations, including detailed rules on Conduct of Business, have been issued under the
various acts.

The Alternative Investment Fund Managers Directive 2011/61/EU (“AIFMD”) was transposed
in Gibraltar legislation via the Financial Services (Alternative Investment Fund Managers)
Regulations 2013. AIFMD does not directly regulate the operations of Alternative Investment
Funds (“AIFs”) but instead regulates the managers of the AIFs; i.e. the alternative investment
fund managers (“AIFMs”).
Financial services business and activities that require licensing specifically under the Financial
Services (Licensing) Regulations, 1991 are summarised in the following page. Note that the
summary is not an exhaustive list of all licensable activities, for example, activities undertaken
by banks, e-money institutions or collective investment schemes are covered under other acts
and/or regulations.

Doing business in Gibraltar 39

Financial services business and activities that require licensing specifically under the Financial
Services (Licensing) Regulations, 1991
Class Description Financial service business

i Investment dealer Dealing in investments

ii (a) Investment broker Arranging deals in investments
ii (b) Collective investment scheme Arranging deals in investments
intermediary
iii Investment manager Managing investments
iv Investment adviser Investment advice
v (a) Collective investment scheme manager Establishing, acting as the manager of,
or as operator of, or winding up a
collective investment scheme
v (b) Collective investment depository Acting as the trustee of a unit trust
scheme or the depository of any other
collective investment scheme
v (c) Collective investment scheme Acting as the administrator of a
administrator collective investment scheme
vi (a) General insurance intermediary Insurance or reinsurance mediation
vi (b) Life assurance intermediary Insurance or reinsurance mediation
vii Professional trustee Acting as trustee or foundation
councillor or soliciting such business
viii Company manager Provision of management and/or
administrative services for companies
ix Insurance manager Exercising management or advisory
functions in relation to one or more
insurer or reinsurer
x Stock exchange Establishing and conducting the
business of an investment exchange
xi Clearing house Establishing and conducting the
business of a clearing house
xii Bureau de change Providing money service business
activities of bureau de change
xiii, xiv Gibraltar-authorised or registered Providing money service business
payment institution activities of money transmitter
xv (a) Mortgage creditor Mortgage credit activity
xv (b) Mortgage creditor intermediary Mortgage credit activity
xv (c) Mortgage creditor service provider Mortgage credit activity
xvi Personal pension scheme controller Establishing, operating or winding up a
personal pension scheme
xvii Pension adviser Advising pensions (personal or
occupational)
xviii DLT provider Providing distributed ledger
technology services

40 Doing business in Gibraltar

External reviews

In October 2014, the OECD published its Phase II review report that focused on the
effectiveness of actual tax exchange information by Gibraltar. The review included an on-
site visit to Gibraltar by OECD’s Global Forum assessment team.
The Phase II review focused on 10 essential areas of tax information exchange and found
Gibraltar to be “compliant” (highest grading) in 7 of those areas and “largely compliant”
(second-highest grading) in the other 3, resulting in an overall rating in line with the UK, the
US and Germany. The Phase II review follows on from the Phase I review in 2011, which
focused on the legal framework for exchange of information.
More recently, Gibraltar has formed part of the Common Reporting Standard (CRS) Early
Adopters Group since its inception and, as such, first automatically exchanged tax-relevant
financial account information with approximately 50 jurisdictions in September 2017. This
will be followed by first automatic exchange of financial account information with a further 50
or so jurisdictions in September 2018.
As regards Exchange of Information on Request (EOIR), Gibraltar has developed a network of
the equivalent of over 150 agreements with over 100 EOIR-partner jurisdictions worldwide
over the years. Gibraltar Finance and the Income Tax Office jointly handle the day-to-day
exchange of information under the various international mechanisms for exchange: bilateral
agreements for the exchange of information in tax matters, Council Directive 2011/16/EU
and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Other external reviews

During 2004, an independent team, comprising four financial services regulatory
consultants and three secondees from the UK Financial Services Authority, was appointed by
His Excellency the Governor under the Financial Services Act 1989 (now replaced by the
Financial Services Commission Act 2007). The team assessed the supervisory activities of
the FSC and was the third independent review commissioned.

The team’s report published in January 2005 emphasized the good standard of financial
services regulation achieved by the FSC in Gibraltar, its clear commitment to meeting
international standards, determination to tackle the risks faced and implementation of a
high-quality regulatory regime in the context of the Gibraltar market. Further endorsement
of Gibraltar’s regulatory regime is evidenced by the FSC’s acceptance as a member of the
International Organisation of Securities Commissions (IOSCO) in April 2005.
Gibraltar’s “Know Your Customer” rules and procedures (and anti-money laundering
laws and regulations in general) have been reviewed and approved in the past by the US
Internal Revenue Service for the purposes of Qualified Intermediary status. The Qualified
Intermediary status enables banks to continue investing in U.S. Securities on behalf of their
clients.

Doing business in Gibraltar 41

 In May 2007, the International Monetary Fund (IMF) published its report on the assessment
of Gibraltar’s financial sector supervision and regulation.
The assessment was carried out by a team of nine individuals from the IMF during March
2006, and it looked at FSC’s supervisory and regulatory practices in the areas of banking and
insurance as well as a jurisdiction-wide review of the anti-money laundering and terrorist
financing regime.

The report concluded that Gibraltar has a well-regulated financial sector and noted a high
level of banking and insurance supervision, compliance with applicable international
standards and a high level of compliance with the revised Financial Action Task Force (FATF)
recommendations on the prevention of money laundering and combating terrorist financing.

More recently, the commission’s regulatory processes and supervisory procedures over
licensed activities are being assessed as part of its ongoing Legislative Reform Programme
which is a joint initiative by HM Government of Gibraltar and GFSC to deliver a streamlined
legislative and regulatory framework for financial and professional services in Gibraltar.

In 2016/2017, another statutory review was carried out by the Statutory Review Team
appointed by the Government. The review team’s remit was to assess the effectiveness of the
GFSC in meeting its statutory and strategic objectives and to determine whether the GFSC is
in the best position to deal with the future challenges that it will face. The report was
considered by Parliament earlier this year.

2.18 Insolvency Act

The Insolvency Act 2011 came into force on 1 November 2014. The act replaced the
Bankruptcy Act 1934 and the sections in the Companies Act that dealt with liquidations (with
the exception of members’ voluntary liquidations which remain under the Companies Act).
The Act consolidated and modernized previous insolvency legislation and introduced new
remedies, procedures and options such as creditor voluntary arrangements, administration
and administrative receiverships aimed at allowing the rescue, and
turnaround of entities facing financial difficulties.
The act also introduced directors’ disqualification provisions, as well as a licensing regime
for insolvency practitioners.

42 Doing business in Gibraltar

3| Finance and investment
3.1 Banking services
Gibraltar has a well-established banking industry with a strong presence in the wealth
management and private banking sector (see App. 6.4). Most of Gibraltar’s banks are
branches or subsidiaries of major UK and other European and US banks or financial
institutions.
The conduct of banking business in Gibraltar is governed by the Financial Services (Banking)
Act. Detailed rules and regulations have been issued under this Act to give effect to all EU
directives relating to banking, including, inter alia, Capital Requirements Directive IV,
Mortgage Credit Directive, Bank Recovery and Resolution Directive and Deposit Guarantee
Directive. (see Section 3.8).
In 1999, the UK Government agreed that Gibraltar had implemented regulatory and
supervisory practices with regard to banks that matched UK standards. This paved the way
for Gibraltar to take advantage of the single European passport for banking. The passport
allows Gibraltar’s licensed banks to set up subsidiaries and branches in other European
Economic Area (EEA) member states.
The banking sector provides a wide range of facilities, such as private banking and
investment services, as well as retail and corporate banking, including import and export
finance and commercial loans.
In addition to banks, there are building societies operating in Gibraltar; all of which are
branches of well-known UK societies. The FSC also supervises these Building societies.

3.2 Insurance services

Insurance business conducted in Gibraltar is governed by the provisions of the Financial
Services (Insurance Companies) Act, and by rules and regulations made thereunder.
Legislation has been put in place to implement all the EU directives that apply to this sector.

The UK Government has agreed that Gibraltar has implemented standards with regard to
the supervision of insurance companies that match UK practice. As a result, Gibraltar has
the approval from the UK Government to take advantage of the single European passport
for insurance. This means that an insurance company licensed in Gibraltar can, with the
approval of the Commissioner of Insurance, do business in EEA states either by setting up a
branch in those states or by providing insurance from Gibraltar to residents of those states.

Doing business in Gibraltar 43

The fiscal and legal advantages of using Gibraltar as a jurisdiction for setting up and
administering captives and other types of insurers include the following:
 Gibraltar insurers can underwrite risks in EEA states directly
 Insurance companies are subject to corporation tax at the rate of 10% on profits from
income accrued and derived in Gibraltar

 Gibraltar possesses local insurance expertise together with a well-developed legal,

accounting and banking infrastructure

 A stamp duty of only £10 is levied on nominal share capital, whether on initial creation
or subsequent increase

 The legal system is based on English common and statute law, with variation enacted
by local statutes
 Official language is English, but the local population is bilingual and speaks Spanish as well
 The Gibraltar cost base is highly competitive. Depending on the type of business carried
out, the annual base fee can start from £7,319 and £20,910 for a Captive insurer and
Open Market insurer, respectively, with additional fees calculated based on number of
cells, gross premium income brackets, gross technical liabilities, number of jurisdictions
the insurer passports into and internal capital model fee where an internal capital model
has approved.

 There are no job quota requirements for insurance companies or managers

 Specialist personnel may apply for a preferential tax status (see Section 5.11.4 on high
executives possessing specialist skills)

 The official currency is sterling and there are no exchange controls

The number of registered insurance companies in Gibraltar has increased significantly in

recent years from 13 in March 2000 to 45.

Solvency II
In 2015, the Solvency II Directive was transposed into Gibraltar legislation, the Financial
Services (Insurance Companies) (Solvency II Directive) Act 2015. The effective date of the
directive was 1 January 2016.
Solvency II is a fundamental review of the capital adequacy and risk management regimes
for the European insurance industry. It aims to establish a revised set of EU-wide capital
requirements and risk management standards that replaces the previous Solvency I
requirements.

The framework includes not just underwriting risk, but operational, investment, currency
and other risks as well. Similar to Basel II for banking, there are three pillars in Solvency II —
qualitative & quantitative, governance & risk management and disclosure & transparency.

44 Doing business in Gibraltar

3.3 Investment services, fund management and collective
investment schemes
The conduct of investment services, fund management and administration in Gibraltar is
governed by the Financial Services Legislation. Detailed rules and regulations have been
issued under several acts to give effect to all EU directives relating to investment services
and the regulation of all types of collective investments, including Undertakings for
Collective Investment in Transferable Securities (UCITS) which are harmonized investment
funds within a European context.
Gibraltar transposed the Alternative Investments Fund Managers Directive in July 2013,
firmly placing the jurisdiction as an EU domicile of choice for managers and funds in the
changing regulatory landscape.
On 03 July 2017, MiFID II, which came about as a response to the financial crisis and the
evolution of the financial markets, was transposed into Gibraltar’s legislation.

Gibraltar enjoys passporting rights with respect to investment services. This means that
providers of investment services may, based on the authorization granted locally by the
FSC, operate in other EEA member states.

Fiscal advantages for both the fund vehicle and the fund manager contribute to Gibraltar’s
attractiveness for operating collective investments. Gibraltar operates a territorial basis of
taxation whereby only income accrued and derived in Gibraltar is subject to tax.
A Gibraltar-based corporate fund manager providing investment services is required to be
licensed and regulated in Gibraltar and is subject to 10% tax on its profits (except that the
profits of any branch or permanent establishment of the licensee would not be subject to tax
in Gibraltar, to the extent that those activities are carried out outside Gibraltar).
Most Gibraltar funds are set up as corporate vehicles and derive their income from capital
gains (which are not subject to tax there) or passive investment income, such as bank
interest, dividends from listed investments or dividends from other companies, all of which
are not subject to tax in Gibraltar under the Income Tax Act 2010.
Investors in an EIF must have a net worth in excess of €1m or invest a minimum of €100,000
(either in a single fund or across a number of EIFs).
Within 10 days of the establishment of the fund, its administrator must provide the FSC
with written notification of the fund’s establishment, a copy of the offering document, an
opinion from a Gibraltar lawyer that the fund complies with the EIF regulations and any
other document required by the FSC. A pre-approval option is now available whereby a fund
may file the above for registration with the regulator at least 10 working days before the
establishment of the fund, thereby enabling the fund to be deemed authorised at the time it
launches. An EIF must have two Gibraltar ordinarily resident directors who have been pre-
approved by the FSC, an administrator and a depository (unless the fund is a closed fund or
the regulator exempts the fund from this requirement).

Doing business in Gibraltar 45

 In April 2012, the definition of an EIF investor was widened to include professional clients
under the Markets In Financial Instruments Directive and investors who invest a
minimum of €50,000 on the advice of a professional adviser. Funds may appoint non-
Gibraltar licensed administrators, subject to certain conditions, for instance, that they are
established in the EEA or jurisdictions subject to an equivalent legislative and regulatory
regime in relation to the administration of funds.

3.4 Online gambling

The Gambling Act 2005 legislates for all forms of gambling (including betting, bookmaking,
gaming and lotteries) in Gibraltar. All gambling operations in Gibraltar require licensing
under the act.
Remote gambling licenses are issued by the Licensing Authority. The Government only
licenses operators with a proven track record in gaming, of reputable standing and with
a realistic business plan. Licensees are required to physically operate and be managed
in Gibraltar. There are currently 32 licensed operators in Gibraltar. Licenses are issued mostly
for either fixed-odds betting or for casinos (including poker), with many operators holding
both types of license. In addition, there is one license in issue for a betting exchange and one
for financial spread betting.
With effect from 1 April 2018, licence fees are fixed at £100,000 for business to customer
(“B2C”) licences and £85,000 for business to business “B2B”) licences. In addition, B2C
licensees pay Betting Duty or Gaming Duty (depending on the activity) of 0.15% of gross
revenue (this generally being gross win for online bookmakers and gaming yield for online
casinos). The first £100,000 per annum of gross revenue is exempt from this Duty.
Previously, gaming tax on fixed-odds betting and betting exchanges was levied at 1% of
turnover. For online casinos, tax was levied at 1% of the gaming yield or gross profit and 1% of
rake in the case of poker operators. In all cases, there was a minimum tax of £85,000 payable
and a cap on tax payable of £425,000 p.a., per licence.
At present, conditions and licensing requirements cover areas such as advertising, pay out of
prize money, customer privacy and data protection, audit and accounts.
The Gambling Act 2005 contains extensive provisions, particularly for remote gambling,
including requirements for:
 Certification of testing of gambling equipment and software

 Security of computer equipment and data

 Direct link on the home page to at least one organisation dedicated to assisting problem
gamblers, systems to enable a person to request to be self-excluded from gambling with
the license holder and various other requirements to help prevent problem gambling

46 Doing business in Gibraltar

 License holders not permitting a person to gamble unless that person has registered
giving full name, residential address, age, etc.

 License holders to inform registered participants that it is their responsibility to ensure

that, under the laws of the jurisdiction to which they are personally subject to, it is
lawful for them to use the facilities provided

Further requirements are contained in various publications:

 Generic Code of Practice for the Gambling Industry, updated in 2012, providing
interpretive guidance to the Gambling Act, as well as a guide to what is regarded as
good practice for operators in the industry

 Code of Practice for Anti-Money Laundering Arrangements, updated July 20161,

providing interpretive guidance to the industry in respect of the Gambling Act 2005,
and the Proceeds of Crime Act 2015 Act, which is Gibraltar’s legislation that
implements the EU’s Fourth Anti-Money Laundering Directive

 Remote Technical and Operating Standards, issued in 2012, which includes technical,
responsible gambling and other operating guidelines
Gibraltar continues to thrive as an attractive base for blue-chip remote gambling operators,
principally as a result of its reputation as a reliable and well-regulated jurisdiction, its legal
framework based on the UK law, well-developed telecommunications, its tax regime, a
multilingual labour force with experience in the gaming industry, and freedom of movement
of labour from within the EU.

3.5 Investment incentives including government and EU funds

The Gibraltar Government is keen to encourage inward investment particularly in those areas
that will generate significant job opportunities for the local workforce. There is a wide range of
fiscal and financial incentives as shown below.

3.5.1 Financial incentives

EU funds
EU funding has been a major source of finance for economic regeneration in Gibraltar in
recent years. Gibraltar has been eligible for support under the European Regional
Development Fund (ERDF) and under the European Social Fund (ESF).

7Gibraltar currently participates and benefits from the 2014-2020 Programming Period under
the Investment for Growth & Jobs Goal.

Doing business in Gibraltar 47

The ERDF Program’s aim is to enhance the competitiveness of small and medium-sized
enterprises (SMEs) and to support a shift towards a low-carbon economy, while the ESF
Program will focus on promoting sustainable and quality employment and supporting labour
mobility together with investing in education, training and vocational training for skills and
lifelong learning.
Detailed information is available from the Gibraltar EU Programmes Secretariat website.
Wholesale, retail, financial services and mobile investments are areas of business activity
that, typically, are not eligible for funding.
Gibraltar also participates in the Interreg program, whose aim is to strengthen transnational
and cross-border cooperation via joint local and regional initiatives.

3.5.2 Fiscal incentives

Qualifying (Category 2) Individuals commonly known as “high-net-worth individuals” (see
Section 5.11.3)
High Executive Possessing Specialist Skills (HEPSS) (see Section 5.11.4)
Development aid (see Section 5.3.5)

Joint venture companies

Amounts invested in companies of which the Gibraltar Government is a member may,
subject to such conditions as the Government prescribes, be offset against assessable
income.

3.6 The law and money laundering/terrorist financing

Gibraltar’s main legislation covering the prevention, detection and reporting of money
laundering activity is the Proceeds of Crime Act 2015 (“POCA 2015”). This legislation was
updated in 2016 to implement the EU’s Fourth Anti-Money Laundering Directive (2015/849).
The Act defines various types of business as being “relevant financial business” for the
purposes of the application of many of its provisions. In March 2018, the l was further updated
to include as a relevant financial business, undertakings that receive proceeds from the sale of
tokenised digital assets involving the use of distributed ledger technology or similar digital
representation of an asset. Other relevant legislation includes:
 The Drug Trafficking Offences Act
 The Counter-Terrorism Act 2010
 The Orders made under the Export Control Act 2005

48 Doing business in Gibraltar

Money laundering offences include assisting another to retain the benefit of criminal conduct,
acquisition, possession or use of property representing (the same), concealing or transferring
the proceeds of criminal conduct or tipping-off. Terrorism-related offenses include raising
funds for terrorism, use or custody of money or property for terrorism, or arranging funding
for terrorism.
For suspicious transactions in Gibraltar, the central reporting authority is the Gibraltar
Financial Intelligence Unit (GFIU), which is staffed by officers from Gibraltar Customs and the
Royal Gibraltar Police. All regulated entities are required by law to report to the GFIU, known
or suspected illegal transactions or attempted transactions.
Financial services
Under POCA 2015, individuals and entities carrying out relevant financial business (including
banks and building societies, investment businesses and fiduciary service providers, life and
general insurance companies, insurance intermediaries, bureaux de change and money
transmission services) are required to put into place measures to ensure the prevention,
detection and reporting of suspicious transactions.

The Gibraltar Financial Services Commission has issued Anti-Money Laundering Guidance
Notes, which cover sectors that are regulated by the commission. The Guidance Notes
represent “relevant guidance” for the financial sector under POCA 2015, which must be
considered by a court in deciding whether a person has committed an offence under that Act.
The Guidance Notes are currently subject to a substantial update to take account of latest
developments in the sector.
In 2018, new regulations were introduced making businesses that received proceeds from
token sales relevant financial businesses under POCA 2015, with the Gibraltar Financial
Services Commission being designated as the relevant supervisory authority. These
regulations became effective on 16 March 2018.

Non-financial sector
Gibraltar’s Office of Fair Trading (“OFT”) issued Guidance Notes for High-Value Dealers
(“HVDs”) in June 2017 and Guidance Notes for Real Estate Agents (“REAs”) in April 2018.
The Guidance Notes for HVDs apply to businesses that accept cash payments of £8,000 or
more in exchange for goods, as well as to the employees of such businesses. The Guidance
Notes for REA apply to all real estate agents, as defined within the Guidance Notes, who are
operational in Gibraltar, as well as to the employees of those real estate agents.
The Guidance states that HVDs (even those that never accept high-value cash payments) and
REAs should appoint a nominated officer (also known as Money Laundering Reporting Officer
or MLRO and have internal policies on anti-money laundering and combatting the financing of
terrorism, and for reporting suspicious activity.

Doing business in Gibraltar 49

 Further, HVDs and REAs are required to put in place controls, including carrying out customer
due diligence, monitoring of client’s activities, assessing risk and keep customer, transactional
and staff training records.
Where an HVD has made one of more transaction over the £8,000 threshold during a
calendar year, it is required to prepare and submit an annual report to the OFT, providing
information and data about cash payments received by the business during that year. For
companies, the filing deadline for the report is 31 October following the relevant year. For
non-companies (for example, individuals, or partnerships), the deadline is 30 November.
Annual reports from companies are required to be accompanied by an independent
accountant’s verification to the effect that the reports have been drawn up accurately.

3.7 Import and export procedures

Gibraltar does not form part of the Customs Territory of the EU and is therefore not required
to apply the various quota and tariff restrictions that the EU imposes. Also, Gibraltar is
regarded as a developing country for the General Agreement on Tariffs and
Trade (GATT). In 1994, the GATT was replaced by the World Trade Organisation (WTO).
However, the original GATT test is still in effect under the WTO framework.
Gibraltar-sourced goods are entitled to various tariff and quota concessions. The Gibraltar
Government levies import duties on most goods, except foodstuffs and medical supplies, at
rates between 0% (exempt) and 12%.

There are special procedures covering goods-in-transit and temporary importation (see the
table in Section 5.13.2, which summarizes the current duty payable on a range of goods).

Gibraltar’s customs procedures and tariffs vary with regard to other EU territories. However,
Gibraltar has adopted the Single Customs Declaration and some other procedures that are
common to all countries that have participated in the Automatic Systems Customs Data
(ASYCUDA) project promoted by the United Nations.

3.8 Investor protection

3.8.1 General
The FSC is the appointed Resolution Authority (RA) for Gibraltar. The powers of the FSC
as RA are delegated to the Financial Services Resolution and Compensation Committee
(the FSRCC), which was established in 2016.

The FSRCC is responsible for resolution planning for credit institutions and some
investment firms as well as decision-making relating to the reorganisation of institutions
experiencing financial difficulties. The FSRCC is also the authority responsible for the
Deposit Guarantee Scheme in Gibraltar (see also 3.8.2 and 3.8.3 below).

The FSRCC is operationally independent from the supervisory function of the FSC, with
the Resolution and Compensation Unit carrying out its day to day functions and reporting
directly to the Committee.

50 Doing business in Gibraltar

3.8.2 Deposit guarantee scheme
Gibraltar has implemented the EU Directive on deposit guarantee schemes. This ensures
that there is a level of deposit protection for depositors with credit institutions in Gibraltar.
In general, the Gibraltar Deposit Guarantee Scheme covers 100% of a credit institution’s
liability to a depositor in respect of qualifying deposits subject to a limit of €100,000.
3.8.3 Bank recovery and resolution directive (BRRD)
Gibraltar has also implemented BRRD through the Financial Services (Recovery and
Resolution) Regulations 2014. BRRD provides a framework to deal with banks which are in
crisis and builds on the measures taken to ensure firms have a recovery plan in place that, in
turn, minimises disruption to the financial system at large. Institutions are required under the
regulations to draw up and maintain recovery plans on an annual basis.

3.8.4 Investor compensation scheme

Gibraltar has implemented the EU Directive on investor compensation schemes
that cover eligible investments made by an investor but specifically excludes deposits
qualifying under the deposit guarantee scheme (see Section 3.8.2 above). In general, the
compensation scheme will cover 90% of the total amount of all eligible investments held by
a claimant with the investment firm in default subject to a maximum payment of the sterling
equivalent of €20,000 to any one individual.

As a result of the financial crisis, the European Commission has been looking into a possible
increase in the compensation limits at a level consistent with the Deposit Guarantee
Schemes Directive.

The Gibraltar Investor Compensation Board is charged with administering the Scheme and is
independent of the FSC or the Government of Gibraltar.

Doing business in Gibraltar 51

 3.9 The Gibraltar Stock Exchange
The Gibraltar Stock Exchange (GSX) was launched on 1 November 2014 and currently
operates two markets, the Main Market which is an EU regulated market recognised by
ESMA and by the United Kingdom’s tax authority (HMRC) under S1005 (1)(b) Income Tax
Act 2007; and the Global Market, a self-regulated market which is a Multilateral Trading
Facility (MTF) as defined under the Markets in Financial Instruments Directive 2004 (MiFID).

GSX admits open-ended and closed-ended funds to listing, including all types of debt
securities such as insurance-linked securities, asset-backed securities, project bonds and
derivative securities.

The principal decision making body of GSX is its board of directors. The board is
accountable to GSX, the FSC, its Member Firms, securities admitted to the Official List, and
the public in respect of the smooth operation of the stock exchange. The Listing Authority is
the body responsible for the regulatory approval of listings and is completely independent
from GSX and is constituted by officers from the FSC.

3.10 New Regulatory Framework for Distributed Ledger Technology

(“DLT”)

On the 12th October 2017 HM Government of Gibraltar published legislation to regulate

individuals and firms engaging in activities (from Gibraltar) not otherwise subject to regulation
under another framework and that for business purposes use Distributed Ledger Technology
(“DLT”) for the transmission or storage of value belonging to others.
The legislation came into effect on 1 January 2018. It recognises the challenges posed in
regulating activities that use rapidly evolving technology and addresses this by adopting an
outcome focused, principles based approach, rather than a prescriptive rigid framework that
can very quickly become obsolete and not fit for purpose. The regulatory bar for new
applicants is high, consistent with expectations across other Financial Services providers and
the new regime should not be confused with a soft or light touch regime.
The legislation sets out 9 key principles that all DLT Provider licence holders need to comply
with at all times. The principles cover conduct of business, consumer protection and
communication, financial resources, protection of customer assets and money, corporate
governance arrangements, systems and security, measures to address financial crime risks
and contingency plans. The principles are intended to be applied proportionately and on a risk-
based approach. The legislation requires that the Gibraltar Financial Services Commission issue
guidance on its application of the regulatory principles, including any criteria to which it will
refer in determining whether a person will comply, is complying or has complied with those
principles.
The new DLT regime reflects the collaborative efforts of the Gibraltar Financial Services
Commission, the private sector and Cryptocurrency Working Group over a period of three
years.

52 Doing business in Gibraltar

 3.11 Initial coin offerings (“ICO”s)/Initial token offerings (“ITOs”)
Gibraltar has seen considerable interest since Quarter 2 of 2017 from businesses wishing to
conduct an ICO to raise funding for IT development, marketing and business development in
the Fintech space.
A number of well-known IT developers, entrepreneurs and management teams have decided
to launch their ICOs and where applicable seek to licence their business under the new DLT
regulatory framework.
HM Government of Gibraltar have committed to bringing in a separate regulatory framework
covering ICOs/ITOs undertaken from Gibraltar that is aligned with the new DLT framework.
The consultation document setting out the proposed regime sets out three key objectives:
x Protect consumers
x Protect Gibraltar’s reputation
x Support the safe use of tokens as a means of crowdfunding

The proposed regime will seek to deliver these objectives by regulating three activities,
namely:
x Promotion, sale and distribution of tokens by persons connected with Gibraltar;
x Secondary market trading activities relating to tokens carried out in/from Gibraltar

53 Doing business in Gibraltar

4| Residency, employment regulations and social security
contributions
4.1 Establishing residency
Immigration and the right to enter Gibraltar are governed by the Immigration, Asylum &
Refugee Act. All individuals registered as having Gibraltarian status or who are British-
Dependent Territories citizens by virtue of their connection with Gibraltar are exempt from
having to hold any permit or certificate of residence required by the act. Exemption is also
granted to Commonwealth citizens employed in Gibraltar in HM Services, HM Government
Service or Gibraltar Government Service.
EEA nationals (including workers, students and retired persons) are entitled to enter or
remain in Gibraltar if they have an enforceable European Community right to do so. Initially,
they may stay in Gibraltar for three months after which they will be granted a renewable
residence permit valid for five years, provided that they have found suitable employment
or established a business. People in this category are entitled to bring their immediate
family (normally spouse and children) with them. However, family members who are not
EEA nationals require an EEA family permit. Exceptions to the general entitlement of EEA
nationals, however, are the following:

1. French nationals solely by birth in, or by other connection with, a French overseas
dependent territory.

2. Nationals of the Netherlands solely by birth in, or by other connection with, Surinam or
the Netherlands Antilles.

Other nationals require both work permits (see Section 4.2 below) and residence permits.
Any individual not having the right to reside in Gibraltar may be refused admission (or after
admission be required to leave) in the interests of public policy, security or health.
Residence permits may be granted at the governor’s discretion to non-EEA nationals who do
not have a work permit if the governor is satisfied that the applicants are of good character
and that granting them residency is in the interest of Gibraltar. Non-EEA nationals who have
obtained Qualifying (Category 2) Individual tax status (commonly known as a high-net-worth
individual) (see Section 5.11.3) are likely to obtain residence permits on this basis.
UK Citizens can, also at the governor’s discretion, be granted a certificate of permanent
residence provided they are of good character and are likely to be an asset to the
community.
If an EEA national wishes to retire in Gibraltar, the person must prove to the satisfaction of
the authorities that they have:

 Full risk private medical insurance (except eligible UK nationals — see note below)

 Adequate financial resources

Doing business in Gibraltar 54

 Adequate accommodation in Gibraltar (in practice, this would involve purchase of a
qualifying property)
Note: Under a reciprocal agreement between the UK and Gibraltar, eligible UK nationals retiring in
Gibraltar may be entitled to free medical services in Gibraltar.

Only citizens of countries that appear on the EU Common Visa List require visas to enter
Gibraltar. Approximately 100 countries appear on this visa list, mainly including those in
Africa, Asia and Eastern Europe. A complete list of these countries may be obtained from
the passport office.
Normally, visa applications are handled by the UK Embassy in the applicant’s home country.
Visa requirements are similar to those in the UK.

Applications are reviewed on the basis of intention of the visit and whether the applicant has
proof of return or onward travel out of Gibraltar. In particular, any practical difficulties that
could arise if forcible deportation became necessary are taken into consideration.

4.2 Work permits

Under the Control of Employment Act, the Gibraltar Government may control the
employment of “non-entitled” workers by means of work permits.

An entitled worker means a worker who is:

 A national of a country belonging to the EEA

 A non-EEA national working in Gibraltar since before 1 July 1993
 A non-EEA national authorised to work in Gibraltar under the Immigration Control Act

EEA nationals are allowed to stay in Gibraltar for three months; after which they will be
granted a renewable residence permit for five years, provided that they have found suitable
employment or established a business.
In the case of a non-entitled worker, the prospective employer is required to request for the
issue of a work permit before commencement of employment. A work permit will only be
granted if there are no entitled workers able or willing to take up any particular employment.
A work permit is issued for a period not exceeding 12 months. The employment of a worker
for whom a work permit is required without the employer having first obtained such a permit
is an offence and fixed penalty notice of £3,000 may be issued to the employer.
Non-entitled workers may be granted residential permits on an annual basis and are normally
renewed only if the individual is still in possession of a work permit. A non-EEA national may
be refused permission to buy real estate in Gibraltar. However, such permission cannot be
refused to residents of EEA countries. Work permits for non-EU nationals are only issued after
a (refundable) deposit is paid to the Employment Service to cover any repatriation, etc.,
which may be required.

55 Doing business in Gibraltar

4.3 Engagement and dismissal

4.3.1 Engagement
In order to engage an employee, the employer must first register the vacancy (ies) at the
Employment Service by completing and submitting a “Notification of Vacancy” form. The
commencement date for the new employee(s) cannot be earlier than two weeks from the
date on which the vacancy is registered.
If an employee is a non-entitled worker (see Section 4.2), the employer must obtain a work
permit (see Section 4.2) from the Employment Service for that worker. This involves, inter
alia, completing a “Request for the Issue of a Work Permit” form.
In all cases, the employer must complete a “Notice of Terms of Engagement” form, which
includes particulars of the terms of employment, such as salary or wages, interval of pay,
hours of work, holiday entitlement and minimum period of notice for termination. This
notice must be accepted and signed by the employee before it is filed at the Employment
Service. Employee details have to be registered within 14 days of the commencement of the
employee’s engagement. On termination of employment of any employee, the Employment
Service must similarly be notified within 14 days.
The process for registering an employee at the Department of Social Security and the ITO
has been simplified in recent years with the introduction of a scheme commonly known
as the “one-stop shop.” Under this scheme, in cases where an employee is simply moving
jobs within Gibraltar, the records at the Department of Social Security and the ITO are
automatically updated internally without the need for the employee to visit each department
in turn.

4.3.2 Dismissal
The Employment and Training Act contains provisions regarding the “right not to be
dismissed unfairly” and the “meaning of Fair and Unfair Dismissal and Onus of Proof.”

The law provides instances where, generally, the employer would be justified in dismissing
an employee. These include the following:
 Unacceptable conduct of the employee (for example, a poor attendance record)
 Lack of capability or qualifications for performing the kind of work for which they were
employed
 A legal or other restriction imposed upon the employee that prevents that person from
working (for example, where a van driver loses their license)
 Termination of a fixed-term contract

 Some other substantial reason

It is important to note that the onus always falls on the employer to prove the fairness of the
dismissal. Termination without good reason and without following disciplinary procedures
may result in a claim for unfair dismissal.

Doing business in Gibraltar 56

The law also provides instances where dismissal would automatically be deemed unfair.
These include the following:
 Trade union related, such as becoming or indicating an intention to become a member of a
trade union or other organisation of workers or taking part in any trade union activities
 Maternity related, such as pregnancy or any other connected reason
 Health and safety related, such as taking, or proposing to take, reasonable action to
protect oneself or others in dangerous circumstances or refusing to return to work, where
the employee reasonably believes a danger exists

 Claims made or alleged against the employer under employment regulations

 Proceedings brought by the employee against the employer to enforce a legal right or
prevent the infringement of a legal right provided the claim is made to in good faith
Claims for unfair dismissal may also follow from situations where an employee resigns
because of the conduct or actions of the employer. This is known as constructive dismissal.

4.3.3 Notice period for termination of employee

The period of notice for the termination of employment may have been determined by
mutual agreement or contract. However, if the contract is for an indefinite period with no
specific agreement as to the notice period (or the contract stipulates a period of notice that is
less than the statutory minimum), the following statutory minimum periods of notice must be
given by the employer:
 Where the payment period is not greater than once a fortnight (for example, weekly paid
employees)

Years of continuous employment Notice to be given (minimum)

Less than 2 years 1 week
From 2 to less than 5 years 2 weeks
From 5 to less than 8 years 4 weeks
From 8 to less than 10 years 8 weeks
10 years and over 13 weeks

 For other payment periods (for example, monthly paid employees):

Years of continuous employment Notice to be given (minimum)

Less than 8 years 1 month
From 8 to less than 10 years 2 months
10 years and over 3 months
Notice need not be given if there is good and sufficient cause. This could be lack, loss or
impairment of skill, ability or efficiency that makes the fulfilment of the contract impossible.
This also applies in cases where the employer has lost confidence in the employee.

57 Doing business in Gibraltar

4.4 Working conditions
Government employees are paid at a rate on parity with the UK, and the private sector is
broadly in line with the Gibraltar Government.
There is a policy of equal pay for women and minimum wage protection for certain sectors.
The statutory minimum wage has been increased from £6.45 per hour to £6.75 per hour
from 1 August 2018. This is equivalent to £263.25 weekly (based on a 39-hour week) and
£1,140.75 monthly. Also, in general, an employee cannot be required to work more
than an average of 48 hours a week, unless otherwise has been agreed in writing with the
employer. Employees working in certain sectors are excluded.
Consultation is encouraged between employees and employers over working conditions,
and there are provisions for involving statutory wage fixing in the event of a breakdown in
negotiations.
Employers are required to keep their premises in a reasonable and safe condition for their
workers, as laid down in the Factories Regulations. There is also legislation governing the
storage and use of explosives and petroleum products.

4.4.1 Holiday entitlement

Statutory holiday entitlement is as follows:

Period in employment Minimum leave (days) p.a.*

Less than 3 years 15
From 3 to 5 years 20
From 5 to 8 years 22
More than 8 years 25
*Based on a 5 day working week

The holiday entitlement is generally in addition to the public holidays listed in Section
1.11.6. The main exception relates to employees whose terms of employment require them
to work on public holidays (for example, employees of companies that provide emergency
services). Such employees are allowed, in accordance with their terms of engagement,
predetermined rest days and periods. Holiday entitlement cannot be replaced by a payment
in lieu.
An employer can determine the starting date(s) and duration of holiday leave. This
information must, however, be notified to the employee (either directly or via a public notice)
within a reasonable period of time.

Doing business in Gibraltar 58

4.4.2 Redundancy pay entitlement
Minimum redundancy pay entitlement is based on the number of years employed and in
accordance with the following bands.

Years employed Weeks’ pay per year*

Less than 1 year 0
First 5 Years 2
Next 5 Years 3
Over 10 Years 4
The maximum entitlement is one year’s salary.
*Week’s pay means the average of the gross weekly payments made to that employee in the 13
weeks immediately prior to the termination of the employment.

Note: These are the standard conditions that can vary, notably in the retail, wholesale, licensed
non-residential, building and painting, or mechanical and electrical sectors.

4.4.3 Sick pay entitlement

Employees who have worked for more than three months are entitled to sick leave
consisting of two week’s full pay and four week’s half pay over a 12-month period of
employment. An employee must report their illness to the employer within three days of
absence from employment and supply a certificate of illness from a medical practitioner in
the European Community.
The employer may deduct from the employee’s sick pay any benefits received from social
security.

4.4.4 Parental leave entitlement

Although not legally defined, parental leave relates to a period of unpaid leave taken by the
mother or father of a child, or any individual who has obtained formal parental responsibility
of a child. An employee who has been continuously employed for at least one year and
has, or will have, the responsibility of a child, is entitled to be absent from work on unpaid
parental leave.

Parental leave is always without pay and consists of 4 months’ leave, provided that no more
than four weeks are taken after the birth or adoption of a child in any one year.

Parental leave is only permitted until the child’s fifth birthday or fifth anniversary of
adoption, where relevant.
The employee must give minimum periods of notice and an employer may postpone the
leave if the operation of the business would be substantially prejudiced by the employee’s
absence.

59 Doing business in Gibraltar

4.4.5 Maternity leave and allowance
Statutory maternity leave, which is unpaid, consists of 14 weeks’ leave.

Maternity allowance is a weekly benefit of £87.64 paid by the Government for a period of
18 weeks. It can be claimed as early as 11 weeks before the expected week of birth but not
later than six months after the right to maternity leave has been exercised. Provided
appropriate social insurance contributions have been paid by the claimant in the year prior
to the birth, a maternity grant of £ 700.00 is also available.

4.4.6 Time off work for urgent family reasons

Time off work must normally be allowed to employees for urgent family reasons, such as
sickness or an accident affecting a member of the employee’s immediate family which
makes the employee’s immediate presence with the family indispensable.
An employee is entitled to up to five working days each year. The employer may require
proof of the necessity for the leave.

Employees are not entitled to be paid during the time off work. The absence from work with
employer’s approval is considered a special type of unpaid leave.

4.5 Labour relations and trade unions

Trade unions are recognised in Gibraltar, but it is not compulsory for workers to join a
union. Unions must be registered under the Trade Unions and Trade Disputes (Conciliation
and Arbitration) Act. Employees and unions are entitled to withhold labour when there is a
dispute.

4.6 Social security contributions

In general, everyone over the age of 15 years who is self-employed or employed in Gibraltar
or, in certain cases, on a ship registered in Gibraltar, is required to make social security
contributions. These individuals are known as “contributors.” Non-residents employed in
Gibraltar are also subject to the employment laws and social security legislation.
An individual may be exempted from contributing to the local system if the local authorities
are satisfied that the individual is keeping up contributions to their home country’s scheme,
and if the scheme offers benefits that are at least equivalent to those offered by the
Gibraltar social security system. In the case of an EU national, it is a fairly straightforward
process that basically requires production of the requisite documentation and completion of
a form.
EU nationals also get aid from EU aggregation rules for certain benefits, including
unemployment benefits. However, they are not entitled to claim social assistance or other
non-contributory benefits.
Gibraltar does not have bilateral social security arrangements with other countries; it is
regarded as a part of the UK for EU purposes.

Doing business in Gibraltar 60

All employees are entitled to be included in approved pension schemes in Gibraltar.
Company directors and partners of firms are also entitled to be included.
All self-employed individuals are entitled to retirement pensions from the social security
scheme as long as the appropriate contributions have been paid.
Unemployed workers are granted credits against their social security contributions.
If they satisfy the required conditions, they may also claim unemployment benefit and, in
cases of hardship, may receive supplementary benefit.
Social security benefits also include maternity grants, death grants, guardian’s allowance
for orphaned children and widower’s allowance for individuals aged below 65 years who are
incapable of supporting themselves.

Industrial injuries benefit and disablement benefits are also available and vary according to
the disablement.

Employees receive a certificate determining the level of contribution required.

Social insurance contributions are based on a percentage of earnings, but subject to a

minimum and a maximum weekly amount. In practice, contributions in respect of many
employees are fixed at the maximum (capped) amounts.
Contributions were increased with effect from 1st July 2018 by approximately 10%, after a
period of fifteen months without change. At the time of writing, contributions are calculated as
set out below:

Contribution class Code Weekly rate of contribution

Employee Employer
Earnings related ER 10% gross earnings 20% gross earnings
Men or women aged between 18 min £6.05 min £18.15
years and 59 years max £30.25 max £40.15

Married women MW £15.95 20% gross earnings

Married women and widows who min £18.15
have elected not to max £40.15
pay contributions under the
Social Insurance Act prior to
1 January 1985

ϲϭ Doing business in Gibraltar

 Contribution class Code Weekly rate of contribution
Employee Employer
Pensioner PN Exempt 20% gross
Men or women min £18.15
aged 60 years or above max £40.15

Self-employed contributors and voluntary contributors

Weekly rate of contribution
Class of employed insured person Self-employed
Men aged between 18 and 64 20% gross
min £12.10
Women aged between 18 and 59
max £36.85

Additional voluntary contributions £2.20

By self-employed women for the
purpose of Maternity Allowance

Social insurance credit for smaller companies

From 1 July 2015 a credit of £100 per employee per annum applies to companies with 10 or
less employees, or if in the first year of operation, to companies with up to 20 employees.

Secondary employment
With effect from 1 July 2015, neither the employer nor employee is required to pay social
insurance contributions in respect of secondary employment, where full contributions are
already paid in Gibraltar.

Doing business in Gibraltar 62

5| Taxation
5.1 Changes for 2018-19
The principal changes for tax year 2018-19 are as follows.

5.1.1 Personal tax

Gross income based system

No changes were made to the tax bands, tax rates or allowances available under the gross
income based system.

Allowance-based system
 No changes were made to the tax bands or tax rates that apply under the allowance-based
system.
 Most allowances and deductions under the Allowance-based system were increased
slightly to reflect cost of living increases (see 5.7.2 for details).

Other personal tax measures

Tax relief of up to £2,000 was announced in respect of expenditure by an individual on a

mechanism to charge electric vehicles in their home, or parking space or garage.

Corporation tax

A measure was announced to allow companies to transfer tax losses as part of a group
restructure. This would only apply where there is no change in ultimate ownership and no
change of business within a period of three years.
Gaming tax

A significant change to the gaming tax regime was announced. Licence fees now fixed at
£100,000 for business to customer (“B2C”) licences and £85,000 for business to business
“B2B”) licences. In addition, B2C licensees pay now pay gaming tax of 0.15% of gross
revenue. See 5.13.5 for further details.

Importation of motor vehicles

Changes on the importation of vehicles were announced :

x The Ë’cash-back’’ on hybrid imports is reduced from £1,000 to £250;

x The Ë’cash-back’’ on full electric vehicles is increased from £1,000 to £2,500;
x Import duty remains at nil for hybrids (except for private imports – 5%) and fully-
electric vehicles;
x Duty on the importation of used vehicles by dealers will be aligned with the duty
payable by individuals (previously dealers generally paid at lower rates).
Doing business in Gibraltar 63
Import duties

Changes to import and excise duties included the following:

Change
Cigarettes From £13 to £14
per carton
Waterpipe tobacco From £15 per kg to £45
per kg
Diesel fuel From 25p to 37p per litre
Petrol (unleaded 95 octane From 29p to 35p per litre
Certain disposable paper products From 12% to nil

Certain disposable plastic products From 6% to 200%

American whiskey & bourbon From £1 to £2 per litre
Sparkling wines & champagne From 69p to £1 per litre
Educational electronic equipment From 3% to nil
Medical, dental and veterinary equipment From various rates to nil
Handbags From 3% to nil

64 Doing business in Gibraltar

5.2 General principles
On 1 January 2011, the Income Tax Act 2010 came into effect. The new act ended the
distinction between offshore and onshore businesses and moved Gibraltar to a system of
self-assessment for companies and self-employed individuals.

The Act provides that all companies, however owned, are taxed on profits accruing in or
derived from Gibraltar, thereby preserving the territorial basis of taxation. “Accrued in and
derived from” is defined by reference to the location of the activities that give rise to the
profits. In the case of companies licensed and regulated under Gibraltar law, the activities
that give rise to the profits are deemed to take place in Gibraltar, with the exception of
profits generated by overseas branches or permanent establishments.

The Commissioner of Income Tax is responsible for the administration of the Income Tax Act
and for the assessment and collection of income tax. Except for bringing a prosecution for a
tax offence, the Commissioner can authorise any individual to carry out any duties imposed
by the Act.

Documents, information and returns are regarded as secret and confidential, and any
official or other employee of the administration who does not observe this rule is guilty of an
offence. Communication of such information is, however, permitted for carrying into effect
the provisions of the act or in accordance with the EU Council Directives regarding exchange
of information (principally the Mutual Assistance) or international tax information exchange
agreements (see below). Communication is also permitted for the purposes of a prosecution
or for enabling proper double tax relief to be given.

The Commissioner may allow the Financial Secretary, Principal Auditor or any other officer
properly authorised on their behalf access to documents deemed necessary for the
performance of their official duties.

An independent tax tribunal hears appeals brought by taxpayers. The members of the
tribunal and a clerk are subject to a statutory declaration not to disclose any information

Doing business in Gibraltar 65

 5.2.1 Information exchange and compliance with international requirements
As at 30 June 2018, Gibraltar has:
 Concluded Tax Information Exchange Agreements (TIEA) with 27 countries, including the
US, the UK and Ireland. Of these, 25 are in force.
 Enacted legislation for the automatic exchange of information with the United States
(“FATCA”), the United Kingdom (“CDOT FATCA”) and all EU Member States (the “EU
Common Reporting Standard” or “DAC”).
 Enacted legislation for the exchange of information under the Common Reporting Standard
(“CRS”). Gibraltar was one of the “Early Adopters Group,” who made the initial formal
commitment to this initiative by the OECD.
 Enacted legislation to implement Country by Country Reporting. This is an OECD initiative
that requires entities that belong to multi-national groups with total consolidated revenue
of €750m or more to notify tax authorities if they are members of such groups, and if so,
the identity and jurisdiction of the ultimate parent entity. Further, the ultimate parent (or
the member entity in some circumstances) is then required to report financial information
relating to the group, analysed on a country-by-country basis.
 Transposed EU Council Directive 2011/16/EU on administrative cooperation in the field of
taxation, which relates to the exchange of information between all EU member states. This
includes the automatic exchange of information on advance cross-border rulings and
pricing arrangements issued by the Gibraltar tax authorities.
 Implemented the OECD and Council of Europe Convention on Mutual Administrative
Assistance in Tax Matters, providing for tax information exchange between Gibraltar and all
countries and territories that have ratified the Convention

In 2009, Gibraltar was placed on OECD’s White List of territories that had substantially
implemented the internationally agreed standard on tax information exchange.

In June 2013, the EU Code of Conduct Group and the ECOFIN fully endorsed the Income
Tax Act 2010. Shortly afterward, the EU launched a state aid investigation into the tax
treatment of passive interest and royalty income. (These have been taxable on companies
since 1 July 2013 and 1 January 2014, respectively). In 2014, the investigation was
extended to cover Gibraltar’s procedures for giving advance tax rulings and as of
30 June 2018 it is still in progress.
The Phase II report issued in 2014 by the OECD’s Global Forum on transparency and exchange
of information for tax purposes gave an overall rating of “Largely Compliant” — the same
rating as that of the UK, Germany and the US. Gibraltar was found to be “compliant” in seven
out of ten essential elements examined and “largely compliant” in the remaining three.

66 Doing business in Gibraltar

5.2.2 Classes of income
The Income Tax Act 2010 sets out the following different classes of income.

Table A
 Gains or profits of a company or a trust from any trade, business, profession or vocation
 Any rents, premiums and other profits (not being capital gains) arising from any interest
in real property

Table B
 Income from any office or employment, including any allowances, perquisites or benefits
in kind specified in Schedule 7 of the act
 Income from a trade, business, profession or vocation

Table C
Class 1 — Dividends, except for dividends:

 Paid or payable by a company to another company

 Paid to a person who is not ordinarily resident in Gibraltar
 Paid by a company whose shares are listed on a recognised stock exchange

 Paid out of profits or gains on which no tax was payable in Gibraltar, to the extent that the
dividend represents the distribution of such profits or gains.

Class 1A — intercompany loan interest (see Section 5.3.21 below)

Class 2 — income from a fund that is not marketed to the general public, including shares in
or securities of an open-ended investment company; taxability of the income depends on
whether the underlying income of the entity or entities forming the structure of the fund is
taxable

Class 3 — income from any right to and interests in anything falling within classes 1 or 2
above
Class 3A — royalties received or receivable by a company (see Section 5.3.22)
Class 4 — any pension, charge or annuity that is not maintenance, alimony or other payment
to a spouse or child under a court order or deed of separation
Class 5 — any profits or gains to be treated as income under the anti-avoidance clauses of
the Act

Doing business in Gibraltar 67

 Companies
Companies are subject to tax in Gibraltar only on income mentioned in the above tables
accruing in or derived from Gibraltar. In other words, companies are taxed on a territorial
basis with regard to the activities giving rise to the income.

Persons other than companies

Persons other than companies, for example, individuals, trusts and foundations) are subject to
tax upon income as mentioned in Tables B and C on a worldwide basis. Income in Table A is
only taxable when accruing in or derived from Gibraltar. Generally for individuals or trusts,
this would mean rental income, which would only be taxable if the property is located in
Gibraltar.

Income not taxable

Income tax is not payable on the following:

a. Most non-trading investment income — notable exceptions to this being Class 1A
intercompany loan interest (see Section 5.3.21 below) and dividends received by
individuals, trusts or foundations from non-quoted securities
b. Companies’ income that is not accrued in or derived from activities carried out in
Gibraltar
c. Rental income from properties located outside Gibraltar

d. Capital gains – these are outside the scope of the Income Tax Act 2010
e. Income received in respect of director fees, provided the director earning the income is
not ordinarily resident in Gibraltar, and is present in Gibraltar for less than 30 days in the
year of assessment
f. Funds income from a fund that is marketed to the general public
g. Income earned by full time students

h. Other income specifically exempted by rules made under the Act

5.2.3 The tax year and basis of assessment

For individuals, trusts and foundations, the year of assessment runs from 1 July in one
calendar year to 30th June in the following year, with taxpayers being assessed on an
actual basis. Companies are assessed on an actual basis according to their financial year.

68 Doing business in Gibraltar

5.2.4 Payment and filing dates

Individuals
Payment of tax
With respect to income from employment, tax is deducted from wages and salaries under a
PAYE system. Any additional tax due is generally payable by the employee once assessed by
the ITO.
Income from self-employment is payable under self-assessment. A taxpayer should make
two payments on account,* first by 31st January and second by 30th June in the year of
assessment. Any balance remaining is payable by 30th November following the end of the
tax year.
Filing requirements
Individuals are required to file their tax return for a tax year by 30th November following the
end of that tax year. Individuals with income from self-employment must draw up their
accounts to 30th June each year.

Trusts and foundations

Payment of tax
The trustees of a trusts or a foundation are required to pay any tax due in respect of the trust
or foundation under self-assessment.

Payments on account* are due by 31st January and by 30th June in the year of assessment.
Any remaining balance is payable by 30th November following the end of the tax year.
Filing requirements
The trustees of a trust or foundation with assessable income are required to file a trust tax
return by 30th November. Trusts or foundations with assessable income must draw up their
accounts to 30th June each year.

Companies

Payment of corporate tax

A company is required to make two payments on account* of corporate tax, the first by 28th
February and the second by 30th September each year. These are payments towards the tax
liability for the financial year in which those payments are due. Any balance of tax remaining
is payable within nine months of the end of the company’s accounting period.
*Payments are in two equal instalments of 50% of the tax payable for the last relevant accounting
period. If the taxpayer believes that the tax payable on account on this basis will exceed the liability
payable for the year, they may apply to the Commissioner to be discharged in whole or in part
from their obligation to make the advance payment. However, if it is subsequently found that the
application has been made erroneously and that the final liability is higher than predicted by the
taxpayer, a surcharge on late payment of the difference may apply.

Doing business in Gibraltar 69

 Filing requirements
For accounting periods ending on or after 1 January 2016 all companies registered in
Gibraltar and all companies (whether Gibraltar-registered or not) with income assessable to
tax in Gibraltar are required to file a tax return. Prior to this date, the filing requirement only
applied to companies with income assessable to tax in Gibraltar.

The filing deadline is nine months after the end of the month in which the accounting period
ended.

Companies with assessable income of £1.25 million or more (or equivalent on a pro rata
basis if the accounting period is less than one year) are required to file audited accounts with
its tax return. Companies with assessable income of less than £1.25 million (or equivalent
on a pro rata basis) are required to file accounts accompanied by an independent
accountant’s report with their tax return (in practice, audited accounts would be accepted as
an alternative).

The audit threshold, which was introduced in 2011, was initially £0.5 million of turnover.
The threshold was changed to £1 million of assessable income for accounting periods ending
on or after 1 July 2013, with an increase to £1.25 million of assessable income applying to
accounting periods ending on or after 1 July 2015.

Guidance has been issued by the Income Tax Office setting out the accounts that, in its view,
would be required to be filed by companies that have no income assessable to tax in Gibraltar.
For small companies (as defined in the Companies Act 2014) with no assessable income, only
an abridged balance would be required to be filed with the tax return.

5.2.5 Appeals
A taxpayer may appeal against an assessment by notice in writing addressed to the
Commissioner of Income Tax within 28 days of the date of service of the assessment. Such
an appeal is formally made to the Income Tax Tribunal, although in practice if there are clear
grounds for an appeal, it is usually resolved by the ITO before being referred to the Tribunal.

5.3 Corporate tax

5.3.1 Taxable base

The taxable base of a company is as defined in Section 5.2.2.

5.3.2 Ordinary residence

A company is considered to be ordinarily resident in Gibraltar if the management and
control of that company take place in Gibraltar, or if the management and control is
exercised outside Gibraltar by persons who are ordinarily resident in Gibraltar. Management
and control mean the highest level of oversight, usually as exercised by the board, rather
than day-to-day management. However, ordinary residence, in itself, is not what determines
if a company is taxable in Gibraltar; this is determined by the location of the activities giving
rise to the company’s profits (see Section 5.2).
70 Doing business in Gibraltar
5.3.3 Corporate tax rates

From 1 January 2011

All companies are chargeable on taxable profits at a rate of 10%, except for utility,
energy and fuel supply companies and for companies deemed to be abusing a dominant
market position, for which the applicable rate is 20%.

Prior to 2011, higher rates of corporate tax applied.

5.3.4 Exempt companies

Exempt company status was phased out by 31 December 2010.

5.3.5 Deductions allowed against income

As a general rule, a deduction in computing the profits or gains will only be allowed with
respect to any disbursement or expense that is wholly and exclusively incurred for the
production of income from a trade, business, profession or vocation. In addition, deductions
are available with respect to the below items.

Approved expenditure on premises

Expenditure incurred on painting, decorating, repairing and, in general, enhancing the

appearance of the frontage of premises entitles the claimant to a deduction in computing
the taxable income. This deduction is in addition to any other deduction that may already be
available as a business expense, for example, if the expenditure already meets the criteria as
a deductible repairs expense.
The expenditure must be certified by the town planner and the claim for the deduction must
be made within two years after the end of the year of assessment for which the deduction is
claimed.

Architect’s fees
A capped 200% credit was introduced for tax year 2015-16 onwards in respect of the cost of
architect’s fees for successful planning applications under the Town Planning Act (and any
fees charged by Government for such an application) made by a company in respect of its
own property in the first 24 months of operation of a start-up company. The credit, capped at
£5,000, is deductible against tax liabilities in the first three years of operation of the
company.

Training costs
For 2015-16 onwards, 150% of costs in respect of “qualifying training” (as approved by the
Commissioner of Income Tax) are allowable against the profits of a business as a deduction.

Doing business in Gibraltar 71

Improvement to Energy Performance Coefficient (EPC) rating
For 2015-16 onwards, a one-off deduction is available against assessable income on the
investment made by an individual, company or business in order to make a significant
improvement to the EPC rating of their premises, subject to conditions.
Development Aid

The objective of Development Aid was to encourage investment in Gibraltar by way

of development that brings a tangible and substantial benefit to the economy.

Although the legislation is still in place, new Development Aid licences are no longer
being issued for the time being. The provisions of the legislation still apply to existing
licence holders. Allowances are available for new developments – see section 5.3.7.
Once a licence was granted, the relevant Government Minister, on the advice of the
Development Aid Advisory Committee, determined what proportion of the total capital
expenditure in percentage terms was available for tax relief.

The amount calculated on this basis is available as a deduction against taxable profits, with
any unused amount being available to use as a deduction in future years. The amount of
profits that have been offset by Development Aid, once distributed to the beneficial owners
of the development company, is treated as non-taxable in the hands of those beneficial
owners.

72 Doing business in Gibraltar

In addition, first-time occupiers of property that was the subject of a Development Aid
licence are entitled to rates relief at the following rates:

Commercial premises Residential premises

Year Relief Year Relief
1 100% 1 100%
2 80% 2 90%
3 60% 3 80%
4 40% 4 70%
5 20% 5 60%
6 (and after) 0% and so on, until year 11 0%

5.3.6 Deductions not allowed against income

The Income Tax Act 2010 includes a list of expenses that are not deductible, or for which the
deduction may be restricted. These expenses include:
 Losses not connected with, or not arising from trade, business, professional or vocation

 Capital withdrawn from a business

 Capital employed in the improvement of premises
 Sums recoverable under insurance or a contract of indemnity

 Interest paid or payable to a person not resident in Gibraltar, to the extent that the
interest charged is at more than a reasonable commercial rate

 Interest paid or payable on funds borrowed other than for the purpose of trade or a
profession that generates the income
 Depreciation and amortisation of assets (instead capital allowances are given — see
Section 5.3.7)

 Taxation charged under the Income Tax Act 2010, or tax charged by other jurisdictions in
respect of which double tax relief may be given (generally this means tax on profits)

 Contributions to a provident, pension or other fund for the benefit of employees where
the fund has not been approved by the Commissioner of Income Tax
 Entertaining expenses — generally, the cost of entertaining clients is deductible, but
there are detailed rules that restrict this; the Act does not appear to allow a deduction
unless the person being entertained is a client (as opposed to, for example, a business
introducer). However, it is understood that in practice — within reason — a deduction will
be available in respect of such an expense if it is incurred wholly and exclusively in the
production of income. This area should be treated with caution, with comprehensive
records kept, if it is intended to be claimed for a deduction

Doing business in Gibraltar 73

 In the case of a branch, or a company with a branch, the deduction of certain head
office expenses or expenses incurred by a branch for the purpose of the company in
excess of 5% of gross income

 The Income Tax Act 2010 states that “In the case of person who has income, some of
which is chargeable to tax and some of which is not chargeable to tax, in computing the
profits and gains liable to tax, the deductions allowed Á Á shall be apportioned on a pro
rata basis between the chargeable and non-chargeable income.” This could be
interpreted as meaning that all otherwise deductible expenses should be apportioned
such that no deduction would be obtained for the portion of costs that are allocated
against non-chargeable income. The Commissioner of Income Tax has, however, stated
that this clause will only be applied to deductions of a general nature and that direct
expenses should be deducted against the income they relate to and not apportioned.

5.3.7 Capital allowances for business assets

The first £30,000 of capital expenditure on plant and machinery (including fixtures, fittings
and equipment acquired in a year of assessment is fully deductible within the year. An annual
allowance is given for any remaining balance over this amount. From 1 January 2016 this
includes commercial motor vehicles, and private motor vehicles only if for hire or the carriage
of members of the public in the ordinary course of business or trade. Prior to that date, there
were no initial allowance is given for motor vehicles, but an annual allowance is given as set
out below.

In addition, the first £50,000 of qualifying capital expenditure on computer equipment is

also fully deductible within the year. As for plant and machinery, an annual allowance is given
for any remaining balance over this amount.
From 1 July 2015 onwards, new businesses may claim 100% of eligible capital allowances
in the first year of trading, subject to conditions.

74 Doing business in Gibraltar

The following table summarises the position from 1 January 2011 onwards.

Initial allowance Additional allowance

Plant and machinery 100% on first At 15%2 p.a. on reducing
(including fixtures and fittings) 1 £30,000 balance

Computer 100% on first at 15%2 p.a. on reducing

equipment £50,000 balance

Industrial buildings (including 4% p.a. straight line on

factories, hotels and similar premises) cost

As of 1 January 2011, all assets are pooled for tax purposes. The pool is increased by
relevant capital expenditure in excess of the initial allowance in the period, and is reduced by
the proceeds of any disposals during the period. The allowance for the year is then
calculated at 15% of the value of the pool. The pool value is then reduced by that allowance
and the remaining balance is carried forward to next year.
In addition to the above, from 1 July 2013, capital allowances are given with respect to
the construction of office accommodation in Gibraltar where construction commenced on
or before 31 March 2015. From 1 July 2014, this was extended to “high-value
accommodation” where ground was broken before 31 December 2015. In the first year
following the completion of construction, 30% of the construction costs are given as an
allowance, with the remaining 70% over the subsequent seven years. This allowance can be
claimed in part or in full by either the developer or the occupant. It is limited to those costs
wholly and exclusively laid out or expended in the construction of the accommodation,
including all preliminary planning, design and associated costs, but excluding the cost of the
land.

The amount paid to a principal landlord (which is taxable for the landlord) in acquiring
leasehold premises may be written off over the period of the lease, provided the lease is for
12 years or less.
Amounts amortized with respect to goodwill and other intangible assets (excluding
any software in respect of which capital allowances apply) are not tax deductible.

1
This does not include motor vehicles (except for - from 1 January 2016 onwards - commercial motor
vehicles, and private motor vehicles if for hire or the carriage of members of the public in the ordinary
course of business or trade).
2
For companies taxed at 20% (utilities, energy companies, etc.), an annual allowance of 20% is given
instead of 15%.

Doing business in Gibraltar 75

5.3.8 Capital gains
There is no capital gains tax legislation in Gibraltar. Capital gains are, therefore, not subject
to taxation.

5.3.9 Losses
Under the Income Tax Act 2010, losses can be carried forward indefinitely to be offset
against future profits arising from the same or similar trade, profession or vocation. There
are no provisions for carrying back tax losses.
In the case of a company, losses cannot be carried forward if, within a period of three years,
there is both a change in the ownership of the company and a major change in the nature or
conduct of a trade of the company.
The tax losses of a company may only be offset against future profits of the same company –
with the exception of a tax measure announced in July 2018. This measure is to allow
companies to transfer tax losses as part of a group restructure. This would only apply where
there is no change in ultimate ownership and no change of business within a period of three
years. At the time of writing, this change is not yet in the legislation and details are still to be
confirmed. It is likely that it would apply from 1 July 2018 onwards.

5.3.10 Computation of taxable profits

£
Profit per accounts X
Add: disallowable expenses included in accounts X
Less: non-taxable income (X)
Less: capital allowances (X)
= Profit for the year subject to corporate tax X
Less: losses brought forward (X)
= Taxable profit P
Taxation payable = 10%/20%* x P X
Less: double tax relief (X)
Less: new business start-up relief (see 5.3.18) (X)
Net tax payable X

76 Doing business in Gibraltar

5.3.11 Dividends paid to shareholders
Dividends paid to resident shareholders attract a Gibraltar tax credit equivalent to the tax
paid by the company on the profits out of which the dividend was paid.
In the case of dividends declared in accounting periods ending up to 31 December 2015,
dividends are deemed first to be paid out of taxable income before non-taxable income.
Within those two groups of income, profits earned at an earlier date are allocated first.
For dividends declared in accounting periods ending on or after 1 January 2016:
x The legislation is silent on the order in which profits from different years should be
allocated, although the dividend returns that apply at the time of writing state that
earlier years should be used before later years (following the previous wording in the
legislation)

x Taxable and non-taxable income within the relevant years’ profits that are treated as
being distributed are allocated in equal proportions.

Detailed rules for calculating the amount of non-taxable income and for determining the
amount of the tax credit are to be implemented, but are still awaited at the time of writing.
These are likely to include rules for the transition from the earlier method of allocating
dividends to the current method. It is also likely that profits from different years will be
grouped according to the headline tax rate for the years in question.
For accounting periods ending on or after 1 January 2016, a dividend return is required to
be filed by any Gibraltar-registered company if it declares a dividend.
Prior to this date, a dividend return was only required to be filed by a company if it declared a
dividend in favour of a person ordinarily resident in Gibraltar, or to a Gibraltar incorporated
company.
Dividend returns are required to be filed within nine months of the end of the end of the
month in which the accounting period ends.

77 Doing business in Gibraltar

5.3.12 Loans made to shareholders
If a loan is made by a company to a shareholder, or to a person connected to a shareholder
(in either case, the borrower not being a company), then the amount of the advance will be
treated as a dividend, if in the opinion of the Commissioner of Income Tax this represents
a distribution of income. The amount deemed to be a dividend is taxed accordingly.

5.3.13 Transitional rules

From 2011 onwards, all incorporated and unincorporated businesses are assessable to tax
on an actual basis. Prior to this, many companies were assessed on a preceding year basis
(i.e., for a given tax year, the profits assessed were those for the financial year ending in the
prior tax year).

Specific transitional rules applied to the taxation of profits generated by companies between
2008 and 2010 (please refer to earlier editions of this publication for details).

Doing business in Gibraltar 78

5.3.14 Double tax relief
There are no double tax agreements in force between Gibraltar and any other jurisdiction.
However, tax relief is available with respect to foreign income tax paid, deducted from,
or liable to be paid on, income that is also chargeable to Gibraltar tax, up to the lower of
Gibraltar tax or foreign tax on the income. This only applies where the jurisdiction imposing
the foreign tax is the same as the jurisdiction in which the income is generated.

5.3.15 Group tax relief

There is no provision for group relief in Gibraltar.

5.3.16 Service fees paid to non-residents

There is no automatic requirement to withhold tax on any payment due to a non-resident
under an agreement for management or consultancy services or services of a similar nature
performed in Gibraltar.

However, the recipient will be liable to tax and the Commissioner may instruct the payer to
withhold tax on any future payments.

5.3.17 Parent-Subsidiary Directive and EU Directive on interest and royalties

Gibraltar has implemented the EU Parent-Subsidiary Directive and the EU Directive on
interest and royalties, so that no tax or withholding taxes apply on dividends, royalty and
interest payments paid between associated companies within the EU (minimum
shareholding, residency and establishment rules apply).
In the case of dividends, in general, a Gibraltar-registered company holding, directly
or indirectly, a relevant participation of the voting capital of a company registered in
another member state does not pay corporate tax on any income derived from that
company.

Similarly, any dividends paid by a Gibraltar-registered company to a company in another

member state are not subject to withholding tax. The relevant participation means an
interest equal to at least 10% in the voting share capital.
[Note: The company of the member state must be of a type listed under the directive. This
lists specific types of companies acceptable in each jurisdiction as well as the kind of tax those
companies must be subject to in their respective states.]

Apart from legislation arising from these two EU Directives, there is, in any case:
 no requirement to withhold tax on dividends paid by Gibraltar companies,
 no Gibraltar tax on dividends received by a company from another company (other than by
the application of any anti-avoidance provisions under the Parent-Subsidiary Directive).
 no tax on non-trading interest income (other than Class 1A — intercompany loan interest,
see Section 5.3.21).

79 Doing business in Gibraltar

5.3.18 Start-up relief
An incentive scheme is available to companies for business start-ups which commenced
between 5 July 2016 and 30 June 2017. The business will be eligible for a tax credit equal
to the tax otherwise payable up to a maximum of £50,000 over each of the first three years
of trading. The business must have at least five employees in the first year. There are anti-
avoidance measures to ensure that it is only applied to genuinely new businesses in Gibraltar

5.3.19 Branches
The tax treatment of profits accrued and derived in Gibraltar by branches (or any form
of permanent establishment) established by foreign companies in Gibraltar is similar to
companies. Similarly, profits accrued and derived by branches or permanent establishments of
Gibraltar companies in another jurisdiction are not liable to Gibraltar corporate tax to the extent
of the activities so conducted outside Gibraltar.

5.3.20 Protected cell companies

Protected cell companies are taxed as if each cell were a separate company.

5.3.21 Class 1A: interest on intercompany loans and advances

Interest from loans or advances by one company to another company are taxable where
the interest from the individual company concerned is £100,000 or more per annum. As an
anti-avoidance measure, interest received or receivable from different companies will be
considered to be from the same company for the purposes of the £100,000 threshold
where those companies are “connected persons” as defined elsewhere in the Income Tax
Act 2010.
For the above purposes, interest will be deemed to be accrued and derived in Gibraltar
where the company in receipt of the interest is a Gibraltar-registered company.

This applies from 1 July 2013 onward.

5.3.22 Class 3A: royalties

With effect from 1 January 2014, royalties received or receivable by a company registered in
Gibraltar are deemed to accrue in and derive from Gibraltar, and are assessable to tax.

5.3.23 Ownership, chartering or operation of ships and aircraft

Gains or profits derived by a non-resident person (including companies) from the carriage
of passengers or cargo to or from Gibraltar in any ship or aircraft owned, chartered or
operated by that person is not taxable.

Doing business in Gibraltar 80

5.4 Individuals: general

5.4.1 Overview
Taxpayers may choose between the gross income based system (GIBS) and the more
traditional allowance-based system (ABS) (see Sections 5.5 to 5.7). In addition to income
tax, social insurance contributions are payable by employers, employees and self-employed
persons (see Section 4.6).

5.4.2 Ordinary residence

As of 1 January 2011, an individual is deemed to be ordinarily resident in Gibraltar is he or
she:
(a) is present in Gibraltar for at least 183 days in a tax year, or
(b) is present in Gibraltar in three consecutive tax years for more than 300 days in total
during those years.

“Present” means being in Gibraltar at any time during a 24 hour period commencing at
midnight, whether or not accommodation is used.

An individual who is ordinarily resident is generally taxable in Gibraltar on their worldwide

income (subject to double tax relief and to the exceptions below:

x Rental income is only taxable if the property is located in Gibraltar.

x Self-employed income is in principle taxable where the activity is located in Gibraltar.
However, the legislation provides that where any part of the activity, including
administration, marketing or support is carried out in Gibraltar, then the whole activity is
treated as being performed in Gibraltar. Further, for this purpose, where any activities
of a similar business, trade, profession or vocation are carried on outside Gibraltar,
those will be treated as part of the activities carried out in Gibraltar.

An individual who is not ordinarily resident is only taxable on income accruing in or derived
from Gibraltar (see Section 5.10 for some further exemptions for non-residents).

81 Doing business in Gibraltar

5.4.3 Sole traders

Self-employed individuals are liable to income tax on their profits, as adjusted for tax
purposes in a similar manner as is the case for companies:

 Deductions are allowed against income — as described in Section 5.3.5

 Certain items are not deductible, or the deductions may be restricted — as described in
Section 5.3.6
 Losses may be carried forward indefinitely against future profits. Losses cannot be
carried back
 There are specific rules that apply to tax years 2009-10 and 2010-11 to transition the
basis of assessment from the preceding year basis that generally applied up to 2010, to
the actual basis applying from 2011 onward
 Capital allowances are available as described in Section 5.3.7

5.4.4 Partnerships
If a partnership carries out a trade, business or profession, it is treated as a transparent
entity; individual partners are taxed on their share of the partnership’s profits as adjusted
for tax purposes. A partner is not liable to the unpaid tax of another partner.

82 Doing business in Gibraltar

5.5 Alternative methods of personal taxation
Under the GIBS, a taxpayer is entitled to very few allowances and/or reliefs, but generally
the applicable tax rates are lower. The majority of taxpayers are taxed under the GIBS,
under which the effective (i.e., overall) tax rate is never more than 25%.

Irrespective of the system that is opted for, on final assessment, the ITO will apply the
system most beneficial to the taxpayer.
In general, where a taxpayer opts for the GIBS and the spouse does not, the availability of
allowances to the spouse opting for the ABS is restricted. In such a case, any allowance
claimed by the spouse up to 30 June 2007 who now opts for the GIBS may not be
“transferred” to the spouse opting for the ABS. Other restrictions include:

1. Mortgage Interest Relief: In relation to the purchase of a home after 30 June 2007 in
Gibraltar where neither spouse had, by that date, claimed mortgage interest relief for
the year ended 30 June 2007, mortgage interest relief available to the spouse being
taxed under ABS is restricted to the lower of 50%* of the eligible mortgage interest paid
and one-sixth of that spouse’s assessable income.

2. Home Purchase Allowance (HPA): In relation to the purchase of a home after 30 June
2007 in Gibraltar where neither spouse had, by that date, claimed the HPA for the
year ended 30 June 2007, the HPA available to the spouse being taxed under ABS is
restricted to a maximum of 50%* of the deduction that could otherwise be claimed. The
ITO also restricts the HPA to one-sixth of the assessable income of the spouse claiming
the allowance.
3. Life insurance policies taken after 1 July 2007 on the lives of both spouses: In such
a case, the spouse that has opted for the ABS is not entitled to claim relief on the life
insurance premiums.
4. Medical insurance policy covering both spouses: As mentioned above, the spouse that
has opted for the ABS cannot claim any allowances.

5. Pension contributions: The spouse of a person contributing to a pension scheme that

opts for the GIBS cannot claim tax relief on contributions.
*The party claiming the allowance must have at least a 50% legal interest in the property.

However, individuals opting for the ABS will always be able to benefit from the following
allowances or reliefs even if their spouses opt for the GIBS (note that this list is not
exhaustive):

 Personal allowance (and “top-up” allowance, if applicable)

 Low-income earners’ allowance

 Special deduction for senior citizens

 In general, any other allowance that was being claimed up to 30 June 2007

Doing business in Gibraltar 83

5.6 Gross income based system: tax rates and deductions

5.6.1 Tax rates for 2018-2019 and 2017-2018

(a) Individuals with gross income up to £25,000

Taxable income bands Rate % Tax on band

First £10,000 6% £600
£10,001-£17,000 20% £1,400
Balance 28% £1,400

(b) Individuals with gross income of more than £25,000

Taxable income bands Rate % Tax on band

First £17,000 16% £2,720
£17,001-£25,000 19% £1,520
£25,001-£40,000 25% £3,750
£40,001-£105,000 28% £18,200
£105,001-£500,000 25% £98,750
£500,001-£700,000 18% £36,000
Balance 5%

The effective rate of tax on taxable income of £1 million is 17.6%. All taxpayers pay an
effective (overall) rate of tax of less than 25%.

84 Doing business in Gibraltar

5.6.2 Deductions

Approved expenditure on premises

This deduction extends to taxpayers under the GIBS, but the deduction is restricted to a
maximum of £5,000 (see Section 5.3.5 for further details).

Purchase of main residential property in Gibraltar

A deduction is available with respect to mortgage interest payments up to a maximum of
£1,500. There is also a deduction of up to £6,500 for first- time buyers with respect to
approved expenditure toward the purchase of their home.

Pension contributions
There is a deduction of up to £1,500 p.a. with respect to contributions to approved pension
schemes.

Medical insurance
There is a deduction available with respect to private medical insurance of up to £3,000
p.a.

Installation of solar energy for boilers

There is an allowance of up to £3,000, given over two years, for the installation of solar
energy for boilers.

Electric vehicle charging installation

A deduction was introduced for 2018-2019 against tax liabilities for the first £2,000 of the
cost of installing a mechanism for the electric charging of a vehicle in the taxpayer’s home, or
in a parking space or garage owned by them, subject to approval.

85 Doing business in Gibraltar

5.7 Allowance-based system
5.7.1 Tax rates

The below bands and rates are in force for both 2018-19 and 2017-18. For both those tax
years, all taxpayers under the ABS receive a tax credit amounting to the greater of £300 or
2% of the tax payable based on the below table.

2018-19 2017-18
Taxable income bands Rate % Tax on band Rate % Tax on band
On first £4,000 14% £560 14% £560
On next £12,000 17% £2,040 17% £2,040
On remainder 39% 39%

Apportionment of tax bands and allowances

When an individual moves to or from Gibraltar and/or takes up or ceases employment in
Gibraltar, rules are applied that result in the apportionment of tax bands and allowances
(see Section 5.11.1).

Doing business in Gibraltar 86

5.7.2 Principal allowances and reliefs
The following are the principal allowances and reliefs available to individuals for the tax year
2018-19 (from 1 July 2018 to 30 June 2019). They also apply to 2017-18 unless otherwise
indicated. These figures are based on the Budget Measures announced by HM Government
of Gibraltar on 2nd July 2018 and may be affected by subsequent legislation. Appendix 6.2
provides an eight-year summary of the principal allowances and reliefs.

Personal allowances
A single taxpayer is entitled to a personal allowance of £3,385 (2017-18:
£3,300). An individual who has a spouse, either living with or maintained by them, is
entitled to a spouse allowance of £3,385 (2017-18: £3,300). This is subject to the proviso
that only one of the spouses may claim the spouse allowance. Taxpayers who prove that they
pay alimony to their wife or former wife may opt for the single taxpayer’s allowance and, in
addition, deduct the alimony actually paid up to a maximum of £3,385 (2017-18: £3,300).
Individuals whose total allowances are less than £4,273 (2017-18: £4,188) have their
personal allowances “topped up” to that amount.
Elderly persons (men aged 65 years or above and women aged 60 years or above) have
their allowances “topped up” to £12,370 (2017-18: £12,200) irrespective of the level of
assessable income.

Other allowances and reliefs

Child relief

With respect to the first of any children of the taxpayer (including a stepchild or adopted
child) who meets the criteria set out below, the taxpayer is entitled to a deduction of £1,165
(2017-18: £1,135). The relief is increased to £1,325 (2017-18: £1,290) with respect to each
child educated outside Gibraltar.
The relief is given to an unmarried child who was:

 Under the age of 16 at the commencement of the year of assessment, or

 Receiving full-time education within or outside Gibraltar during the year of assessment.
The child need not be the claimant’s own child, but must be maintained during the year by
the taxpayer, who must be an ordinarily resident individual in Gibraltar.
If the child’s income in their own right, exclusive of any income from a scholarship, bursary
or other educational allowance and earnings from employment at an approved educational
establishment, exceeds the specified reliefs, no relief is given unless another child of the
claimant meets the criteria. However, the income received by a student from a holiday job
during school or university vacations is exempt from income tax.

87 Doing business in Gibraltar

If an individual proves to the satisfaction of the Commissioner that they have paid
maintenance for a child under a court order or deed of separation maintenance to a child,
the individual is entitled to claim a deduction from assessable income of the amount of
maintenance so paid, up to a maximum of £1,165 (2017-18: £1,135).

Disabled person relief

With respect to each disabled unmarried individual, the parent is entitled to relief in the
amount of £9,285. In order for a parent to qualify for the relief, the disabled individual
must be suffering from specific bodily or mental disability, be residing with the parent and
is either eligible for a disability allowance paid by the Gibraltar Government, or would be
eligible for a disability allowance if they satisfied the five-year residency period required
for a disability allowance.

Nursery school allowance

An allowance of £5,290 (2017-18: £5,160) is available to ordinarily resident individuals
with respect to each child attending a private registered nursery during the preschool
academic year.

Relief with respect to individuals taking charge of children (single parent’s allowance)
A relief of £5,575 (2017-18: £5,435) is given to a man who is not entitled to a deduction for
a spouse, or to a woman with respect to whom no man is entitled to claim such a deduction,*
who has the custody of, and maintains during the year of assessment, an unmarried child
for whom a deduction for child allowance is available. This only applies if the taxpayer is an
ordinarily resident in Gibraltar.

Low-income earner’s tax credit

Individuals with income of less than £11,200 (2017-18: £11,150) are entitled to an
additional allowance so that no tax is payable by them. Allowances are tapered for individuals
whose earned income for the tax year is between £11,200 and £19,500.

Dependent relative relief

A relief of £325 (2017-18: £315), or £215 for non-residents (2017-18: £210) is available to a
claimant with respect to a relative of the claimant or of their spouse who is incapacitated by old
age or infirmity from maintaining herself (if the relative is a widowed mother, then whether
incapacitated or not), whose income from all sources does not exceed £2,812 (subject to
confirmation at the time of writing) and who is maintained by the claimant at their own
expense.
The relief is reduced by the excess of the dependent’s total income from all sources over a
certain amount and is restricted if the dependent is not a resident of Gibraltar.

*This restriction does not apply if the only deduction for a spouse claimed by a man with respect
to the (female) taxpayer in question is in relation to alimony or maintenance following divorce, or in
relation to payments under a court order or separation agreement.

Doing business in Gibraltar 88

Deduction for blind person
An allowance of £5,285 (2017-18: £5,155) is available to an individual who proves to the
satisfaction of the Commissioner, by producing a certificate signed by a qualified medical
practitioner, that the individual or their spouse has effectively lost their sight.

Disabled individuals’ tax allowance

An additional earned income allowance effectively exempts individuals in employment from
tax, if they are recipients of disability allowance paid by the Department of Social Security.

Deduction for purchase or construction of a house or flat

Individuals ordinarily resident in Gibraltar who purchase or enter into an agreement to

purchase, construct, or are in the process of constructing a house or flat in Gibraltar for
their own residential occupation, are entitled, in any one or more years of assessment, to
claim a deduction or deductions from their taxable income, or that of their spouse, or of
both*, in whichever proportion is most beneficial. The following restrictions apply:

1. Deduction is only granted once and is not granted for more than one dwelling at
any one time.
2. Deduction is only allowed for any payment or payments made toward the purchase or
construction of the dwelling.
3. Deduction amount cannot, in any year of assessment, exceed the aggregate amount
paid by the individual toward the purchase or construction of the dwelling.
The “aggregate amount” mentioned in point 3 includes:
 A deposit
 The repayment of any loan or part of a loan advanced for the purpose of purchasing
or constructing the dwelling

 The interest on such a loan (this is not affected by the fact that the interest may have
been relieved under a different section of the Income Tax Act).
Further restrictions apply where the spouse of the taxpayer is taxed under the GIBS (see
Section 5.5).
*If also taxed under the ABS

89 Doing business in Gibraltar

Once the right to the deduction has been established, the taxpayer may choose over how
many tax years they wish to spread the deduction.

The allowance is claimed back if the taxpayer relinquishes the legal estate of the dwelling
with respect to which the deduction has been granted within 12 months of obtaining it or if
the taxpayer ceases to reside in the dwelling within 12 months of obtaining the legal estate.
The deduction is available, determined as above, for accommodation occupied or being
constructed for each child of the taxpayer subject to certain provisos concerning occupation
by that child and the stipulation mentioned above concerning disposal within 12 months.

Interest relief on loans for the purchase, improvement or development of property

Interest paid by an individual or their spouse who occupies property in Gibraltar for
residential purposes on a loan to defray money applied in purchasing or on improving or
developing that property is allowable, subject to the following restrictions:

 Interest on new mortgages granted from 1 July 2008 onward is restricted to a maximum
of the interest on £350,000 of the loan amount
 Interest on pre 1 July 2008 mortgages where the principal exceeds £350,000 are
grandfathered, with the amount over the relevant limit being reduced gradually
Restrictions also apply where the spouse of the taxpayer is taxed under the GIBS
(see Section 5.5).

Interest relief on loans for the purchase or construction of a parking bay or garage
Interest paid by an individual on a loan to purchase or construct a garage or parking bay in
Gibraltar is allowable against the assessable income of that person, their spouse or of both in
whichever proportion is most beneficial.

Approved expenditure on premises

This deduction, which is described in Section 5.3.5, also applies to individuals, whether
as part of the business of a self-employed person, or with respect to property held for non-
business purposes.

Life insurance relief

Premiums or contributions (or both) payable during the year of assessment are allowable as a
deduction, subject to the following restrictions.
The deduction is given with respect to premiums payable by the claimant for an insurance
contract on the claimant’s or spouse’s life. However, relief is restricted to:
 One-seventh of the assessable income of the taxpayer
 Seven percent of the capital sum assured at death

Doing business in Gibraltar 90

Pension contributions: personal pension schemes and retirement annuity contracts
Aggregate contributions to such schemes are eligible for tax relief subject to a limit of the
lower of 20% of earned income or £35,000. In order to allow members of these schemes to
top up unused tax relief, a one-year carry-back provision is available.

Contributions by the employer to approved personal pension schemes within the above
limits are not taxable on the employee as a benefit in kind. This exemption does not apply
to retirement annuity schemes.

Pension contributions: occupational pension schemes

Contributions in respect of proprietary directors and shareholders by an employer and
employee in total of up to 25% of assessable income are eligible for tax relief.
In case of other employees, the maximum tax relief available with respect to contributions is
the difference between one-sixth of the taxpayer’s assessable income and any deduction for
life assurance premiums already claimed (the deduction for life assurance premiums being
restricted to one-seventh of assessable income).

Contributions by the employer are not taxable on the employee as a benefit in kind.

Pension contributions: other

A deduction is available in respect of contributions to a pension scheme, provident society

or fund approved by the Commissioner, with such contributions not being related to a
statutory pension scheme, or personal pension scheme. The deduction available, together
with any deduction for life insurance premiums (see above), is restricted to:
 One-sixth of the assessable income of the taxpayer

 Seven percent of the capital sum assured at death (in respect of any policy securing a
capital sum on death)

Medical insurance allowance

The first £5,285 (2017-18: £5,155) of eligible premiums paid in the tax year by a taxpayer
to an approved medical insurance scheme providing health insurance for the taxpayer,
spouse or dependent children is fully allowable from the taxpayer’s assessable income.

5.8 Exemptions and concessions

Income from pensions

Income from state pensions is not taxable.

Occupational pensions received from an approved pension scheme by individuals aged 60 or
above, or by retired policemen, firemen, prison officers, Royal Gibraltar Regiment or
customs officers who are aged 55 or over, and who are in employment will not be taken into
account in establishing tax due on their earned income. In addition, all such pensions are
taxed at 0%.
91 Doing business in Gibraltar
There is no requirement to buy an annuity from the capital value of a pension fund and
pensioners may withdraw the entire capital tax-free on reaching retirement age.

Pensions received from an approved pension scheme imported from another jurisdiction
Recognised Overseas Pension Schemes (“ROPS” – previously referred to as QROPS) are
taxed at the rate of 2.5% insofar as they form part of an individual’s taxable income.

Savings income
Income of a passive nature is not liable to tax — this includes bank interest and dividends and
interest from securities quoted on a recognised stock exchange.

Gibraltar Government debentures

Income from investments in various Government of Gibraltar debentures is tax-exempt.

Rental income from property outside Gibraltar

Income from the rental of property located outside Gibraltar is not taxable in Gibraltar.

Other exemptions
 Compensation for unfair dismissal, redundancy payments and in some circumstances other
termination payments may be approved as non-taxable by the Commissioner of Income Tax.

 Income received by a full-time student from employment.

Gift aid and charitable giving

Where donations are made under this scheme, the Government pays the charity in question
the equivalent of the tax suffered by the donor on the amount of the gift grossed up at the
standard rate of tax (20%). The limit on gifts under the scheme is £5,000 p.a.

A Payroll Giving Scheme allows for tax free charitable donations of up to £5,000 to be given.

5.9 Benefits in kind

5.9.1 Scope

Schedule 7 of the act describes the tax treatment of specific taxable benefits provided to
employees and/or their families, including:

 Cash and non-cash vouchers

 Credit tokens
 Living accommodation
 Cars, vans and related benefits
 Employment-related loans
 Expense payments

Doing business in Gibraltar 92

In addition, the act includes a “catch-all” provision for benefits not specifically covered
under the legislation. Employment-related benefits received by prospective or former
employees are included by the legislation.

5.9.2 Tax payable

Benefits received by an employee of less than £250 in a year of assessment are not taxable.
Employers may apply for a dispensation from the Commissioner of Income Tax, and as part
of this, opt to pay the tax on benefits on behalf of the employee. If an employer is paying the
tax under a dispensation, the benefits received by an employee between £250 and £15,000
in the year of assessment are taxed at the rate of 20%. If the benefits exceed £15,000, then
tax is payable at the rate of 29%.

5.9.3 Living accommodation

Living accommodation provided to employees or a member of their family or household is a
taxable benefit. However, the benefit is exempt in the following circumstances:

 The employer is an individual and is providing accommodation in the normal course of a

domestic family or personal relationship

 The accommodation is necessary for the proper performance of the employee’s duties
 The accommodation is provided for the better performance of the duties of employment
and is customary for that type of employment

 The accommodation has been provided by an employer to an employee who has relocated in
order to take up that employment, and:
x The relocation is from a residence that was not within a reasonable commuting
distance of work to one that is within a reasonable commuting distance
x The change in residence arose from either employment, a change in duties of
employment, or alteration of the normal place of employment duties

In this case, the exemption applies for seven years from the date of relocation.

5.9.4 Cars and vans

Cars and vans provided by an employer to an employee or any member of their family or
household is a taxable benefit if made available for their private use. The cash benefit is
calculated as 25% p.a. of the purchase cost of the vehicle to the employer. After four years,
there is no remaining benefit. There are separate rules relating to the provision of fuel by
employers. Tax is payable on the cash benefit.

Where a car is shared between employees for their private use, the taxable benefit on each
employee is apportioned on a “just and reasonable basis.”
There is an exemption for “pooled cars.” These are cars:
 Available to and actually used by more than one employee by reason of their employment

93 Doing business in Gibraltar

 Not ordinarily used by one employee to the exclusion of others

 Whose private use is merely incidental to the employee’s other use of the car
 Not normally kept overnight in the vicinity of the home of one of the employees (unless
the vehicle is kept on premises occupied by the employer)
Motorcycles and scooters provided for employees are specifically excluded from being a
benefit in kind.

5.9.5 Cheap loans and loans to directors

If a loan is made by an employer to an employee or a relative of an employee, this is treated
as a cheap loan if there is no interest payable, or if the interest payable is below what
would be charged on the open market by a bank or building society. The tax benefit is the
difference between any interest payable by the employee and the interest that would be
payable at the market rate.

“Employer” as stated above, extends to various parties connected to the employer, for
example, a company controlled by the employer or a person with a material interest in the
employer.

No taxable benefit arises on advances to cover necessary expenses, where the amount on
all such advances in the year never exceeds £1,000, the advance is spent within six months
and the employee accounts for the expenditure to the employer at regular intervals.
If an employee-related loan is written off or released, it is treated as earnings.
The Income Tax Act 2010 previously contained specific provisions relating to loans to
directors, to the effect that such loans were treated as a taxable benefit-in-kind irrespective
of whether any interest is charged or not. In 2015, the legislation was amended to remove
this provision with effect from 1 July 2014; now loans to directors are treated the same as
loans to other employees.
There is provision elsewhere in the Income Tax Act to treat loans to shareholders as if they
were dividends (see Section 5.3.12) in the event that such loans are not already taxed as a
benefit in kind.

5.9.6 Contributions by employers to medical insurance

There is an exemption in respect of approved health insurance premiums paid by an employer
on behalf of employees (including coverage for their spouse and children). This applies to
premiums of up to £5,285 (2017-18: £5,155) under the Allowance Based System, and of up
to £3,000 under the Gross Income Based System. In either case, the exemption would be
reduced by any amount claimed by the taxpayer as a deduction for health insurance.

Doing business in Gibraltar 94

5.9.7 Relocation expenses
There are a range of expenses connected with relocation that are specifically excluded from
being treated as a benefit in kind, for example, expenses in connection with the purchase or
disposal of property, costs of transporting belongings, traveling and subsistence.

In order to qualify for such exclusion, the following conditions must be met:
 The expenses must be for an employee who has relocated in order to take up employment

 The relocation must be from a residence that was not within a reasonable commuting
distance of work to one that is within a reasonable commuting distance
 The change in residence must arise from the employment, a change in duties of
employment or alteration in the normal place of employment duties

5.10 Non-residents
See Section 5.4.2 for the definition of ordinary residence for an individual for tax purposes.

5.10.1 Non-residents: general

Non-residents are liable to tax on income accruing in or derived from Gibraltar, although
there are a number of exemptions as described in Sections 5.10.2 to 5.10.4 below.
In the case of a non-resident individual, the ABS applies a rate of tax of 17% on taxable income
of up to £16,000 and 39% on taxable income in excess of that. For a non-resident with income
from employment or from a “trade, business, profession, or vocation” (i.e., self-employed), it
is likely that GIBS would be applied instead.
However, in the case of a non-resident individual with taxable income other than from
employment, or self-employment the Income Tax Office’s view is that GIBS cannot be applied.
Rental income is generally treated as a separate type of income from a “trade, business,
profession or vocation”. Therefore, the income of a non-resident from rental income from a
Gibraltar property may be taxed at up to 39%.

5.10.2 Income from occasional presence in Gibraltar

Individuals who are not ordinarily resident in Gibraltar and who are present in Gibraltar for
less than 30 days in a tax year are not taxable on:

 Fees with respect to the office of director of a company

 Emoluments from employment where the duties of the employment, other than duties
ancillary to the employment, are performed exclusively outside Gibraltar (subject to anti-
avoidance rules on dual-employment contracts)
 Remuneration from a trade, profession, business or vocation where the trade or service,
other than activities ancillary to that trade, profession, business or vocation, is performed or
provided exclusively outside Gibraltar (subject to some restrictions)

95 Doing business in Gibraltar

5.10.3 Ownership, chartering or operation of ships and aircraft
Gains or profits derived by a non-resident individual (or company) from the carriage of
passengers or cargo to or from Gibraltar in any ship or aircraft owned, chartered or
operated by that person is not taxable.

5.10.4 Investment income from Gibraltar

Dividends from a Gibraltar company and interest from banks, building societies and other
financial services institutions received by an individual who is not ordinarily resident, are not
taxable in Gibraltar.

5.10.5 QROPS and QNUPS

Refer to Sections 5.11.5 and 5.11.6, for QROPS and Qualifying Non-UK Pension Schemes
(QNUPS), respectively.

5.11 Expatriates

5.11.1 Apportionment of tax bands and tax allowances

When a person obtains employment in Gibraltar, who was not resident in Gibraltar
immediately prior to obtaining employment:
 the tax bands that apply to them are apportioned on a pro-rata basis according to
the number of months that they are in employment or self-employment here in the
first tax year. The taxpayer is given one-twelfth of the annual tax band for each
month, or part of a month, that they are working in Gibraltar.
 allowances and deductions are apportioned according to the number of months
they are resident here. The taxpayer is given one-twelfth of the annual
allowance for each month, or part of a month, that they are resident in Gibraltar.

5.11.2 Relocated employees: exemptions from benefits in kind

There are generous tax breaks available with respect to the provision of accommodation
and payment of relocation expenses by employers, as described in Sections 5.9.3 and 5.9.6.

5.11.3 Category 2 (high-net-worth) individuals

Under the Qualifying (Category 2) Individuals Rules 2004, an individual may apply to the
Finance Centre Director for a Category 2 individual certificate. Such a certificate can only be
granted to applicants who:

1. Have available, for their exclusive use and that of their families, approved residential
accommodation in Gibraltar.

Doing business in Gibraltar 96

2. Have not been a resident in Gibraltar for the previous five years.
3. Have not been engaged for the previous five years, and will not be engaged in the future
while being a Category 2 individual in a trade, business or employment in Gibraltar,
other than, in general, duties that are incidental to any trade, business or employment
based outside Gibraltar, or providing consultancy services from Gibraltar in certain
circumstances (see below) - unless otherwise agreed by the Finance Centre Director.

4. Submit two character references from recognised and established professionals (a bank
and a law or accountancy firm), a copy of passport, a curriculum vitae and a proof of
financial standing (in practice this should be in excess of £2 million).

5. Pay an application fee of £1,000.

6. Have received a certificate from the Finance Centre Director confirming their status.

An individual who has obtained a Category 2 individual certificate is assessable to income

tax on the first £80,000 of income only, resulting in a maximum amount of tax payable of
£27,560. This cap on taxable income generally does not apply to income accrued in or
derived from Gibraltar, for example, director’s fees and rental income from properties
located in Gibraltar, which would be taxed separately. Category 2 Individuals are taxed
under the ABS system.

The minimum tax payable under the scheme is £22,000, which is prorated if the certificate
was obtained or expired partway during the tax year.
In certain circumstances, the income of the spouse and children will be deemed to be that
of the certificate holder so that no additional tax will be payable on that income. Finally,
there are tax advantages for individuals with Category 2 status in connection with trusts
(see Section 5.12 below).

97 Doing business in Gibraltar

5.11.4 High executive possessing specialist skills (HEPSS)
The tax payable by an HEPSS is limited to the first £120,000 of earned income (maximum
tax payable of £29,940). The GIBS is applied to HEPSS individuals.
The individual must have skills or experience that are not available in Gibraltar and deemed
necessary to promote and sustain economic activity of particular economic value to
Gibraltar.

The individual must also occupy a high executive or senior management position, earn
more than £120,000 p.a. and have approved residential accommodation available for
the exclusive use in Gibraltar. Moreover, the individual may not have been a resident or
employed in Gibraltar during the three years prior to the year in which the application is
made (the Finance Centre Director (FCD) may, however, waive this requirement). There is
a non-refundable fee of £1,000 for the issue or renewal of the certificate.

5.11.5 Imported pension schemes (“ROPS” – previously referred to as “QROPS”)

Under the UK legislation, persons not resident in the UK, or who are planning to live
permanently outside the UK may transfer their UK pension scheme to a non-UK pension
scheme that is recognised by the UK tax authorities (HMRC), potentially avoiding some of the
restrictions that apply to UK schemes. In 2012, the HMRC confirmed that Gibraltar was a
jurisdiction with the requisite tax and pension rules in place. This has enabled pension
schemes to be set up in Gibraltar and registered with the HMRC. Such schemes are known as
ROPS. As of 5th August 2017, there were 41 Gibraltar schemes listed by HMRC as having
notified the HMRC that they meet the conditions to be a ROPS.
Members of a ROPS may be resident in Gibraltar or elsewhere.

The following are the main features of a Gibraltar ROPS:

 The income received by the scheme, as well as capital growth in the scheme, is not taxed
in Gibraltar

 The transfer of funds to the scheme is not taxable in Gibraltar

 Any member of a scheme has the right to commence drawing benefits from the scheme
at any time after attaining the age of 55 years. Such benefits may include lump-sum
payments, not exceeding 30% of the pension fund value

 Lump-sum payments received in accordance with the scheme rules are not subject to
tax
in Gibraltar. Other pension benefits payable to members are taxed in Gibraltar at 2.5%

 On the death of a member, the trustee or administrator of the scheme may, subject to
the scheme rules, pay death benefits in the form of a lump sum or by pension payments.
Any such lump sum is not taxable in Gibraltar, while the pension payments are taxed at
the rate of 2.5%. Other than this, any funds remaining in the scheme at the time of death
are not taxable in Gibraltar.

Doing business in Gibraltar 98

5.11.6 Qualifying Non-UK Pension Schemes
A QNUPS is defined in the UK as a pension scheme established outside the UK that is not a
UK-registered scheme, but meets the requirements of the Inheritance Tax (Qualifying Non-
UK Pension Schemes) Regulations 2010. Such schemes may be established in Gibraltar.

5.12 Trusts and Foundations

For general information on trusts and foundations see Section 2.4.
Foundations were introduced in Gibraltar in 2017 by the Private Foundations Act 2017.
The Income Tax Act 2010 provides for the Gibraltar tax treatment of such foundations and
their beneficiaries in a very similar to that of trusts and their beneficiaries.
As of 1 January 2011, a trust or foundation is tax resident in Gibraltar if one or more of the
beneficiaries are ordinarily resident in Gibraltar or the class of beneficiaries may include an
ordinarily resident person or the issue of an ordinarily resident person. The residency status
of the trustees, settlor (in the case of a trust) or founder (in the case of a foundation) is, in
itself, not relevant.

An individual who has Category 2 status or the spouse or child of such an individual
(provided the individual has elected to include their spouse or child under the Category 2
rules) is not deemed to be a tax resident in Gibraltar for the purposes of determining the
taxation of a trust or foundation, or of the beneficiaries of a trust or foundation.
A trust or foundation that is not tax resident in Gibraltar is taxable only on income that
accrues in or is derived from Gibraltar. By contrast, a trust or foundation that is ordinarily
resident in Gibraltar is taxable on its worldwide income. As for individuals, non-trading
interest income, dividends from listed companies, non-Gibraltar property-based rental
income and capital gains are not taxable in Gibraltar.
The capital of the trust or foundation is not liable to tax since Gibraltar has no wealth or gift
taxes, estate duty or other capital taxes.

Trusts of a public nature are completely exempt from income tax provided that the profits
from any trade or business are only used for the purposes of the trust, and either this trade
or business is exercised in the cause of carrying out a primary purpose of the trust, or the
work is mainly carried out by the beneficiaries of the trust.
Trusts and foundations are taxed at the rate of 10% on any taxable income.

See Section 5.2.4 for filing requirements and tax payment deadlines.

99 Doing business in Gibraltar


5.13 Indirect taxes

5.13.1 Value added tax

There is no VAT in Gibraltar.

5.13.2 Import duties and excise duties

Import duties are levied on goods imported into Gibraltar mostly at rates between 0% and
12%. A notable exception applies to motor vehicles. Excise duties are levied mainly on
spirits, wines, tobacco and mineral oils.

The following table summarizes the current position on a range of goods at the time of writing.
General imports
Product Duty Payable
Dealer imports General imports
(new vehicles
only)
Petrol motor vehicles
Engine up to 1500cc 15% 25%
More than 1500cc, but not exceeding 2000cc 18% 30%
Over 2000cc 22% 35%
Diesel motor vehicles
Engine up to 1500cc 35% 35%
More than 1500cc, but not exceeding 2000cc 30% 30%
Over 2000cc 35% 35%
Hybrid cars 0% 5%
In addition, there is a £250 cashback available on the importation of a hybrid car, with
cashback available on fully electric vehicles of £2,500, £150 in the case of a hybrid/all-
electric motorcycle, on registration in Gibraltar.
Electric cars and pedal cycles 0% 0%
Motor cycles
Two-stroke engines (all sizes) 50% 50%
Four-stroke engine, 50cc and under 6% 12%
Four-stroke engine, scooters up to 250cc 6% 12%
Four-stroke engines, other 15% 30%
Petrol (unleaded 95 octane) £0.35p per litre
Petrol (unleaded 98 octane) £0.34p per litre
Diesel £0.37p per litre
Biofuels Nil
Marine fuel Nil
Cigarettes £14.00 per carton
(200 cigarettes)
Rolling tobacco £60.00 per kilo
Bulk exports of tobacco 5%
Waterpipe Tobacco £45.00 per kilo

Doing business in Gibraltar 100

 Product Duty Payable
General imports

Bourbon whiskey £2.00 per litre

Whisky and spirits £1.00 per litre

Printed matter for educational purposes, newspapers,
journals and periodicals Nil
Paper-based stationery, writing
Implements Nil
Other printed matter 12%
Recycled or approved environment
friendly or eco-paper Nil
Gold bullion 1%
Perfumes, beauty and makeup
preparations, clothing,
footwear and watches 3%
Disposable plastic cutlery, plates, straws and similar plastic
disposable items 200%
Sunglasses Nil
Loose gemstones Nil
Building materials 12%
Photographic equipment, televisions, hi-fi
and other electronic or electrical audio or
visual equipment, DVDs and CDs, mobile
phones Nil
Portable computers (laptops, tablet PCs
and memory cards) and software Nil
Other computer equipment 6%
Foodstuffs, pet food and medical supplies Nil
Seagoing vessels Nil
LED lighting Nil
Musical instruments Nil
Single-use plastic bags £0.10 per bag
Artwork Nil
Pre-shave, Shaving, After-shave preparations, Personal
deodorants, Antiperspirants, Perfumed Bath salts and other
Bath preparations Nil
Yachts and other vessels for pleasure or sports:
Rowing boats and canoes Nil

101 Doing business in Gibraltar

5.13.3 Stamp duty
The Stamp Duties Act 2005, which came into force on 12 January 2006, revoked and
replaced the Stamp Duties Act 1932. Stamp duty is now payable only on instruments
relating to real estate property in Gibraltar and on capital transactions. The following are
the principal rates:
 On initial authorised share capital and increases thereof — flat rate of £10
 On loan capital (on each issue, e.g., debenture stock) — flat rate of £10

On conveyance or transfer of real estate property as follows:

>ajkl%Yf\k][gf\%lae]Zmq]jk2
 First £260,000 of purchase price — nil
 Balance above £260,000 to £350,000 — 5.5%
 Balance above £350,000 — 3.5%
Gl`]jZmq]jk2

 Where purchase price does not exceed £200,000 — nil

 Where total purchase price is between £200,001 and £350,000

— 2% on first £250,000 and 5.5% on balance

 Where total purchase price is over £350,000

— 3% on first £350,000 and 3.5% on balance

KlYeh\mlqgfegjl_Y_]k

 Mortgages not exceeding £200,000 — 0.13%

 Mortgages over £200,000 — 0.2%

5.13.4 Rates
Rates are levied on business and residential properties in Gibraltar. There are discounts
for the early payment of business rates, generally 15%. New starts-ups benefit from a 65%
discount in their first year of trading and 25% for the second year. There are additional
discounts for bars, restaurants and casinos in connection with their cooperation with the
smoking ban in such establishments.

102 Doing business in Gibraltar

5.13.5 Gaming tax
With effect from 1 April 2018, licence fees are fixed at £100,000 for business to customer
(“B2C”) licences and £85,000 for business to business “B2B”) licences. In addition, B2C
licensees pay Betting Duty or Gaming Duty (depending on the activity) of 0.15% of gross
revenue (this generally being gross win for online bookmakers and gaming yield for online
casinos). The first £100,000 per annum of gross revenue is exempt from this Duty.
Previously, gaming tax on fixed-odds betting and betting exchanges was levied at 1% of
turnover. For online casinos, tax was levied at 1% of the gaming yield or gross profit and 1% of
rake in the case of poker operators. In all cases, there was a minimum tax of £85,000 payable
and a cap on tax payable of £425,000 p.a., per licence.

5.14 Other taxes

There is no estate duty, capital gains tax, inheritance tax, wealth, gift or other capital tax.
Estate duty was abolished for the estate of any individual who died on or after 1 April 1997.
5.15 Withholding taxes

Dividends
There is no withholding tax on dividends paid by Gibraltar companies.

Interest

There is no withholding tax on interest payments.

Royalties
There is no withholding tax on royalties.

5.16 Construction subcontractors

As at 30 June 2016, the Income Tax (Construction Subcontractors) Regulations have yet to
be revised in line with the stricter requirements of the new tax regime.
The comments below describe the current regulations and not the anticipated but as yet
unpublished new regulations.
Companies operating as subcontractors in any construction operation are subject to the
Income Tax (Construction Subcontractors) Regulations. Under these regulations, the main
contractor is obliged to deduct and pay over to the Income Tax Office 25% of any payment
made to the subcontractor that does not represent the direct cost of materials.

This deduction is not required if the subcontractor holds a valid exemption certificate issued
by the Income Tax Office. A certificate will generally only be issued if the subcontractor
meets the requirements prescribed by the Regulations. Subcontractors need to apply to the
Income Tax Office for the exemption certificates.

A contractor who fails to make the appropriate deductions from payments to any
subcontractor who does not hold a valid exemption certificate commits an offence under the
Regulations and may be subject to penalties.
Doing business in Gibraltar 103
5.17 Penalties
The Income Tax Act 2010 incorporates an extensive range of penalties and surcharges.
The Commissioner has the power, in his absolute discretion, to waive, reduce or discharge
any penalty (as opposed to surcharge) incurred if they are satisfied that the act or failure to
act, which triggered the penalty, was purely inadvertent.

Circumstances in which penalties and surcharges apply include the following.

Late payment of tax

Late payment of tax will result in a surcharge of 10% of the tax payable on the day
immediately after it is due. After 90 days, there is a further surcharge of 20% of the amount
unpaid (tax plus initial surcharge).

Late or incomplete returns

If a company does not file a complete tax return (which includes accounts and, if applicable, a
P8 reconciliation) within the deadline, then it is liable to a penalty of £50. If the failure
continues for three months, then there is a further penalty of £300, with a further £500
penalty payable if the failure continues for a further three months.

Incorrect returns or information

If an individual fraudulently, recklessly or negligently delivers an incorrect return

or incorrect accounts, information, statement or declaration in connection with the
ascertainment of the taxation to which they are subject to, they will be liable to a penalty
of up to 150% of the difference between the amount of tax due and that which they have
declared. In calculating the penalty percentage to be applied, the Commissioner will take
into account the amount of tax lost, the gravity of the offence (innocent error, negligence,
recklessness or deliberate omission) and the degree of cooperation afforded by the taxpayer
during the investigation.

Doing business in Gibraltar 104

Tax evasion
It is an offence for an individual to knowingly get involved in fraudulent evasion of income
tax, whether alone or with another individual. If found guilty of such an offense, the
individual will be liable, on summary conviction, to imprisonment for up to six months or
a fine, or both and on conviction on indictment to imprisonment for up to seven years
or a fine, or both. The individual may request the Commissioner of Income Tax to issue
a compounding order before the court hearing, provided they admit in writing that they
committed the offense, settle the amount due (including penalties, surcharges and
interest) and consent that full details of the compounding order will be published in the
?aZjYdlYj?Yr]ll]&

Non-payment of PAYE or social insurance
If a company fails to pay to the Commissioner any PAYE or social insurance that has been
or should have been withheld or collected by the due date, then any director or shadow
director of that company is committing an offense and is subject to the same penalties as
individuals who are knowingly concerned in evasion of income tax (see above). However,
there is no requirement that the compounding order be published in the ?aZjYdlYj?Yr]ll]
unless tax evasion is involved.

If an individual fails to pay PAYE or social insurance that has been deducted or should
have been deducted and if the amount payable has been outstanding for three months or
more and amounts to more than £5,000, then the Commissioner can publish details of the
offence and of the offender in the ?aZjYdlYj?Yr]ll]. However, the Commissioner must first
provide a 14-day written notice to the offender of the intention to “name and shame.”

Failure to report notifiable arrangements

An individual who fails to notify the Commissioner of reportable tax planning arrangements
(as defined in Section 41 of the act — see Section 5.18) will be liable to a fine and/or
imprisonment.

Information requests
An individual who does not comply with a request for information (in connection with their
tax affairs or those of other persons) by the Commissioner of Income Tax by the due date,
will be liable to a fine and/or imprisonment.

105 Doing business in Gibraltar

5.18 Anti-avoidance
General anti-avoidance provision

Section 40 of the Income Tax Act 2010 empowers the Commissioner of Income Tax to
disregard part or all of any arrangements that are deemed to be artificial and/or fictitious
and whose purpose is to reduce or eliminate tax payable in Gibraltar.

Notifiable arrangements and proposals

Section 41 of the act includes a requirement for promoters of a scheme to disclose to the
Commissioner any “notifiable arrangement” or “notifiable proposal.”

The act defines a notifiable arrangement as being any arrangement or arrangements that:
 Enable, or may be expected to enable, a person to obtain an advantage in relation to any
tax under the act
 Are such that the main benefit, or one of the main benefits, expected from the
arrangement is to obtain a tax advantage

A notifiable proposal is defined as being any proposal that, if entered into, would be a
notifiable arrangement.
Guidance notes produced by the ITO state that, “For the purposes of the Act, a notifiable
arrangement will not include advice provided in respect of specific allowances, deductions
and/or exemptions.”
A “promoter” is either a bank, a person providing taxation services or a person involved
in the provision of financial products capable of reducing tax, that is, to any extent,
responsible for:

 Designing a notifiable arrangement or proposal

 Making such an arrangement or proposal available for implementation by others

 Organizing or managing the implementation of an arrangement or intended

implementation of a proposal

Disclosure of a notifiable arrangement or proposal must be made within 30 days from the
earlier of:
 The date on which the promoter makes the proposal available for implementation by any
other individual

 The date on which the promoter first becomes aware of any transaction forming part of
the arrangements

If the promoter is not a Gibraltar resident or when there is no promoter, the taxpayer is
responsible for the disclosure of the arrangement or proposal to the Commissioner.

Doing business in Gibraltar 106

There are detailed procedures for seeking clearance in advance of any notifiable
arrangements, setting out a timetable for the Commissioner to either:
 Request further information
 Notify the applicant that anti-avoidance provisions either will or will not apply to the
arrangement
 Notify the applicant that they need a further 21 days to make a decision
Where such an application is made, the Commissioner may publish a description of the
arrangement and their decision in such a way that the taxpayer concerned will remain
anonymous.

Thin capitalization rules

These rules apply to interest payable by a company to individuals or trusts that are
connected parties, and to interest payable by a company where the loan is secured on
assets belonging to individuals or trusts that are connected persons. Interest paid by the
company may be treated as a dividend and not as a deductible expense, if the loan capital to
equity ratio of the company is greater than 5 to 1. This does not apply to credit institutions or
deposit takers licensed under the Banking Act.

Transactions with connected persons

In certain circumstances, the deduction for expenses incurred in relation to a transaction

with a connected person or connected persons may be restricted by the Commissioner to
the lowest of:
 The amount of the expense
 Five percent of turnover

 Seventy-five percent of profit before taking into account the expense in question
Interest paid to a connected person in excess of the amount that would have been charged
on an arm’s-length basis is deemed to be a dividend, and not a deductible expense.

Back-to-back loans

Interest expense is not deductible in cases where:

 Interest is paid on a loan
 The loan is secured by a cash deposit made with the lender (or party connected to the
lender) or secured by certain investments

 The income from the cash deposit or investment is not assessable to tax

107 Doing business in Gibraltar

Parent-subsidiary directive

Anti-avoidance provisions included in the Parent-subsidiary directive in late 2015 are included
in the Income Tax Act 2010.

Dual employment contracts

When an employee of an ordinarily resident employer in Gibraltar has contracts with that
employer or with a party connected to that employer, then the employee’s income from all of
the employers or the connected person is taxable in Gibraltar.
Note: To know about the exemption for occasional presence in Gibraltar and double tax
relief, please refer to (Sections 5.10.2 and 5.3.14, respectively.

Transfer of assets abroad

There are rules to prevent avoidance of tax by transferring assets abroad.

Doing business in Gibraltar 108

6| Appendices
App. 6.1 Historical income tax rates and bandings
A. Allowance-based system:

Amount of taxable income in bands

Rate of 2009-10 2015-16
tax in to 2012-13 2013-14 2014-15 to 2018-19
bands 2011-12 2017-18
14% - - - - 4,000 4,000
15% - £4,000 £4,000 £4,000 - -
17% £4,000 - - - 12,000 12,000
18% - - - £12,000 - -
24% - - £12,000 - - -
30% £12,000 £12,000 - - - -
39% - - - - Balance Balance
40% Balance Balance Balance Balance - -

From 2011-12 onwards, all taxpayers under the allowance-based system receive a tax credit
amounting to the greater of £300 or 2% of the tax payable based on the above table.

B. Gross income based system (introduced in 2008-09)

Note: No allowances applied under the GIBS until 2014-15. In case a taxpayer opts for this
system and the spouse does not, the availability of allowances to the spouse are restricted
(see Section 5.5 and refer to the Government website — www.gibraltar.gov.gi).

109 Doing business in Gibraltar

 2010-11

a. Individuals on gross income up to £16,000

Taxable income bands Rate Tax on band

£0-£10,000 8% £800
£10,001-£16,000 20% £1,200

b. Individuals on gross income between £16,001 and £25,000

Gross income between On first Rate Balance at 20% Tax payable

£16,001-£17,000 £6,000 0% £10,001-£11,000 £2,000-£2,200
£17,001-£18,000 £5,000 0% £12,001-£13,000 £2,400-£2,600
£18,001-£19,000 £4,000 0% £14,001-£15,000 £2,800-£3,000
£19,001-£20,000 £3,000 0% £16,001-£17,000 £3,200-£3,400
£20,001-£25,000 £2,000 0% £18,001-£23,000 £3,600-£4,600

c. Individuals on gross income between £25,001 and £35,000

Rate of 20% applies less tapering relief* on gross income between £25,001 and £26,000.
*Tapering relief (on gross income of £25,000 there is a tax-free amount of £2,000 which reduces by
£2 for every £1 increase in gross income).

d. Individuals on gross income between £35,001 and £100,000

The effective (average) tax rate is reduced by 0.5% from 2009-10 using a formula that gives a
maximum effective tax rate of 26.25% on a gross income of £100,000.

The tax liability is arrived at by:

 Calculating the effective tax rate using the 2009-10 tax bands (see below)

 Reducing this by 0.5%

 Applying the resulting rate to taxable income (gross income less tapering relief*)
*Tapering relief (on gross income of £35,001 there is a tax-free amount of £3,284 which reduces by
£2 for every £1 increase in gross income).

2009-10 tax bands Rate

£0-£25,000 20%
£25,001-£100,000 29%

Doing business in Gibraltar 110

 e. Individuals on gross income between £100,001 and £353,000
Rate of 20% on first £25,000 of gross income with the balance taxed at 29%.
Tapering relief applies (on gross income of £100,001 there is a tax-free amount of £1,722
which reduces by £2 for every £1 increase in gross income).

f. Individuals on gross income over £353,000

Rate
First £25,000 20%
£25,001-£353,000 29%
£353,000 - £704,800 20%
£704,801 £1,000,000 10%
Excess over £1,000,000 5%

The effective rate of tax on a gross income of £1 million is 20%, with any excess taxed at 5%.

2011-12, 2012-13, 2013-14 and 2014-15

a. Individuals with gross income of up to £25,000

Taxable income bands Rate Tax on band

First £10,000 6% £600
£10,001-£17,000 20% £1,400
Balance 28%

b. Individuals with gross income of more than £25,000

Taxable income bands Rate Tax on band

First £17,000 16% 2,720
£17,001-£25,000 19% 1,520
£25,001 - £40,000 25% 3,750
£40,000 - £105,000 28% 18,200
£105,001 - £500,000 25% 98,750
£500,001 - £700,000 18% 36,000
£700,001 - £1million 10% 30,000
Balance 5%

111 Doing business in Gibraltar

 2015-16 , 2016-17, 2017-18 and 2018-19

a. Individuals with gross income of up to £25,000

Taxable income bands Rate Tax on band

First £10,000 6% £600
£10,001-£17,000 20% £1,400
Balance 28%

b. Individuals with gross income of more than £25,000

Taxable income bands Rate Tax on band

First £17,000 16% 2,720
£17,001-£25,000 19% 1,520
£25,001 - £40,000 25% 3,750
£40,000 - £105,000 28% 18,200
£105,001 - £500,000 25% 98,750
£500,001 - £700,000 18% 36,000
Balance 5%

Doing business in Gibraltar 112


113
App. 6.2 Principal tax allowances and reliefs (ABS only)

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

£ £ £ £ £ £ £ £
Personal allowances
Personal 2,812 2,812 3,000 3,100 3,200 3,215 3,300 3,385
Spouse 2,632 2,632 3,000 3,100 3,200 3,215 3,300 3,385
Minimum personal allowance 3,700 3,700 3,888 3,988 4,088 4,103 4,188 4,273

Doing business in Gibraltar

(top-up allowance)

Special senior* citizens (top-up 10,887 10,887 11,443/ 11,643/ 12,000 12,030 12,200 12,370
allowance) 11,075 11,175
Child relief
First child educated in Gibraltar 997 997 997 997 1,100 1,105 1,135 1,165
Each child educated abroad 1,105 1,105 1,105 1,105 1,250 1,255 1,290 1,325
Disabled person relief
Disabled person 2,724 2,724 5,000 6,000 9,000 9,040 9,285 9,285
 App. 6.2 Principal tax allowances and reliefs (ABS only)

2010-11
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
£ £ £ £ £ £ £ £
House purchase allowance
Deduction 11,500 11,500 11,500 11,500 12,000 12,000 12,000 12,000

Doing business in Gibraltar

Additional (£1,000 max 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000
p.a.)
Social insurance allowance

114
Employee 335 335 335 335 335 335 335 335
Self employed 432 432 432 432 432 432 432 432
Other reliefs and
allowances
Nursery school allowance 1023 2,000 3,000 4,000 5,000 5,025 5,160 5,290
Blind person 627 627 3,000 4,000 5,000 5,020 5,155 5,285
Single parent 2,632 2,632 3,000 4,000 5,264 5,290 5,435 5,575
Medical insurance allowance 1,120 1,500 2,000 4,000 5,000 5,020 5,155 5,285
 App. 6.3 General index of retail prices

115
General index of retail prices 1 Jan 15 1 Jul 15 1 Jan 16 1 Jul 16 1 Jan 17 1 Jul 17 1 Jan 18 1 Jul 18
at:
Component groups
Foodstuffs 174.71 171.15 172.97 176.78 178.55 181.17 186.42 188.36

Doing business in Gibraltar

Alcoholic drinks and tobacco 214.49 212.72 213.80 209.10 214.33 219.05 219.27 225.23
Clothing and footwear 107.64 108.23 104.67 106.76 98.97 102.85 95.24 95.35
Durable household goods 117.71 116.78 116.28 117.79 119.91 120.31 120.19 119.53
Housing 113.69 113.46 114.06 114.52 115.09 115.38 116.42 119.07
Services 154.22 159.48 160.67 161.63 162.92 163.66 172.99 174.37
Other goods 139.01 137.73 137.85 137.85 138.95 140.32 141.44 141.74
Transport and vehicles 152.02 161.31 153.55 157.39 164.00 165.53 167.35 173.64
Weighted average 145.42 146.66 145.41 147.45 149.07 150.87 152.98 155.60
Increase/decrease
Over the 6 months (%) (0.80%) .85% (.85%) 1.4% 1.1% 1.2% 1.4% 1.7%
Increase over the year (%) 0.80% .05% (.01%) .54% 2.52% 2.32% 2.62% 3.14%
App. 6.4 Institutions licensed under the Financial Services (Banking)
Act to carry on deposit-taking business in or from within Gibraltar
Bank J. Safra Sarasin (Gibraltar) Limited
Bank JSS (Gibraltar) Limited
G-Rock Limited (trading as Golden Sand Bank)
Gibraltar International Bank Limited
IDT Financial Services Limited
Jyske Bank (Gibraltar) Limited
Leeds Building Society
Lloyds Bank (Gibraltar) Limited
Lloyds Bank plc
Lombard Odier & Cie (Gibraltar) Limited
Moneycorp Bank Limited
SG Kleinwort Hambros Bank (Gibraltar) Limited
The Royal Bank of Scotland International Limited (trading as NatWest and
RBS International)
Turicum Private Bank Limited

App. 6.5 Useful addresses and contact details

Range 2nd floor, Eurotowers,
Government of Gibraltar Tel: + 350 200 51168 Block 4 1
Chief Minister’s Office Fax: + 350 200 79901 Europort Road
6 Convent Place Email: Tel: + 350 200 74636
Tel: + 350 200 70071 financialsec@gibtelecom.net Fax: + 350 200 72166
Fax: + 350 200 79901 Email: info@gra.com
Finance Centre Gibraltar Financial Services Auditors Public
Licensing Unit Commission Oversight Board
Suite 761A Europort PO Box 940 Financial Services
Tel: + 350 200 51163 Suite 3, Ground Floor Commission Suite 3,
Fax: + 350 200 76599 Atlantic Suites, Ground Floor
Gibraltar Finance Centre Europort Avenue Atlantic Suites,
Ministry of Finance Tel: + 350 200 40283 Europort Avenue
Suite 761, Europort Fax: + 350 200 40282 Tel: + 350 200 41062
Tel: + 350 200 50011 Email: info@fsc.gi Fax: + 350 200 40282
Fax: + 350 200 51818 Email: arb@fsc.gi
Email:
info@financecentre.gov.gi
Blake House
19C

Authority
Town Doing business in Gibraltar 116
Accountant Department of Social Department of Consumer
General’s Office Security Affairs
206-210 Main Street 14 Governor’s Parade 10 Governor’s Lane
Tel: + 350 200 48396 Tel: + 350 200 51149 Tel: + 350 200 50788
Fax: + 350 200 77147 Fax: + 350 200 74941 Fax: + 350 200 47995
Email: Email: dss@gibraltar.gov.gi Email:info@consumera
treasury@gibtelecom.net ffairs.gov.gi
Ministry of Employment
Principal Auditor’s Office Units 76 & 77 Registry of Companies and
Gibraltar Audit Office Harbours Walk Business Names
Elmslie House New Harbours Companies House (Gibraltar)
51/53 Irish Town Tel: + 350 200 11000 Limited
Tel: + 350 200 51137 Fax: + 350 200 73981 1st Floor, Don House,
Fax: + 350 200 51136 Email: employment. The Arcade,
Email: gao@audit.gov.gi service@gibraltar.gov.gi 30-38 Main Street
Tel: + 350 200 78193
Attorney General’s Customs
Fax: + 350 200 44436
Chambers Custom House, Waterport
Email:
Joshua Hassan House Tel: + 350 200 78879
mail@companieshouse.gi
Secretary’s Lane Fax: + 350 200 78362
Tel: + 350 200 78882 Email: Registry of Co-operative
Fax: + 350 200 79891 hmcustoms@gibraltar.gov.gi Societies and Friendly
Email: info.agchambers@ Societies
Education and Training
gibraltar.gov.gi Financial Secretary’s Office
23 Queensway
No 6 Convent Place
Judiciary Tel: + 350 200 77486
Tel: + 350 200 51168
The Law Courts Fax: + 350 200 71564
Fax: + 350 200 79901
227 Main Street Email:
Email: financialsec@gibtele.
Tel: + 350 200 78808 info.edu@gibraltar.gov.gi
com.net
Fax: + 350 200 77118
Gibraltar Tourist Board
Department of Enterprise
Statistics Office Duke of Kent House
and Development
99 Harbours Walk Cathedral Square
Suite 631, Europort
New Harbours Tel: + 350 200 74950
Tel: + 350 200 52052
Rosia Road Fax: + 350 200 74943
Fax: + 350 200 71406
Tel: + 350 200 75515 Email:
Email:
+ 350 200 75490 information@tourism.gov.gi
info@investgibraltar.gov.gi
Fax: + 350 200 51160
Technical Services
Email: Trade Licensing Office
Department
statistics@gibraltar.gov.gi Suite 631, Europort
Joshua Hassan House
Tel: + 350 200 76358
Income Tax Office Secretary’s Lane
Fax: + 350 200 71950
St Jago’s Stone Block Tel: + 350 200 59800
Email: licensing.mttp@
331 Main Street Fax: + 350 200 50917
gibraltar.gov.gi
Tel: + 350 200 75260
Official Receiver’s Office
Fax: + 350 200 40020
206-210 Main Street
Email:
Tel: + 350 200 67315
incometax@gibraltar.gov.gi
117 Doing business in Gibraltar
Royal Gibraltar Primary Care Centre Water and electricity
Police Headquarters 2nd Floor
Gibraltar Electricity
New Mole House International Commercial
Authority
Rosia Road Centre (ICC)
(Connections, etc.)
Tel: + 350 200 72500 Tel: + 350 200 72355
Gibelec House,
(Emergency 199 and 112) Fax: + 350 200 43948
North Mole Road
Fax: + 350 200 72428 Email: info@gha.gi
Tel: + 350 200 74191
Email: supportservices@
Environmental Health Fax: + 350 200 48935
royalgib.police.gi
Email: consumer@gibelec.gi
Environmental Agency
Central Police Station
Limited AquaGib Limited
Irish Town
37 Town Range Suite 10B, Leanse Place
Tel: + 350 200 79395
Tel: + 350 200 70620 50 Town Range
(Emergency 199 and 112)
Fax: + 350 200 74119 Tel: + 350 200 40880
Immigration Department Email: admin@eag.gi Fax: + 350 200 40881
Joshua Hassan House Email:
Emergency services
Secretary’s Lane main.office@aquagib.gi
Tel: + 350 200 76948 Fire 190
Business
Fax: + 350 200 43053 Ambulance 190
Email: immigration.csro@ Police 199 Gibraltar Chamber of
gibraltar.gov.gi All emergencies 112 Commerce
Watergate House
Post Office Air terminal
2/6 Casemates
104 Main Street
Gibraltar International Square P.O Box 29
Tel: + 350 200 75714
Airport Tel: + 350 200 78376
Fax: + 350 200 40027
British Lines Road Fax: + 350 200 78403
Email: info@post.gi
Tel: + 350 200 12345 Email: info@gibraltar
Philatelic Bureau Fax: + 350 200 73925 chamberofcommerce.com
Gibraltar Philatelic Email:
Gibraltar Federation of
Bureau Ltd, info@gibraltarairport.com
Small Businesses
Suite 9/11
Public utilities 122 Irish
Watergardens 2
Town PO Box 211
Waterport Wharf Telephone
Tel: + 350 200 47722
Tel: + 350 200 75662
Gibtelecom Fax: + 350 200 47733
Fax: + 350 200 42149
15/21 John Mackintosh Email: gfsb@gfsb.gi
Email:
Square
info@gibraltar-stamps.com Gibraltar Stock
Tel: + 350 200 52200
Exchange
Hospitals Fax: + 350 200 71673
Suite 834
Email: info@gibtele.com
St. Bernard’s Hospital Europort
Harbour Views Road Tel: + 350 200 67822
Tel: + 350 200 79700 Fax: + 350 200 67821
Email: info@gsx.gi

Doing business in Gibraltar 118

App. 6.6 Useful Gibraltar websites

EY Limited www.ey.com
Government of Gibraltar Information Services www.gibraltar.gov.gi
General information on Gibraltar www.gibraltar.gi
The Gibraltar Financial Services Commission www.fsc.gi
The Gibraltar Society of Accountants www.gibraltaraccountants.com
The Gibraltar Federation of Small Businesses www.gfsb.gi
The Gibraltar Chamber of Commerce www.gibraltarchamberofcommerce.com
The Gibraltar Banker’s Association www.gba.gi
Gibraltar Companies House www.companieshouse.gi
Gibraltar Insurance Association www.gia.gi
Gibraltar Laws www.gibraltarlaws.gov.gi
Gibraltar Regulatory Authority www.gra.gi
Gibraltar Stock Exchange www.gsx.gi
Gibraltar Finance www.gibraltarfinance.gi

App. 6.7 About EY

EY Gibraltar practice profile

EY Limited commenced trading in Gibraltar on 5 September 2013. The EY Gibraltar office is

one of the leading providers of audit, tax, accounting and business advisory services in the
jurisdiction.
Our clients include businesses in the following sectors: financial services (insurance
companies, banks, insurance brokers, asset management and funds, trust and company
managers), online gaming, retail/wholesale, shipping, property and construction.
EY Limited is a limited company registered in Gibraltar with registered number 110110 and
is a member firm of Ernst & Young Global.

119 Doing business in Gibraltar

EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and
quality services that we deliver help build trust and confidence in the capital markets and in
economies the world over. We develop exceptional leaders who team to deliver on our
promises to all of our stakeholders. In so doing, we play a critical role in building a better
working world for our people, our clients and our communities.
Global headquarters: London

Global Chairman and CEO: Mark Weinberger

Number of people globally: 260,000 (over FY 2017)

Global revenues: US$34.8 billion (FY18, ending 30 June 2018)

Geographic areas: Americas; Europe, the Middle East, India and Africa; Asia-Pacific; and
Japan
Offices: 728 offices in more than 150 countries

Service lines: Assurance, Advisory, Tax and Transaction Advisory Services

Founded: in 1989 through the merger of Ernst & Whinney and Arthur Young & Co.; oldest
component from 1849

Doing business in Gibraltar 120

 App. 6.8 Biographies of directors

Jose Julio Pisharello, BSc (Hons.), ACIB, FCCA Board Chairman

Jose Julio qualified as a certified chartered accountant in 1991.
He has been working in practice in Gibraltar since 1991 and has acquired in-
depth knowledge and experience of the local commercial and business
environment, particularly in the field of financial services.

He was admitted as an associate member of the Institute of Financial

Services (Chartered Institute of Bankers) after qualifying in 2006.
From 2008 to 2009, he was the President of the Gibraltar Society of
Accountants and also served as the Deputy President of the Society
during 2006-07.
He has also been a member of the society’s executive and technical
committees and has served as a chairman of the technical committee.
He became a partner of Baker Tilly (Gibraltar) in 1999 and became its
chairman in 2011. In September 2013, he joined EY to establish its new
office in Gibraltar, serving as the country managing partner.

Jose Julio is Chairman of the Board of Governors of the University of

Gibraltar.

Neil M. Rumford, BAdmin (Hons.), CA

Having graduated from Dundee University, Neil trained as a chartered

accountant with EY in Dundee. On attaining qualification in 1991, he
moved to Gibraltar. In 2006, he was appointed as a partner/director of
Baker Tilly (Gibraltar) Limited
Currently, he is the chairman of the Tax Faculty of the Gibraltar Society of
Accountants, as well as a member of the Society’s Executive Committee.
He plays an active role in meetings between the Faculty and the tax
authorities to clarify technical and practical issues, and has participated in
a number of working groups in the tax arena. He also chairs the Tax
Committee of the Gibraltar Insurance Association.

He re-joined the EY network in September 2013, and now heads the Tax
Services team, having established the Tax Services team in EY’s new
office in Gibraltar.

121 Doing business in Gibraltar

Angelique Linares, BSc (Hons.), FCA
A graduate from the University of East Anglia, Angelique qualified as a
chartered accountant in Leicester. In 1997, she joined KPMG Gibraltar
where she worked on a large portfolio of locally based clients, particularly
in the financial services industry (including banking and insurance).
She was appointed as a partner/director of Baker Tilly (Gibraltar) Limited
in 2006.

She specialises in provision of auditing, accounting and advisory services

within the insurance and captive administration sectors and, together with
co-directors Jose Julio Pisharello and Dale Cruz, leads the specialised
team providing services to a large portfolio of insurance clients.

Her expertise in the insurance field has contributed significantly to making

EY a leading organisation in the provision of audit and advisory services to
the insurance industry in Gibraltar.
She is the former vice chairman of the Gibraltar Insurance Association
and is part of the Government Discretionary Scholarship Awards
Committee. She is a former chairperson of the Training Committee of the
Gibraltar Society of Accountants and has been part of the Government
Training Advisory Council. Having been involved with the Young
Enterprise Gibraltar branch in judging the finalists, she has now also
become a judge for Young Enterprise in UK.
She is the partner in charge of Human Resources at the EY Gibraltar office
as well as being the Country Practice Protection Director and Country
Independence Leader.

Johann Olivera, BA (Hons.), FCA

A graduate from Exeter University, Johann trained as a chartered
accountant with Robson Rhodes in London, qualifying in 1998. He joined
KPMG Gibraltar in 1998 and was appointed as a partner/director of Baker
Tilly (Gibraltar) Limited in 2006.

At EY Gibraltar, he is responsible for the provision of audit and

accountancy services to financial services clients (including banks, funds,
fund administration, asset management and trust and company managers)
as well as audit services to a number of government-owned companies. He
also leads the Fintech team advising entities who will fall within the scope of
the new Distributed Ledger Technology regulatory framework and entities
conducting their ICOs/ITOs from Gibraltar.

He has been involved in the development of the funds industry in Gibraltar

since its inception, serving on executive committee of the Gibraltar Funds &
Investments Association. He is also the partner responsible for audit quality
in the EY Gibraltar office.
Doing business in Gibraltar 122
 Dale Cruz, BA (Hons.), FCA
After graduating from the University of Kent at Canterbury, Dale went on
to train as a chartered accountant in London, qualifying in 2003. Since his
return to Gibraltar, he has been involved in audit and assurance services
for both local and international clients. He has mainly worked in financial
services, specialising in the insurance industry. He co-leads the provision
of services within Gibraltar to a large portfolio of insurance clients.
He is responsible for Learning & Development at the EY Gibraltar Office.

In 2012, he was appointed as a director. He is an active member of the

Gibraltar Society of Accountants. He is currently a member of the audit
faculty and is a former secretary and treasurer. Dale also sits on the
technical committee of the Gibraltar Insurance Association.

123 Doing business in Gibraltar

Notes

Doing business in Gibraltar 124

EY | Assurance | Tax | Transactions | Advisory
About EY
EY is a global leader in assurance, tax, transaction
and advisory services. The insights and quality
services we deliver help build trust and confidence
in the capital markets and in economies the world
over. We develop outstanding leaders who team to
deliver on our promises to all of our stakeholders.
In so doing, we play a critical role in building a better
working world for our people, for our clients and for
our communities.
EY refers to the global organisation, and may refer
to one or more, of the member firms of Ernst & Young
Global Limited, each of which is a separate legal
entity. Ernst & Young Global Limited, a UK company
limited by guarantee, does not provide services to
clients. For more information about our organisation,
please visit ey.com.
© 2018 EY Limited.
All rights reserved.

ED None
This material has been prepared for general informational purposes
only and is not intended to be relied upon as accounting, tax, or other
professional advice. Please refer to your advisors for specific advice.

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