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Overview
Gibraltar is situated at the southern tip of the Iberian peninsula
and has a land mass of 5.83 Square kilometres (much of which is the
famous "Rock of Gibraltar"). British sovereignty over Gibraltar was
formalised in 1713 and in 1830 Gibraltar was declared a British Colony.
Gibraltar became a territory of the European Union with UK accession
but an exemption from the Common Customs Area, the VAT Area and the
Common Agricultural Policy were negotiated. As part of the
negotiations for the accession of Spain to the European Union, it was
secured that the land frontier would be re-opened, but since then there
has been an almost daily war of attrition by the Spanish authorities
against any further recognition of Gibraltar. In 2003, Gibraltar
residents voted overwhelmingly by referendum to remain a British colony
and against a "total shared sovereignty" arrangement while demanding
participation in talks between the UK and Spain; Spain disapproves of
UK plans to grant Gibraltar even greater autonomy.
The development of the financial sector in Gibraltar has been
facilitated by its location, a favorable tax regime, a stable
government, status within the European Union (EU), no exchange
controls, a legal framework based on the British system, and the
availability of a well-qualified labour force. The Gibraltar financial
sector is not large by international standards. For example, assets of
banks that conduct only offshore business amount toUS$5 billion.
However, its contribution to employment and to the foreign exchange
earnings of the economy is important. It is estimated that the
financial sector, both onshore and offshore, accounts for roughly 30
percent of GDP or about the same as tourism.
The financial services provided are broad and include banking,
insurance services, and some relatively small-scale fund management and
advisory business. Current policy is that all such activities should be
carried out in physical premises in Gibraltar, with accounting records
and management available for inspection in the territory.
There are also a number of insurance companies whose total assets
are about US$325 million, and a modest investment and securities
industry. In addition, there are approximately 28,500 active companies
registered of which 8,800 are exempt companies. The provision of
professional trusteeship and company management services is deemed to
be "controlled activities" and there are 83 groups that are licensed to
conduct that business.
Online News Sources
Gibraltar Chronicle: www.chronicle.gi
Gibraltar News Online: www.gibraltarnewsonline.com
The Gibraltar Magazine: www.thegibraltarmagazine.com
Business Environment
In 1989, the Government of Gibraltar introduced the Financial
Services Commission Ordinance which was enacted in Gibraltar's
Parliament. Whilst overall policy in respect of financial services
remain within the remit of the government, the Ordinance established a
Commission that is fully independent of the Government of Gibraltar in
regulatory and supervisory matters. The Ordinance provides for
appointment of the Commissioner also Chairman of the Financial Services
Commission-and the seven other members to be made by the Governor
(acting with the agreement of the U.K. Foreign Secretary). The
Ordinance also requires the Financial Services Commission (FSC) to
provide advice to the Government of Gibraltar on the regulatory aspects
of financial services matters and, in practice, this has meant that the
FSC and the Government have established a close working relationship.
The promotion of Gibraltar as a financial centre is the responsibility
of the Gibraltar Finance Centre Division within the Ministry of Trade,
Industry and Telecommunications.
The FSC is the sole regulatory and supervisory authority for
financial services providers operating in or from within Gibraltar.
Under its founding ordinance, the FSC is required to match U.K.
supervisory standards where European Union law applies and as Gibraltar
is part of the European Union through the United Kingdom's membership,
it has put in place relevant EU directives that apply to the financial
sector.
Legislation provides for offshore exempt companies, qualifying
companies, private banks, trusts, ship registration, and residency of
high net worth individuals. Gibraltar also markets itself as a
manufacturing and distribution centre for non-European companies
seeking access to the European Union through the New Harbours free-port
zone.
A deposit protection scheme set up by Gibraltar in 1999 and the
Banking (Gibraltar) Regulations 1999, passed by the UK Parliament 20
August 1999, gave banks the ability to operate in the UK and other EU
member states on the basis of their Gibraltar registration. Insurance
companies were authorised to cover risks in the EU in 1997.
Gibraltar-based companies are now actively passporting banking and
insurance services into the EU, and passporting in investment services
is expected to follow soon.
The Gibraltar Companies Ordinance is based on the Companies Act
1929 of the United Kingdom along with amendments. Four types of company
may be established under the legislation: a company limited by shares,
a company limited by guarantee having a share capital, a company
limited by guarantee without a share capital and an unlimited company.
Companies must have a registered office in Gibraltar, must file the
statutory books there, and must submit an annual return to the
Registrar of Companies containing details of the shareholders,
directors and the capital of the company. The information is open to
public inspection. A company incorporated in Gibraltar or a registered
branch of an overseas company may apply for a tax exemption
certificate, or a qualifying company certificate, both valid for 25
years. In circumstances where operations require a presence in
Gibraltar, such as in the provision of financial services or
import/export activities, then such operations would obtain qualifying
company status rather than exempt company status.
Exempt companies are exempted from all taxes, while qualifying
companies may pay tax up to a maximum of 35%. No Gibraltarian or
Gibraltar resident may have a beneficial interest in the shares of an
exempt or qualifying company. The beneficial ownership of the shares of
exempt and qualifying companies must be disclosed to the Finance Centre
Director.
Exempt or qualifying companies can be resident, managed and
controlled in or from Gibraltar without affecting its tax status. There
are no restrictions as to the nationality or residence of directors.
The exempt or qualifying company may not, without the prior consent of
the Gibraltar Finance Centre Director, trade or carry on business in
Gibraltar, but may trade with other exempt or qualifying companies or
non-residents.
Taxes
Under the Treaty of Rome, Gibraltar is
exempted from complying with the European Community's common customs
tariff, common agricultural policy and the harmonization of turnover
taxes. However, with the EU's push toward tax harmonisation, Gibraltar
is considering adjusting the tax structure. Gibraltar does not have
capital gain tax, wealth tax, inheritance tax, estate duty, or
value-added tax. Corporate tax is set at the rate of 35%. Tax-exempt
companies are exempted for 25 years from any form of Gibraltar
taxation. Qualifying companies can apply for a tax rate of between 0%
and 35%. Qualifying companies benefit in situations where a subsidiary
company needs to make income remittances to a foreign parent in a
country that requires the subsidiary to have been taxed at a minimum
level to escape further taxation. Qualifying banks usually pay tax at
5%.
For qualifying companies fees payable to non-residents, including
directors, and dividends paid to its shareholders are subject to
withholding tax at the same prescribed rate as the company. There is no
estate duty in Gibraltar. There is no stamp duty on the transfer of
shares of a qualifying company.
The standard rate of tax for individuals is 30%. High net worth
individuals may apply for qualifying status if they are non-resident
and if they derive no income from Gibraltar other than from a
qualifying company. The rate of tax is not less than 2% of income, up
to a maximum of £20,000 in taxes paid.
Interest received from deposits through qualifying or exempt
companies is exempt from taxes. Gibraltar does not have exchange
control restrictions.
In April 2002 the European Court ruled that Gibraltar's exempt
company tax concessions was not state aid under EU rules, but that
qualifying company status could be investigated by the European
Commission. In February 2002 Gibraltar signed a letter of commitment
with the Organisation for Economic Co-operation and Development,
agreeing to exchange information with overseas authorities in criminal
tax matters by 31 December 2003 and in civil tax matters by 31 December
2005.
Key Contacts
Gibraltar Finance Centre
Government of Gibraltar
Ministry of Trade, Industry & Telecommunications
Finance Centre Division
Suite 761, Europort
Gibraltar
Tel: 350 50011
Fax: 350 51818
E-mail: finance@dtti.gov.gi
Website: www.gibraltar.gov.gi
Gibraltar Regulatory Authority
Suite 631
Europort
Gibraltar
Tel: 350 74636
Fax: 350 72166
Website: www.gra.gi
Financial Services Commission
943 Europort, Gibraltar
Tel (350) 40283 or 40284
Fax (350) 40282
E-mail: fsc@gibnet.gi
Website: www.fsc.gi
Key Facts
Status:
British Overseas Territory. Spain claims Gibraltar as
its territory. Discussions between the UK and Spain have involved
suggestions of a period of joint sovereignty over Gibraltar with
eventual transfer to Spain. The UK has said it would not transfer
sovereignty against the wishes of Gibraltar's residents. The Gibraltar
government opposes becoming part of Spain.
Population: 27,884 (July 2005 est.)
Capital: Gibraltar
Currency: US$1 = £0.543 Gibraltar pound (September 2005). The
British pound is on par with the Gibraltar pound and both currencies
are accepted.
Legal system
Based on the English system, except for minor
modifications. There is a Magistrates' Court, a Supreme Court of
Gibraltar, and a Court of Appeal.
Government
Gibraltar is a UK overseas territory with internal
self-government. The United Kingdom is responsible for defence, foreign
affairs, financial stability, and internal security. The head of state
is the British monarch represented by a governor. The legislative
branch is the unicameral House of Assembly made up of 15 members
elected for four-year terms. The voting system allows each elector to
cast a maximum of eight votes. The attorney-general and the financial
and development secretary sit as ex officio members. The cabinet is
called the Council of Ministers, made up of the chief minister and
seven other ministers. The Gibraltar Council is made up of the
governor, the chief minister, four other ministers, the deputy
governor, the attorney-general, the financial and development secretary
and the deputy fortress commander.
Governor: Sir Francis Richards (since 27 May 2003)
Chief
minister and minister for the economy and public finances, financial
services, lands and gaming, government departments and public
administration, information and public relations, personal status,
industrial relations and internal government services: Peter Caruana
(since 17 May 1996)
Political parties: Gibraltar Social Democrats (GSD) leader Peter
Caruana; Gibraltar Socialist Labour Party (GSLP) leader Joe Bossano;
Gibraltar Liberal Party leader Joe Garcia.
Elections: Last held 27 November 2003. The next must be held by
February 2008. The Gibraltar Social Democrats won 58% of the vote and
eight seats and the Gibraltar Socialist Labour Party won the remaining
seven seats.
Economic overview
The economy is dependent on financial
services, tourism, and port services including ship repair and ship
conversion. The British military presence contributes about 11% to the
local economy. The financial sector accounts for 20% of GDP. Gibraltar
had 6.5 million visitors in 1999, the vast majority arriving by land.
Gross domestic product: US$769 million (2000 estimated)
Trade: Trade exports - US$136 million f.o.b.,; Trade imports – US$ 1.743 billion c.i.f. (2002).
Inflation rate: 1.4% (year to October 2000)
Labour force: 14,800 (including non-Gibraltar employees), services 60%, industry 40%.
Budget (2001-2002 est.) Recurrent revenue of £146.8 million. Recurrent expenditures of £141.8 million. Capital expenditures of
£25 million. Public debt: £61.4 million at 31 March 2001
Financial year: 1 April-31 March.
Public holidays (2005)
1 January (New Year's Day), 2 January
(New Year’s Day Holiday), 14 March (Commonwealth Day), 25 March (Good
Friday), 28 March (Easter Monday), 2 May (May Day), 30 May (Spring Bank
Holiday); 13 June (Queen's birthday), 29 August (late summer bank
holiday), 12 September (Gibraltar National Day), 25 December (Christmas
day), 26 December (Boxing day) 27 December (Christmas Holiday).
Time zone
GMT plus 1 hour. Daylight savings time takes effect
on the last Sunday in March and reverts to normal time on the last
Sunday in October.
Restaurant Guide
We recommend:
Bunters International Restaurant
College Lane. Tel: 70482 Fax: 75659
The Rib Room Restaurant
The Rock Hotel. Tel: 73000 Fax: 73513
E-mail: rockhotel@gibnynex.gi
Website: www.rockhotelgibraltar.com
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