The Gibraltar Tax Exempt Company: The Gibraltar Tax Exempt Company is a Limited Company which has obtained a Certificate of Tax Exemption from the Gibraltar Financial and Development Secretary. An application for exemption is routine and an exemption will be granted within a short period of time so long as the basic criteria set by the Financial and Development Secretary is met. In essence, the Beneficial Shareholder of the Company should submit two references, from a bank or professional person, together with a little information as to the purpose of the Company. The only limitation to the Tax Exempt Company is that resident of Gibraltar or Gibraltar national cannot own or trade with a Gibraltar company though they can be Directors and manage the Company. Once exemption has been obtained, such a Company will only pay 255 pound sterling tax each year. This tax exemption applies to all taxes including any withholding tax, tax on dividends, interest, royalties, management fees paid to non-residents, stamp duty, capital gains tax, inheritance tax, etc. Irrespective of the profit that the company makes, the Company will only pay 225 pound sterling tax on its profits. The Gibraltar Tax Exempt Company can be utilized for a wide variety of trading or investment holding purposes without the payment of any tax whatsoever. In the past, Gibraltar Tax Exempt Companies have proved to be particularly useful and advantageous in the following circumstances. 1. Where a client wishes to have a tax exempt and totally confidential company for the purpose of owning residential or commercial property from which income is to be derived by way of rent. 2. Where a client wishes to open a confidential bank account, whether in Gibraltar or elsewhere, for the purpose of everyday use or investment. There is no restriction as to where a Gibraltar Company can open a bank account, subject only to any exchange control regulations there may be in the country in which it is intended to open a bank account. Such accounts remain totally confidential and all interest earned is totally free of tax. 3. Where a client wishes to invest confidentially in the shares of a company or on the stock market generally. 4. Where a client who could be an individual or a trading company wishes to receive commissions in an offshore centre or alternatively wishes to re-invoice for goods or services. 5. Where a client wishes to invest money out of his jurisdiction anonymously whilst retaining the possibility of re-investing in his jurisdiction at a later date, once again on an anonymous basis. There are many other areas in which a Gibraltar Tax Exempt Company can be used extremely tax efficiently, such as captive insurance companies, shipping companies, constancy service companies, etc. Gibraltar Qualifying Company: Companies operating in the overseas services and export trading sector in Gibraltar (including branches of overseas companies) doing business outside Gibraltar can enjoy qualifying company status. Such Companies, depending on arrangements agreed with the Financial and Development Secretary, can pay tax of between 0% and 35%, quite often agreed at 5%, on their trading profits that the Company may make. On some occasions it is useful for a Company to show that it has paid some tax, albeit low tax, on its trading profits. This would seem to be particularly useful to: 1. Shipping companies, which can operate from Gibraltar. 2. Financial entities e.g. Banks, UCITS, Fund Managers, Unit or Investment Trust Managers, Life Assurance Companies and Captive Insurance Companies. EU companies have free access to the EU single market of Financial Services in Gibraltar. Industrial trading and transshipping companies: Gibraltar has developed a duty free industrial park for Companies manufacturing or trading in export and such companies will be eligible for the 5% tax rate. Gibraltar benefits from the General System of Preferences. This is an arrangement whereby industrialized nations (including the remainder of the EU) allow preferential access to their markets for specified goods from less developed economies, provided certain rules are satisfied. Gibraltar is a highly advantageous location from which to produce certain goods, particularly for entry into the rest of the EU. Such a Company, once established, can avail itself of Tax Exempt Status or Qualifying Status whichever is preferred. Relocated executives possessing specialist skills: These rules govern employed individuals who are relocated to Gibraltar and possess specialist skills. Such individuals would pay a maximum tax of 10,000 pound sterling per annum whatever their level of employment income is, provided that they are employed by a Qualified Employer. Again the individual must obtain a certificate from the Financial and Development Secretary and non-refundable application of 500 pound sterling is payable when the application is made. The certificate lasts for five years. A qualified employer is either a Qualifying Company operating in the new duty free zone, or alternatively a Qualifying Company incorporated after 1st January 1992. High Net Worth Individuals (HNWI): Gibraltar introduced a new low level of tax for High Net Worth Individuals to encourage such individuals to invest in Gibraltar. In essence, individuals obtaining HNWI's status become tax residents of Gibraltar because it is of interest for them vis-a-vis they world-wide tax status. HNWI's pay tax on the first 45,000 pound sterling of assessable income. The only reservation is that tax paid must not be less than 10,000 pound sterling. Only income arising in or remitted to Gibraltar is taxable and therefore such individuals can still hold a Gibraltar Tax Exempt Company or a Gibraltar Qualifying Company and the income from such Companies would only be taxable if received by the individual in Gibraltar. An application from HNWI's status is made to the Financial and Development Secretary and a 500 pound sterling non-refundable application fee is payable when the application is submitted. In order for an individual to qualify as an HNWI, he must have available for his exclusive use for a period of not less than 7 months, approved residential accommodation in Gibraltar, and must reside in Gibraltar in that property during any year of assessment (July to June) a minimum of 30 non-consecutive days. There is no Capital Gains Tax in Gibraltar. HNWI's are also exempt from Estate Duty. Once the application is approved, the HNWI will obtain a certificate from the Financial and Development Secretary. Trusts and Settlements: Gibraltar Trust Law is similar to that of the United Kingdom. A Trust may be established for various reasons, perhaps to hold assets confidentially, to provide for ones' heirs, to avoid forced heirship provisions in the client's own country, to protect wealth or to protect assets from future creditors. A Trust created for a non-resident person is exempted from tax. There are no capital gains taxes, estate duty, inheritance, and gift on wealth taxes payable on such Trusts. A Gibraltar Trust is a flexible instrument which can be tailored to meet a client's requirements including the appointment of a trusted friend or adviser as protector or counselor. Should you wish to receive any further information in relation to any of the above-mentioned financial products, please contact us at your convenience.