Business Environment

Gibraltar's status as a UK colony and its relationship to Spain and the European Union is currently under negotiation. 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.

Gibraltar's Financial Services Commission (FSC) is responsible for the regulation of the financial services sector. The government's marketing arm is the Gibraltar Finance Centre, a division within the Department of Trade and Industry. 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.


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.

Financial Services Commission
943 Europort, Gibraltar
Tel (350) 40283 or 40284
Fax (350) 40282

The Gibraltar Port Website
The Gibraltar Finance Centre Website

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.

30,000 (July 2000 est.)


US$1 = £0.68 Gibraltar pound (May 2002). 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.

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
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

Education, employment and training: Dr. B A Linares
Trade, industry and communications, tourism: J J Holliday
Health: E Britto
Housing: J J Netto
Social affairs and civic affairs: Y del Agua
Heritage, culture, youth and sport: C. Beltran
Environment, roads and utilities: F. Vinet
Attorney general: R R Rhoda
Financial and development secretary: T J Bristow

Political parties
Gibraltar Social Democrats (GSD) leader Peter Caruana
Gibraltar Socialist Labour Party (GSLP) leader Joe Bossano
Gibraltar Liberal Party leader Joe Garcia
Gibraltar Labour Party/Association for the Advancement of Civil Rights (GCL/AACR) leader Issac Marranche
Independent Liberal Forum (ILF) leader Lyana Armstrong-Emery

Last held 10 February 2000. The next must be held by February 2004. The Gibraltar Social Democrats won 58.3% of the vote and eight seats. An alliance of the Gibraltar Socialist Labour Party and the Liberal 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
£327.7 million (1998)

Trade exports - 49.2 million, trade imports - £216.8 million.

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. Government financial year 1 April-31 March.

Public holidays (2004)
1 January (New Year's Day), 8 March (Commonwealth Day), 9 April (Good Friday), 12 April (Easter Monday), 1 May (May Day), 31 May (Spring Bank Holiday); 14 June (Queen's birthday), 30 August (late summer bank holiday), 10 September (Gibraltar National Day), 25 December (Christmas day), 26 December (Boxing day).

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.

Financial Services Commission
The Gibraltar Port Website
The Gibraltar Finance Centre Website