Opening an offshore company is a great tool that should be part of every wealthy person’s repertoire. And if you’re a six- or seven-figure entrepreneur, the amount you can save from offshoring your business is likely in the millions.
If it’s your first time hearing about offshore companies or considering putting up an offshore business, we have many resources that can help you, so do check those out.
However, if you want to expand your business activities overseas or choose a new territory to diversify your portfolio, we suggest you consider Gibraltar.
Gibraltar is a popular tax haven among the high net worth and ultra-high net worth entrepreneurs like you because of the country’s tax benefits on non-resident companies, regulated by the Gibraltar Companies Ordinance law.
To be clear, Gibraltar is not an island. Gibraltar is a British overseas territory located on the southern tip of the Iberian Peninsula inside Spain’s region. Its ideal location creates easy access to Spain, Portugal, and the rest of Europe.
Despite the country’s turbulent past and considerable small territory, Gibraltar is an affluent nation known chiefly for its strategic importance and economic stronghold.
In fact, despite the economic turbulence in Spain, Gibraltar’s economy remains robust and has yet to experience a recession. The economic outlook continues to remain favorable, with solid growth for the future.
Benefits of Incorporating a Gibraltar Offshore Company
Gibraltar offshore companies are investment vehicles that work much the same as local Gibraltar companies. That’s why the government doesn’t market its jurisdiction similarly to conventional offshore countries. Instead, Gibraltar projects itself as a more traditional onshore environment offering tax benefits and investment opportunities.
So, what exactly are these tax benefits and investment opportunities?
Favorable Tax System
Gibraltar offers one of the lowest tax rates in Europe. The standard corporate tax rate is pegged at 12.5%. Utility and energy companies have to pay a higher 20%, but the country still does not impose income tax if the non-resident companies do not conduct any business activities within its jurisdiction, including holding shareholder meetings.
Gibraltar offshore companies are also not liable for any local taxes, including value added tax or gift tax, wealth tax, and capital gains tax.
Gibraltar does not have double taxation treaties with any country except the UK since it is under Sovereign rule so only the annual license fee has to be paid; Nonetheless, Gibraltar has recently started to sign tax information exchange agreements (TIEAs) in accordance with the Organization for Economic Co-operation and Development (OECD) model. Some of the countries Gibraltar has signed these agreements with are the US, Australia, Germany, France, Ireland, Italy, Poland, and Malta.
Now that’s what we call an ideal tax haven where you’re free from taxation on all your profits earned around the globe.
Provision for Anonymity
A Gibraltar offshore company’s details, including the beneficial owner, directors, and shareholders, are listed in Gibraltar corporate registry. The corporate registry is open to the public, but nominee services are available to protect the identity of company owners who wish to remain anonymous.
Nominee directors or shareholders function as placeholders for the actual owner by taking their place in all public records relating to the company. You can conduct your business in any industry abroad without limitations as long as it is legal.
Robust Banking System
Banking in Gibraltar, though well regulated, is very business-friendly, so for high net worth and ultra-high net worth individuals like you, opening a corporate bank account for your offshore business will not be a problem.
Opening a business entails opening a bank account, so you have a way to move your money. But where you open a bank account and where you incorporate your company does not necessarily have to be in the same jurisdiction. This is a piece of advice to keep in mind because some EU digital banks are not available in the country.
Under British Sovereignty
Gibraltar’s status as a British overseas territory provides many advantages over other offshore countries. For one, it has autonomy from the British government but is under the protection of the Sovereign and abides by English Common Law. Second, its small size means its parliament can efficiently pass and enact laws without too much bureaucracy. This further adds efficiency to their policy-making.
Gibraltar’s association with the UK means it belongs to the European Free Trade Association (EFTA) or Single Market. However, because of Brexit, Gibraltar also ceased to become part of the EU.
As a self-governing British overseas territory, Gibraltar is classified as a tier-1 jurisdiction. This means the county has a reasonably predictable political environment, transparent legal system, dependable business infrastructures, sophisticated financial system regulations, and a stable economy. All of which contribute to its global reputation as an offshore economic powerhouse.
How to Open an Offshore Company in Gibraltar
There are two ways how to open a company in Gibraltar. First is by registering a new company; a local registered office is required for all Gibraltar Non-Resident Companies.
Set up a New Company
To set up a new non-resident company in Gibraltar, you must register with the Business Liaison unit at the Ministry for Business. The Business Liaison unit is a one-stop shop for all business registration requirements. This will ensure a seamless and hassle-free registration process for investors.
The Business Liaison team will not only liaise with relevant government departments but will also assist with the required documents and attachments.
Buy a Ready-Made Company
Buying a ready-made offshore company in Gibraltar is an excellent alternative to setting up a new one, especially if you are under a time constraint or simply want the convenience of it.
A ready-made or shelf company is a pre-registered, existing company on the ‘shelf.’ These companies have no assets or liabilities and have never conducted business. However, it is registered with the intent of being sold.
Sometimes purchasing a shelf company in Gibraltar can take less than a couple of days. Assuming, of course, that you did your due diligence and the shelf company is clean and up to all legal standards.
Types of Gibraltar Company Formation
Besides knowing how to open a company in Gibraltar, you should also know what type of company ownership you should register based on the nature of your business or how you want to use your Gibraltar offshore company as an investment tool.
Below are Gibraltar incorporation options for structuring your offshore business.
1. Sole Trader
A sole trader is ideal for small companies. The individual or sole trader is registered as self-employed but can be registered under a business name for a layer of anonymity.
2. General Partnership
Partnerships can be between two or more groups of people. Each partner is a joint owner/s of the company and shares the assets and liabilities. Moreover, this business structure does not separate the person from the legal entity. This means you are ‘see-through’ regarding liability and local taxation.
This form of Gibraltar offshore company formation is great for startups and friends or family members who want to build a company together.
3. Limited Partnership
A limited partnership has the same structure as a general partnership but has a general partner and a limited partner.
A limited partnership has at least one general partner in charge of the day-to-day management of the business and unlimited liabilities. It also has at least one limited partner who simply puts investment in the company, is hands-off on the daily operations, and has limited liabilities.
4. Limited Liability Partnership
There are no general partners in a limited liability partnership (LLP). Instead, all partners have limited liability, but all contribute to the management of the business.
Though the structure may look like a private company limited by shares (LTD), an LLP does not have a board of directors. Moreover, this Gibraltar offshore company setup is treated as a partnership for the purpose of taxation. Accordingly, partners are taxed based on their share of the company revenues.
This type of business structure is very flexible, where partners can make changes in the business structure freely.
Trusts are not taxable in Gibraltar as long as it does not earn income locally. Also, its beneficiaries should not be Gibraltar residents. However, trustees can be legal residents of Gibraltar.
Trust is often set up for asset protection and estate planning purposes.
Fundations operate and are used similarly to a trust. The main difference is foundations have legal personalities. Furthermore, it can hold and manage properties as legal and beneficial owners.
7. Private Company Limited by Shares, LTD
The most popular non-resident Gibraltar company formation among foreign investors is the private company limited by shares, LTD. LTDs are great for managing taxes because Gibraltar does not impose a corporate tax that is not earned within its jurisdiction or remitted to Gibraltar.
LTDs are the preferred company ownership among foreign entrepreneurs who want to manage their taxes more efficiently and protect their capital.
Gibraltar Non-Resident Company
A Gibraltar non-resident company is an incredibly versatile investment vehicle for a range of different purposes. Despite being more costly than other offshore countries like Belize or St Lucia, our team believes having a non-resident company in Gibraltar offers desirable advantages for wealthy entrepreneurs.
A Gibraltar non-resident company can act as a holding company for international investment and trade, e-commerce, property holding, and holdings of movable assets.
Three things attract our team towards Gibraltar offshore company formation:
1. A Straightforward Company Formation Process
The registration process on how to open a company in Gibraltar is relatively simple yet thorough. You don’t need to jump hoops for your offshore company setup, and there’s a minimal paper requirement. Once you have secured your corporate documents, it can take as little as ten days to complete your offshore company registration.
What is more, you can start your Gibraltar offshore company setup remotely. Imagine forming or buying a company in Gibraltar without leaving your residence. That’s just top-level convenience!
2. Low Cost of Gibraltar Company Formation
The essential requirement for offshore company registration in Gibraltar is having at least one director, shareholder, and company secretary. If the company has two directors, the other director can act as the company secretary.
Furthermore, Gibraltar incorporation does not require minimum capital. But it is required by law to issue a minimum share capital of GBP 100. Authorized share capital, on average, is at GBP 2,000 divided into 2000 equal shares.
3. Hassle-Free and Low Maintenance Cost
Gibraltar offshore company operating costs like license fees, annual return filing fee, and annual tax requirements are minimal.
Cheap Offshore Company Formation
When looking for a country to set up your offshore business, it is not enough to just look at who’s offering the cheapest corporate tax rates and the easiest way to incorporate a company.
Reputation matters. A stable legal system matters. Access to banks and financial tools matters. Your business activities and goals matter. Your lifestyle matters.
Don’t waste your time trying to make a cheap option work.
All these internal and external factors should be considered when choosing offshore countries. For example, it doesn’t make sense to pay little when it costs you more time to make it work around your personal and business goals. Time is your most valuable resource. Thus, it is better to pay a little extra and go where you’re treated best.
Don’t just collect shiny objects. Know your end goal. Have a plan.
Talk to our team so we can help you craft a bespoke, holistic strategy that works.