Formation of Companies in Gibraltar

FORMATION OF COMPANIES IN OTHER JURISDICTIONS
GIBRALTAR CORPORATIONS

Introduction
Gibraltar is a peninsula at the southern tip of Spain with an area of approximately 7 sq km. It is adjacent to Africa yet within Europe, and has a historically strategic position at the junction of the Atlantic and the Mediterranean. The Rock of Gibraltar is limestone, is almost 425 m high, and has hundreds of metres of tunnels that were dug for various military campaigns. The name itself derives from the Moorish leader Tariq who used Gibraltar as a base in the eighth century. "Gibel Tariq" means the Mountain of Tariq.

Disclosure of beneficial ownership to authorities
In order to obtain exempt status, an application has to be made to the Financial Services Commission. The application must include the name and address of the beneficial owner(s), and bank character references relating to the beneficial owners. This information is not on public record.

Advantages
Gibraltar was the first European jurisdiction to offer the exempt company which allows a company to be controlled and managed from Gibraltar whilst still able to enjoy preferential tax status there. Probably the most cost-effective European jurisdiction. The exempt certificate gives a 25-year guarantee of exemption from Gibraltarian taxes.

Disadvantages
Not as well established as its European jurisdiction. As a full member of the EC pressure may be brought to bear at some time in an attempt to force Gibraltar to harmonise its taxes with other member states.

Non-resident companies
The Gibraltar non-resident company has been recognized as excellent alternative to the Irish non-resident company which itself was very popular as offshore vehicle until 1999. (Many of the Irish non-resident companies have since been re-domiciled to Gibraltar.)
The Gibraltar company law is based almost entirely upon the Companies Act 1929 of England, which is amended and enhanced by Ordinances passed by the Gibraltar House of Assembly. The tax status for various types of Gibraltar companies is established primarily by the Gibraltar Companies (Taxation and Concessions) Ordinance of 1967.

Gibraltar non-resident company is not taxable in Gibraltar
A company registered in Gibraltar will not be liable to Gibraltar taxation if it's owned and controlled by non-residents of Gibraltar, does not trade in Gibraltar and does not remit income to Gibraltar. Hence, this is the basis for creation of a Gibraltar non-resident company. There are no capital gains taxes, gift taxes, wealth taxes nor VAT in Gibraltar. Companies that do not exceed GBP 4.8 million annual turnover, GBP 2.4 mil balance sheet and 50 employees do not have to submit audited returns. Just what's called an "abridged balance sheet".

Low maintenance costs
A Gibraltar non-resident company only pays GBP 30 (Approx USD 50) annual filing fee to the Registrar of Companies, payable at filing of the Annual Return. If the company is not formally directed by the beneficial owners themselves, the directorship function can be outsourced worldwide to suitable corporate or private third-party directors. Audited returns will not be required for most companies, as they usually qualify as "small" companies under the relevant rules. The Gibraltar company will need to maintain a registered office in Gibraltar and to have a resident secretary - both these functions are provided by us at a competitive fee.

As a result, Gibraltar non-resident company is probably the most cost efficient offshore vehicle in Europe today. It is also competes very well worldwide with the likes of BVI, Belize, Bahamas, Cayman Islands and other better-marketed offshore centres.

Respectable jurisdiction
Unlike many, Gibraltar is not an exotic, far-away island. Gibraltar is part of the European continent. The regulatory and legal environment of Gibraltar has been recognized as benchmark towards which other offshore jurisdictions should being compared. Serving historically as an "offshore branch" of the City of London, Gibraltar has excellent infrastructure, communications and work culture.

Other types of companies
The Gibraltar Companies (Taxation and Concessions) Ordinance of 1967 provides for two other specialized company types in Gibraltar - the exempt company and the qualifying company. However their future status is somewhat unclear due to a pending dispute over the state aid rules raised recently by the European Union. (This does not concern the non-resident companies.)

Applications
There are two general areas where offshore companies, and Gibraltar non-resident companies in particular, are used:

Asset protection & confidentiality - by vesting private assets in a properly structured offshore company, such assets can be protected from future claims such as bankruptcies, judgments, creditors and other litigants. Just as well, these assets can be protected from the eyes of competitors, adverse claimants and other undesirable third parties.

Tax mitigation
A proper use of a no-tax offshore company can legally reduce or defer some of the tax which would otherwise be payable if the same business would be undertaken by a highly taxed company. The best applications include international trading and cross-border services, international portfolio investment, e-commerce.

Gibraltar non-resident company is well suited for both of these purposes.

In particular, a Gibraltar company can be used for the following:

• To trade in any imported and exported goods.
• To hold capital shares in foreign enterprises and joint ventures.
• To hold real estate.
• To hold investment instruments.
• To hold ships and other vehicles.
• To provide software development services.
• To provide consulting services.
• To provide transportation and logistics services.
• To act as independent contractor or advisor.
• To act as sales or purchases agent.
• To receive royalties and license fees.
• To provide factoring and discounting service.

Corporate characteristics: