In 1967 the Companies (Taxation and Concessions) Ordinance introduced the concept of 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 (three weeks approximately) so long as the basic criteria set down by the Gibraltar Financial and Development Secretary is met.

Requirements

1. That the minimum paid up Share Capital of the company is no less than £100.
2. That no Gibraltarian or resident of Gibraltar has a beneficial interest in the shares of the company (this does not preclude Gibraltarians or residents of Gibraltar from acting as Nominees or from working for the company).
3. That the company does not carry out or transact any trade or business in Gibraltar unless all receipts and income arise either outside Gibraltar or from dealings with other exempt companies and originate from persons other than Gibraltarians or residents of Gibraltar.
4. That the company maintains its Company Register and its Registered Office in Gibraltar.
5. That no shares are issued or transferred without the approval of the Financial and Development Secretary.

All applications should be submitted with a reference of each of the beneficial shareholders which should be provided by a bank or a professional person. Additionally a little information as to the purpose of the company should be enclosed in the application.

Once exemption has been obtained such a company will only pay a Licence Fee (or tax) of £225 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.

So what can the offshore tax exempt company be used for? The Gibraltar tax exempt company can be used for a wide variety of trading or investment holding purposes.

Here are some examples:

Where a company wishes to have a tax exempt and totally confidential vehicle for the purpose of owning commercial or residential property for which income is to be derived by way of rent.

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 operate a bank account, subject only to any exchange control regulations there may be in the country in which it is intended to open the bank account. Such accounts remain totally confidential and all interest earned is totally tax free.

Where a client wishes to invest confidentially in the shares of a company or in the Stock Market generally.

Where a trading company or individual wishes to receive commissions in an offshore centre or alternatively wishes to re-invoice for goods or services.

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.

Where a client wishes to hold a patent, copyright, design or royalty in a company, which in turn can licence its intellectual property and receive licence fees in a tax free environment.

Where ship owners wish to operate and charter vessels free of tax.

There are many other areas where a Gibraltar tax exempt company can be used extremely tax efficiently including Captive Insurance Companies, Consultancy Service Companies, etc.