Gibraltar

Gibraltar, like Panama and Liberia, is known as a haven for the registration of ships. Gibraltar is ¾ of a mile wide and 3 miles long, give or take a few hundred yards here or there. It is located on the southern tip of Spain, jutting out into the Mediterranean Sea (most people think it juts into the Atlantic Ocean). Its population of about 30,000 mainly English-speaking citizens, and Gibraltar is a British Crown Colony. Gibraltar’s tax laws are based on British common-law principles. 

After nearly 400 years of Spanish rule, Gibraltar fell into British hands during the great European wars of Louis XIV and has remained a Crown Colony since the Treaty of Utrecht (1704). Today, a British army garrison is everywhere in evidence, and soldiers stand outside the British governor’s residence where a military band makes regular appearances. 

While Gibraltar has been a British colony since 1704, there has been outside political and military pressure from Spain in an attempt to regain sovereignty. In a referendum vote in 1967 Gibraltar residents expressed an almost unanimous desire to remain attached to Britain. Two years later in 1969 Spain passed sanctions against Gibraltar in an act of reprisal. Spain, to win control, closed her frontier to Gibraltar and prevented land traffic to or from the territory. In the face of this indignation, Gibraltar’s residents nevertheless remained staunchly pro British openly defying the Spanish. 

The political problems with Spain has made Gibraltar less accessible and less attractive as a tax haven, but its excellent air and sea transportation links allowed Gibraltar residents to cope with the Spanish embargo. Recently, Spain reopened its borders to Gibraltar and political frictions have ceased to be a problem. 

Gibraltar has been a British port of registration since 1864. As of January 1988, the total tonnage of merchant vessels registered in Gibraltar stood at 2.5 million tons. Gibraltar shipping companies are exempt from tax. 

Gibraltar registered ships do not fly the Gibraltar flag, but fly the British Red Ensign. 

In order to apply for registration the ship must be a ‘British ship’. A ‘British ship’ is one owned wholly by (a) Natural born or naturalized British subject, or (b) Companies established under the laws of some part of Her Majesty’s Dominions. Usually a British ship registered in Gibraltar will be owned by a company resident in Gibraltar. 

Some types of vessels have been refused registration by the Port of Gibraltar. These include fishing vessels, nuclear powered vessels, gas or chemical tankers and large passenger ships. A large number of pleasure yachts are registered in Gibraltar. 

Ships owned by a Gibraltar Tax Exempt Company can keep the beneficial owners of such companies confidential by law. Directors and shareholders usually are nominees. The beneficial owner may appear on the shareholder’s Register if he wishes. 

Non-Gibraltarians and non-residents owners of Gibraltar ship companies can apply for a 25 year Tax Exemption Certificate. An annual fee of £225 will thereafter keep you free from all Gibraltar taxes from trading operations. A Gibraltar exempt shipper can trade with other exempt Gibraltar companies, but may not carry on other trade or business in Gibraltar. 

Non-stop flights to London take about 2-½ hours. Flights leave and arrive daily. There are regular flights between Morocco and Gibraltar. 

The unit of currency in Gibraltar is the Pound Sterling although there is a local note and coinage issue, which is at par with Sterling. In addition, in 1991 Gibraltar was the first EC state to issue ECU based coinage, which is legal tender. There are no exchange control restrictions in force, there being complete freedom to remit funds into and out of Gibraltar and to convert funds into other currencies. 

Gibraltar’s official language is English, although French and Spanish are also spoken.

The Gibraltar pound is equal to 100 British pence. 

Gibraltar’s legal system understandably is styled after English law, and lawyers are English trained. There are currently 50,000 companies, of which 8,000 are exempted (from tax) companies. Foreigners usually choose the exempted company for their international operations. 

The Gibraltar Companies (Taxation and Concession) Ordinance of 1974 is based on the English 1929 Companies Act. Companies registered in Gibraltar can be limited by shares, by guarantee or unlimited. By filing a Memorandum of Association with the Registrar and stating the company’s name and objects, its limited or unlimited liability, and how the shares are divided, a Gibraltar company becomes a legal entity. Articles of Association may be drafted by the members or a statutory model (Table A) may be adopted. 

For purposes of Gibraltar income taxes, a company is treated as resident in Gibraltar if it is managed and controlled there. The same will apply if it carries on business in Gibraltar but its management and control are exercised outside Gibraltar by persons resident in Gibraltar. The rate of taxation applicable to both resident and non-resident companies is 35%, but non-resident companies are so taxed only on Gibraltar source income. 

The Gibraltar Companies (Taxation and Concessions) Ordinance permits exempted companies, whether incorporated in Gibraltar or elsewhere, to be granted total tax exemption from income tax, stamp duty on documents, dividend, interest, director’s fees and other annual sums and remunerations payable to non-residents. Debentures and shares of an exempt company are also free from Gibraltar estate taxes. 

Exempt companies are further broken down into overseas companies (i.e., incorporated under the laws of a foreign country), ordinary resident companies (Gibraltar registered – managed in Gibraltar) and ordinary non-resident companies (management outside Gibraltar). 

Company management services in Gibraltar can be hired to provide resident directors and officers including the company’s registered address. A company, which is managed in Gibraltar, pays an annual tax of £225, whilst the tax for a company management outside Gibraltar is £200. 

Where a company is incorporated outside Gibraltar the annual tax is £300 regardless of profit. The minimum paid up capital requirement equivalent in a foreign currency. An exempted company receives a tax exemption certificate from the government, which continues in force for a period of 25 years. Registry of an exempted company is fast – taking 24/48 hours. 

Gibraltar does not have a capital gains tax, a surtax, a tax on capital or a wealth tax. It does have estate taxes, but exempt companies are relieved of any estate tax liability. The exemption from estate tax and income tax is guaranteed by the government for 25 years. 

To acquire exempt company status the company must apply to the registrar and await approval. For approval to be granted the company must have. 

1. Paid-in capital of at least £100 at all times.
2. May not engage in business inside Gibraltar, except for managing the affairs of enterprises outside Gibraltar.
3. A company must keep its register of shares inside Gibraltar exclusively.
4. An overseas company must keep a true copy of its register of members in Gibraltar.
5. The company cannot have shareholders that are residents of Gibraltar. 

Costs: Incorporation and Maintenance 

An ordinary resident exempt company managed and controlled in Gibraltar pays an annual tax of £225 (US$425), while the tax for a company managed outside Gibraltar is £200 (US$380). Overseas companies pay an annual tax of £300 (US$570) regardless of the size of its profits. The tax for an overseas company is paid in two installments on the first day of April and the first day of October in each year. A company that fails to pay the tax 30 days after the due date automatically ceases to be an exempt company and will only be reinstated on payment of a penalty of £25, if the Financial and Development Secretary is satisfied the default was excusable and made or allowed without intent to defeat the provisions. 

Yearly fees for company secretarial services, maintaining a registered office and director’s services (which include annual filing fee) cost an addition £445 (US$180). In addition, an £75 exempt company audit fee is payable to external auditors. 

An exempt company’s exemption certificate continues in force for a period of 25 years from the time when issued provided its conditions are not breached. 

Banks operating in Gibraltar now stand at 28. An application for a banking license must be submitted to the Commissioner of Banking who then receives an assessment from the Banking supervisor. 

There are four distinct types of licenses, divided into Class A or Class B, which may be either full or limited. Class B licensed Banks have offshore status and so deal with non-residents. They are restricted to taking deposits only from non-residents of Gibraltar, holders of Class A licenses, and certain types of locally registered offshore companies. The holder of a Class B license, on meeting the requirements of the Companies (Concessions and Taxation) Ordinance, is eligible for exemption from Gibraltar Income Tax, and will pay only a flat annual fee of £225. The minimum paid up capital for a full license is £1,000,000 and £250,000 for a limited license. 

One of the principal areas of Gibraltar’s success in banking. Gibraltar has a total of 28 banks with aggregate deposits of £2.6 billion. British and Scandinavian banks like Barclays, Lloyds and Jyske Bank are well placed to offer services to the thousands of retired and semi-retired sun seekers on the Costa del Sol. Interestingly also, branches of Spanish banks jostle for space with their British competitors in Main Street as if to demonstrate that business does not recognize the petty boundaries of politics. 

Banks in Gibraltar come from a wide range of countries. National Bank of New York, Banque IndoSuez and Credit Suisse are just some of he famous names here. 

Several of Gibraltar’s banks offer a full service to high net worth individuals where, apart from the usual banking functions of deposit-taking, money transfer and foreign exchange, they will trade in securities on behalf of clients, often on a discretionary basis. 

Gibraltar, which does not distinguish between ‘onshore’ and ‘offshore’ banking institutions, has managed to attract some 28 of the world’s major deposit taking names. These operations now hold over £2.6 billion on the rock for savers based throughout the world, but particularly those resident on the Iberian peninsula. 

To some degree or another, the mix of international banks are all attracted by the ability to offer interest from Gibraltar to depositors free of taxes deducted at source. 

The most recent to join these banks on the rock is an offshore offshoot of the Newcastle building society. The Newcastle already had two building society branches in Gibraltar, but the new operation is a banking arrangement located right opposite rival Abbey National and not far from the Norwich & Peterborough’s shop front. 

American brokerage firm Dean Witter Reynolds set up its first European offshore subsidiary, Discover Card Bank, in Gibraltar’s Euro sport. The company offers the Discover Card, a credit and charge card, deposit accounts in dollars and other major currencies, and foreign exchange transactions. There is a minimum balance of US$5,000 on call deposits, with interest paid quarterly. Fixed deposits with a fixed term of investment and a fixed interest rate have a minimum balance of $25,000. As yet Discover Card Bank in Gibraltar is a small operation, but plans include expansion into private banking. 

Gibraltar was chosen as the site of the Discover Card Bank, says manager James Gordon, after Dean Witter Discover & Co looked at several offshore centers outside the Americas. The company stresses Gibraltar’s freedom from exchange controls, multiple tax advantages, political and economic stability, and the anonymity and discretion afforded by its disclosure laws. 

Gibraltar’s location, between Europe and north western Africa, is also important to Discover Card, as American institutions with offshore subsidiaries in Europe tend to use them to service clients throughout Europe and the Middle East. James Gordon says he is interested in attracting not just an American clientele to the Gibraltar operation, but a wider market of intentional investors. 

Gibraltar’s Banking Ordinance has recently been rewritten and now meets all the requirements of the banking Directives in its licensing and control requirements. It incorporates some of the related Directives, which together are designed to produce the fully integrated European banking system of which Gibraltar is a part. The principal amendments which have been implemented are those setting out conditions on which a bank authorized in one member State has a right to establish a branch in, or provide a wide range of banking services on the strength of its home country authorization. The services covered by this “single passport” would include deposit taking, lending, money transmission services, leasing, participation in securities issues, securities trading and portfolio management and advice. Provision is made for a minimum capital base of 5m ECU and limitations on bank’s holdings in non-financial companies. 

Gibraltar has common-law trust principles based on English law. The Trustee Ordinance stipulates that trustees can be either corporations or individuals, but they must be residents of Gibraltar. The perpetuity period for a Gibraltar trust is one hundred years, and the accumulation period has recently been increased to 100 years also. 

The fact that a Gibraltar trust must have resident trustees is not a deterrent to the U.S. tax planner, because the IRS will not recognize a foreign trust as being “foreign”, if the majority of the trustees are U.S. citizens or entities. 

The income of a trust created by a non-resident of Gibraltar is exempt from Gibraltar tax provided that the trust deed specifies that no Gibraltarian or resident of Gibraltar is or may be a beneficiary. Further, trust income must be derived from sources outside Gibraltar to be exempt. Recent tax exemptions have been provided from estate taxes in respect to interest held by non-residents in Gibraltar trusts. Gibraltar’s trust legislation is based on the UK Trustee Act of 1893. 

As a common law jurisdiction, Gibraltar is an attractive location for offshore trusts. Gibraltar also has specific legislation permitting the establishment of asset protection trusts. 

Gibraltar has no double taxation agreements with any nation, thus a Gibraltar based company or trust will enjoy no treaty tax relief on its U.S. source interests, dividends and royalties, and will be subject to a flat 30% withholding tax on these passive incomes. 

Much of the information below was provided by the Gibraltar Financial Service Commission in July 1995. 

The reopening of the border with Spain in 1985 has enabled Gibraltar, a British possession since 1713, to expand its role as a major offshore finance center, against a background of political stability and administrative and legal systems derived from the English models. The absence of any exchange control restrictions together with exemptions and concessions from domestic taxes to certain categories of companies, non-resident individuals who do not work in Gibraltar itself, and trusts administered for non-residents has created many opportunities for offshore investors and led to substantial growth in financial sector services. This has been augmented by strong investor protection legislation passed in 1990 and 1991 leading to the creation of the Financial Services Commission and the appointment of a Financial Services Commissioner. 

Gibraltar is a peninsula with an area of 2.75 square miles linked to the southern tip of Spain, facing the northern coast of Africa and dominating the entrance to the Western Mediterranean. One of the world’s famous landmarks, the Rock of Gibraltar rises to approximately 1,300 feet and has been a key strategic site for many centuries. 

Gibraltar’s position at the southernmost tip of the Iberian peninsula, coupled with its dominance over the entrance to the Mediterranean, has given it a long an turbulent history and an influence on world events out of all proportion to its size and population. Its name is a legacy of the 8th century Arab invasion of mainland Spain, when the Moorish leader Tarik based his troop-ships on the peninsula. The name is derived from Gibel Tarik – the mountain of Tarik. Although it was captured and held briefly by the Kingdom of Castille between 1309 and 1333, the Rock remained as a symbol of Moslem domination of the Western Mediterranean until finally captured by Spain in 1462. Britain captured the Rock in 1704 during the War of the Spanish Succession. Its cession was confirmed by the terms of the Treaty of Utrecht in 1713, when Gibraltar became a British garrison. 

The climate is Mediterranean and mild with an average noon summer temperature of 23 oC (which can rise to as much as 32 C) and a winter average of 13 C. 

Gibraltar taxes are generally modeled on those in the United Kingdom, but there are a number of major differences. In particular, Gibraltar does not have any Capital Gains Tax or Inheritance Tax (although Estate Duty applies). In addition there is specific tax legislation, which is designed to favor the development of the territory’s commercial and tourist infrastructure and to make it an attractive offshore finance center. 

Though Gibraltar is a member of the European Economic Community under the provisions relating to dependent territories, it is specifically excluded from the regulations concerning the Common Agricultural Policy and Value Added Tax. 

The taxation of income of both companies and individuals is governed by the Income tax Ordinance (1984 reprint) as amended by the various Income Tax (Amendment) Ordinances. 

Income tax is charged on most classes of income accruing in, derived from, or received in Gibraltar. The year of assessment runs from 1st July in any year to 30th June of the next year. Taxation in any year of assessment is normally levied on income derived from the preceding year except in the case of income from employment, which is subject to deduction on an actual basis via a Pay-As-You-Earn system. 

There are no double-tax treaties in force between Gibraltar and any other country. However, tax relief is available in respect of UK income tax paid on income, which is similarly chargeable to Gibraltar tax up to the lower of Gibraltar tax or UK tax. In respect of Commonwealth income tax, the relief is the lower of one half of the Gibraltar tax or the Commonwealth tax on the income. In certain cases, income earned, taxed and retained overseas is not taxable in Gibraltar. 

Non-resident owned and controlled companies incorporated in Gibraltar which do not trade, earn or remit income to Gibraltar are not liable to company taxation. 

A Gibraltar incorporated company or a registered branch of an overseas-incorporated company may apply for registration under the Companies (Taxation and Concessions) Ordinance. Such registration entitles the company and/or beneficial owner to exemption from all income tax and estate duty in Gibraltar. 

The main requirements for exemption status are that no Gibraltarian or Gibraltar resident has a beneficial interest in the shares of the company and that the company does not trade or carry on business in Gibraltar. The Company can maintain office premises in Gibraltar for the purposes of transacting business with non-residents or with other exempt or qualifying companies. There are no restrictions on the appointment of directors or officers of an exempt company (but either the company secretary or a director must be a Gibraltar resident) and meetings may be held inside or outside Gibraltar thus allowing the company to be managed and controlled locally. A secrecy provision in the Ordinance prevents the disclosure of details concerning the beneficial owners of the company. 

A fixed annual tax is payable by the company of £225 if ordinarily resident and £200 if not so resident. A registered branch of an overseas company pays £300 per annum. 

A Gibraltar incorporated company or a registered branch of an overseas-incorporated company may apply for registration under the Income Tax (Qualifying Companies) Rules 1983. Qualifying companies are chargeable to tax on their profits at such rates as may be prescribed but not less than 2% and not more than 18%. The requirements for obtaining and retaining qualifying status are similar to those covering exempt companies. Additionally, however, the share capital must not be less than £1,000 and a further sum of £1,000 must be deposited with the Gibraltar Government as security for future taxes. A fee of £250 is payable for obtaining a qualifying certificate. 

A separate piece of tax legislation issued in December 1991 created the concept of the Gibraltar 1992 Company, which has the following characteristics: 

1. It is incorporated or registered in Gibraltar under the provision of the Companies Ordinance on or after 1st January 1992;
2. It is ordinarily resident in Gibraltar; the principal object of the company is to hold interests amounting to relevant participations (defined as interests of at least 5% in the voting share capital of other body corporates); in any year of assessment at least 51% of its income is derived from relevant participations;
3. It has a proper physical presence in Gibraltar (i.e. business premises of at least 400 sq. ft. and a minimum of two employees);
4. No resident of Gibraltar has a beneficial interest in its share capital; a reasonable debt to equity ratio is maintained. 

Once the above criteria are satisfied, the Financial and Development Secretary will issue a certificate to this effect. 

Although a Gibraltar 1992 Company is assessable to Gibraltar income tax in the normal way (the current company rate is 35%) its significant attraction is in the area of withholding tax where tax at the rate of 1% shall apply to dividends paid by such companies. Furthermore, interest payments are totally exempt from withholding tax.  

There is no further liability to Gibraltar tax by the recipient of any dividends or interest paid by a Gibraltar 1992 Company. 

Throughout its history Gibraltar has harbored successive waves of immigrants from widely differing cultural backgrounds. The establishment of British rule brought about the departure of the Rock’s Spanish inhabitants: their place was taken by a miscellaneous collection of immigrants – including Genoese, Moroccan Jews and Portuguese – who combines with British settlers to form a heterogeneous community. 

The Rock now has about 30,000 inhabitants, 26,000 are native Gibraltarians, the balance being made up of British expatriates and service personnel. English is the official language, but due to cultural differences, most Gibraltarians speak and write both English and Spanish. 

Constitutionally, Gibraltar is a Crown Colony with Intel self government, the United Kingdom being responsible for defense, foreign affairs, financial stability and Internal security. It has its own House of Assembly, which consists of fifteen elected members and two nominated members. There is a Council of Minister, which consists of the Chief Minister, and seven other Ministers, who are responsible for “defined” domestic matters such as trade, economic development, education, public works and services, and housing. Other matters are dealt with by the Gibraltar Council, which consists 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. Gibraltar is a member of the EC, having joined with the United Kingdom in 1973, under provisions of the Treaty of Rome relating to European dependent territories. However, it is excluded from the Common External Tariff, the Common Agricultural Policy and the requirements to levy Value Added Tax. 

The legal system in Gibraltar is based on English Common and Stature Law with variations introduced by local Statute Law or “Ordinances”. The administration of justice in Gibraltar is undertaken by a Chief Justice; there are three courts, a Magistrates Court, a Court of First Instance and a Supreme Court. The ultimate Court of Appeal is the Privy Council in the United Kingdom. 

The economy is primarily dependent upon service industries and port facilities with income being derived from tourism, trans-shipment, and perhaps most importantly in terms of growth, the provision of financial services. Boosted by the re-opening of the border, the rapidly expanding economy has however also benefited the construction industry with multinational companies linking with local firms to build hotels, office blocks and other commercial and residential accommodation. A wide range of Internal banking facilities on the Rock. Banking confidentiality is guaranteed by Statute. Bank accounts may be maintained in any generally recognized currency and are exempt from Gibraltar taxes when held by non-residents. Gibraltar enjoys virtually full employment and also provides jobs for blue and white collar workers commuting from Spain. 

Gibraltar’s strategic location at the entrance to the Mediterranean places it at the center of a network of communications. Gibraltar has both an international airport and a harbor, which continues to be a prime port of call for many of the world’s shipping lines as a result of both its location and its free port status. In Spain the airports at Seville, Jerez and Malaga are all within two hours’ drive of the Rock and allow access to a wide variety of Spanish domestic an international flights. 

Following the recent installation of a fully digital network, Gibraltar has excellent telecommunications with the rest of the World. 

The early development of a Finance Center in Gibraltar was based on supplying a relatively narrow range of services to a well-defined group of customers largely in the UK and on the Costa. With a combination of (somewhat dated) company related laws and the addition of provision for a few specialist investment vehicles such as the tax exempt Company, the legal infrastructure was perfectly adequate for this original limited ambition. 

Development depends on Gibraltar being able to offer the increasingly complex and sophisticated range of services, which businessmen and investors alike expect to be able to call on as an integrated package. It is well understood in Gibraltar that the financial sector legislation must come to reflect this requirement for well-rounded and fully integrated legislation, which is such an essential entry requirement into the genuinely international market place where the future lies. It is, therefore, no accident that legislative development has been at the forefront of the strategy that Government is developing in conjunction with the private sector for achieving the growth of the Finance Center. 

In 1992, Gibraltar joined the select band or jurisdictions, which actively seek to attract new, wealthy residents by designing special residence and tax laws for them. As well as a beneficial tax treatment, these high net worth individuals (HNWls) can qualify for a British passport (though not the right of abode in the UK). In a briefing prepared by Gibraltar solicitors Marrache & Co, under the terms of the legislation, a high net worth individual is classified as such where he or she: has available to him or her for exclusive use, for a period of not less than seven months, residential accommodation in Gibraltar - *resides in Gibraltar, in the property, for a minimum of 30 days in each year; and has not otherwise been resident in Gibraltar during the last five years (although in certain circumstances this requirement may be waived). 

In return for meeting these criteria, HVWls qualify for a special annual tax charge, which is currently capped at £20,000. 

The Financial Services Commission Ordinance provides for the appointment of an independent Commissioner and a Commission of six voluntary members appointed as individuals having the necessary experience to contribute. The role of the Commission is to advise the Commissioner on matters of policy. At an executive level the Commissioner is supported by the office of the Commissioner, which he is free to recruit as his needs change. 

The financial services covered by the Commissioner/Commission include:

• Banking,
• Insurance,
• Investment Business including the operation of Collective investment schemes,
• Company management,
• Professional trusteeships,
• Insurance brokering,
• Investment exchanges and clearing houses.

Good progress has been made in implementing the detailed licensing arrangements that are the cornerstone of the investor protection envisaged under the Financial Services Ordinance. The approach of the Commission has been very much one of a very careful scrutiny of those who are able to do business using Gibraltar as a base and only to require approval of individual products or product ranges where there is a particular sensitivity or vulnerability.

Under the Ordinance provision is made for the Commission to be self-financing from charges raised and the initial scale of the main annual charges is as follows:

The next group of Ordinances that require consideration are those, which to a greater or lesser extent are affected by the requirements of EEC Directives. A major element in marketing of the Finance Center is the ability to provide gateway access to the single European Market. But to maintain this advantage, it is necessary to ensure that Gibraltar institutions are fully European in construction and in their obligations.

In respect of Company legislation, EEC requirements are both more fundamental and more complex. The Gibraltar Companies Ordinance has as its root in the UK Companies Act of 1929. Clearly much water has passed under the bridge since then.

In a world in which the attitude of Caveat Emptor has given way to expectation of independent investor protection as a sign of international responsibility, the statutory basis for such protection is perhaps a logical place to start. It is worth noting that this has probably been one of the most difficult areas for legislators worldwide over the last decade as they seek to tread a path between the unscrupulous or incompetent on the one hand and over regulation incapable of practical application on the other. It is as much due to ability to learn from the mistakes of others that Gibraltar’s Financial Services and Financial Services Commission Ordinances of 1989 reflect a practical and effective solution. In particular, the legislation is probably the best shot yet in Europe in terms of providing a fully integrated approach to Supervision rather than the considerable fragmentation that still exists elsewhere.

Promulgated to implement amendments to the Ordinance to give practical implementation to the requirements of the 2nd Company Directive dealing with public limited companies and the minimum accounting requirements with regard to all companies. In this latter case, full use has been made of flexibilities with regards to “small” companies in flexibilities with regards to “small” companies in adopting a practical and realistic basis for compliance. Other areas are receiving attention, including the authorization and regulation of Auditors.

Finally under this grouping of EEC requirements, there is the anti money laundering legislation. The Drug Trafficking Offenses Ordinance of 1988 is second to none in Europe in its rigorous approach to deterring the money laundering of drug related money. However, a new EEC Directive introduced in 1991 will require more extensive anti-money laundering legislation extending not just to the proceeds of drug related crime. These requirements are under review.

The final group of financial sector legislation is concerned with legislation designed specifically with new financial services in mind. In this case we are using our legislative capacity as the cutting edge in forming new markets.

A good example in this respect is the Collective Investment Scheme Regulations, which were introduced in April 1991 under powers contained in the Financial Services Ordinance. By drawing pooled investment within the ambit of supervision of the Financial Services Commission on terms, which meet minimum EEC requirement, the groundwork has been created for the establishment of funds capable of pan-European marketing from a base in Gibraltar. (To further enhance marketability in this area Gibraltar is also associated to the OECD, which makes funds based in Gibraltar much ore marketable in countries such as Japan).

Other areas of opportunity currently under consideration include offshore pension arrangements and captive insurance management. Both services are capable of being provided within existing legislative provision, but consideration is being given to whether they would benefit from a dedicated body of law in their own right. In these and in any other areas that come to light, Government is very willing to consider promoting legislation to ensure that the framework of legislation that Gibraltar has in place, really does meet modern requirements.

And this really is the message of this article. The financial services market is now truly global and constantly changing with market demands. There are no senses in which a body of financial services market is now truly global and constantly changing with market demands. There are no senses in which a body of financial sector legislation can ever be under anything than constant review whether it be to respond to a developing understanding of supervisory needs, a change in market products or simply to ensure that the integrity of the whole is maintained. The Government of Gibraltar, in consultation with practitioners, is committed to this process of constant renewal.

Gibraltar is within the EC by virtue of its status under Article 227(4) of the Treaty of Rome, it being a territory for whose external relations of Member State (i.e. the United Kingdom) is responsible.

In all other respects EC Directives are considered to apply to Gibraltar; and Gibraltar, in its turn, has been demonstrating a strong commitment to implementing these Directives, most particularly in areas such as banking, fund management and more recently, company law. One of the most interesting Directives, from a fiscal planning point of view to have emerged from Brussels in recent years has been directive 90/435 which requires most Member States to exempt from withholding tax dividends paid by subsidiary companies to parent companies when both such companies are located within EC Member States. Furthermore, it requires Member States to exempt from further taxation those dividends in the hands of the parent company. Clearly the two principal objectives of the Directive were to ensure that profits earned with the EC were subject to corporate taxation only once, and to remove fiscal barriers to cross-border investment.

Find the contact names, addresses, numbers and information for local government offices, banks, accountants, company formation services, investment and management companies, advisors, experts, maildrops, real estate agents and other useful local contacts in the THE OFFSHORE MANUAL & DIRECTORY.