Corporates
Introduction
Gibraltar has completed a long journey to reposition its financial services centre from an offshore tax haven to a mainstream onshore European finance centre which is fully compliant with all EU and international directives and treaties on responsible behaviour. With a new attractive fiscal regime in place Gibraltar is fast becoming a very favourable jurisdiction for businesses looking either to redomicile or establish a new subsidiary. Gibraltar offers European and international standards of regulation, an impeccable reputation and a competitive low tax model to entice firms into the jurisdiction.
For UK companies looking to establish a physical presence, Gibraltar offers a familiar language and legal system as well as a stable economic, business and political climate. The insurance rating and information experts AM Best assessed Gibraltar as a country with very low levels of economic, political and financial system risk.
The territory is making considerable investment in capital infrastructure projects including an expansion to the port’s facilities to attract more cargo and cruise ships, a new airport terminal which can handle 1m passengers and new roads and tunnels to improve traffic flow. A shortage of suitable office space is being addressed with a number of developments in the offing including a World Trade Centre which will add more than 170,000 square feet of office space.
Corporate tax
The territory has replaced the tax exempt regime for offshore companies with an internationally competitive tax model whereby all firms pay a standard rate of tax across the board. With effect 1st January 2011 the standard rate of corporation tax is 10% save in the case of utilities and companies enjoying a dominant market position which are subject to 20% tax.
THE ADVANTAGES OF RELOCATING YOUR BUSINESS TO GIBRALTAR
- Corporate Tax @ 10%.
- No Surtax.
- No Capital duty.
- No Payroll Tax.
- No Real Property Tax.
- No VAT.
- No Capital Gains Tax.
- No Transfer Tax.
- No Tax on Royalties.
- No Tax on Interest income.
- No Tax on Dividends paid either to another local entity or non resident company or person.
- Employers Social Security contributions currently capped at £32.92 per week.
- Stamp Duty charged at a fixed rate £10 applicable to initial creation and subsequent increase to share capital as well as to immovable property in Gibraltar.
- Foreign Tax Credit – consideration given to income subjected to tax in another jurisdiction to arrive at tax due in Gibraltar.
- The provisions of the EU Parent Subsidiary Directive have been transposed into local laws.
HEPSS
The term HEPSS stands for “High Executive Possessing Specialist Skills.” The Gibraltar Government introduced this special employment status to encourage the relocation of high earning executives with specialist skills that will promote and sustain economic activity of particular economic value to Gibraltar. It is also considered as a cost saving incentive for corporate entities looking to recruit senior management positions.
Why should you consider applying for tax residency in Gibraltar as a HEPSS?
It would appeal to you if you are a high earning executive or senior manager possessing skills and experience which are not readily available and which would be of economic value to Gibraltar.
The key conditions which you must satisfy in order to qualify and obtain Gibraltar Residency status as a HEPSS can be summarized as follows:
- The HEPSS applicant must possess specialist skills not already present in Gibraltar and which in the Gibraltar Government’s opinion are deemed to be of exceptional economic value to Gibraltar.
- The HEPSS applicant would have to earn more than £120,000 in Gibraltar.
- The HEPSS applicant cannot have been gainfully employed nor resident in Gibraltar for any part of a period of three years immediately preceding the year in which the application is made.
- The HEPSS applicant must acquire residential accommodation in Gibraltar for their exclusive use and be large enough to house their direct family. It would have to be a property which is approved for these purposes by the Finance Centre Director.
It should be noted that once issued the certificate requires that the HEPSS individual remains with the same company therefore a change of employment would trigger the withdrawal of this special tax status. Furthermore the individual also needs to maintain a good character and reputation in order not to damage the jurisdictions own reputation.
How much income tax would you pay as a HEPSS?
A High Executive Possessing Specialist Skills individual’s liability to tax from qualifying employment is limited to the first £120,000 under the Gross Income Based System (GIB). Earnings in excess of this amount would escape further taxation.
THE ADVANTAGES OF BECOMING A HEPSS GIBRALTAR RESIDENT
- Maximum tax payable from qualifying employment income capped at £32,500.
It is worth pointing out that the HEPSS cap on income specifically relates to earnings from their employment in Gibraltar attributable to their specialist skills. Any other income arising to the individual would not fall under the cap and would therefore continue to be assessed to tax in accordance with the provisions of the Income Tax Act.
PERSONAL TAXATION
Firms looking to relocate staff for their Gibraltar operation are able to include the very generous personal tax regime as part of an attractive benefits package. Employees earning up to £20,000 would pay an effective rate of less than 15% and those earning up to £40,000 would pay less than 20% whilst everyone whose earnings do not exceed £300,000 pay a maximum effective rate of tax of 24.99%. There is also no wealth, capital gains or gift tax nor is there VAT or taxation on interest savings for that matter.
At Fiduciary Wealth we offer a complete financial planning service for businesses including the provision of a Gibraltar occupational pension scheme and a suite of insurance products to meet employee needs such death in service, critical illness and private medical cover. We also offer a bespoke service for Directors and key personnel in respect of their own financial arrangements.
Our firm provides a complete tax led wealth management service to individuals and businesses looking to relocate to Gibraltar. As a financial advisory practice we can take care of all your Gibraltar residency requirements through a single point of contact.
At a time when governments around the world are increasing personal and indirect taxes to increase revenues, Gibraltar offers a refreshing and significantly less painful alternative.
If you are looking for a new place of residency then Gibraltar could well be the right “address” for you or for your business.
To speak directly to a financial adviser or for further information Tel: +350 200 50982 or email wealth@fiduciarywealth.eu
For further information on our financial planning services for businesses, the sourcing of office space, corporate & personal taxation and other such matters please download our free Gibraltar Residency Guide.