Gibraltar’s new Income Tax Act 2010 (“the New Act”), which came into force on 1st January 2011, brings Gibraltar’s system of taxation into line with the rest of the European Union, having done away with the former exempt status tax regime that allowed offshore companies to pay no tax whilst onshore businesses had to pay tax at a 35% rate. The New Act has instead introduced a single 10% corporation tax across the board, abandoning discriminatory distinctions between onshore and offshore business.
As an onshore EU finance centre with very competitive rates of corporate and personal taxation, no capital gains tax, VAT, inheritance tax or wealth or gift taxes, Gibraltar now finds itself in a unique position to offer business and tax planning opportunities that few other finance centres can. In the following editions we will review a couple of examples.
Companies licensed in Gibraltar to engage in an activity covered by the EU Single Market Directive (including banking, insurance, insurance mediation, UCITs management or investment services businesses) can passport this activity throughout Europe (EEA states). This is an EEA right, known as passporting. There is no need to apply to the target member state for a license to provide services in that jurisdiction. Passporting of a financial services licence to another member state can normally be conducted in a short timeframe through a simple process of notification to the Gibraltar regulator, the Financial Services Commission (“FSC”).
Firms licensed in Gibraltar may also establish branches in other member states on the basis of their Gibraltar license by making an application to the FSC. Again, the application process is very simple.
To be continued tomorrow, Part II: Parent Subsidiary Directive (90/435/EEC)