Legal Requirements for Starting a Business in Gibraltar
Gibraltar has established itself as a favourable location for businesses, particularly due to its strategic geographical position, favourable tax regime, and strong regulatory framework. For entrepreneurs and investors looking to start a business in Gibraltar, it is essential to understand the legal requirements involved in setting up and running a company in the jurisdiction. Below is a detailed guide on the key legal steps required to start a business in Gibraltar, covering everything from company registration to tax obligations and ongoing compliance.
1. Choosing the Right Business Structure
The first step in setting up a business in Gibraltar is determining the appropriate legal structure for your company. The business structure will affect how the company is taxed, the liability of its owners, and how the business is operated. In Gibraltar, the most common business structures include:
Private Limited Company (Ltd)
A private limited company is a separate legal entity from its owners (shareholders), which means shareholders’ liability is limited to the amount they have invested in the company. This is the most common structure for small and medium-sized businesses. The company can be formed with just one shareholder, one director and a company secretary, and there is no requirement for the these to be residents of Gibraltar.
Public Limited Company (PLC)
A public limited company can offer its shares to the public and may be listed on a stock exchange. This structure is suitable for larger businesses looking to raise capital through public offerings. A PLC must have at least two directors and a company secretary and comply with stricter regulations, including the requirement for audited accounts.
Sole Trader
A sole trader is an individual who runs their business personally and is responsible for all the business’s liabilities. While this structure is simpler and cheaper to set up, it does not provide the same legal protection as a limited company, as the sole trader is personally liable for the business’s debts.
Limited Liability Partnership (LLP)
A limited liability partnership provides the flexibility of a partnership while limiting the liability of each partner. This structure is suitable for businesses where partners wish to run the business together while limiting their exposure to risk.
2. Company Registration Process
Once the business structure is chosen, the next step is to register the company with Gibraltar’s Companies House. The registration process involves several key steps:
a) Choosing a Company Name
The company name must be unique and not similar to any existing businesses in Gibraltar. A name check can be carried out through the Companies House to confirm the availability of the desired name. Certain words, such as “Royal” or “Bank,” may require special permission to use.
b) Memorandum and Articles of Association
The Memorandum and Articles of Association are key documents that set out the purpose of the company, its structure, and its governance rules. These documents must be prepared and submitted during the registration process. The Articles of Association define the internal management and how the company will operate.
c) Share Capital and Shareholders
For limited companies, the business must issue shares to its shareholders. The company can be set up with any amount of share capital, but at least one share must be issued to at least one shareholder. The details of the shareholders, including their names and addresses, must be provided to Companies House.
d) Appointing Directors and a Company Secretary
Every Gibraltar company must have at least one director who is responsible for managing the company and a company secretary who is responsible for maintaining the company’s statutory books and records. They do not have to be a resident of Gibraltar.
e) Registered Office
All companies in Gibraltar must have a registered office, which serves as the company’s official address. The registered office must be a physical location in Gibraltar and will be used for official correspondence.
f) Registration with Companies House
Once the above steps are completed, the company must be registered with Companies House. The registration process involves submitting the relevant documents, including the Memorandum and Articles of Association, the details of the directors, company secretary and shareholders, and the company’s registered office address. A registration fee will also apply.
After successful registration, the company will receive a Certificate of Incorporation, which officially establishes the business as a legal entity in Gibraltar.
3. Tax Registration and Obligations
a) Corporate Tax
Gibraltar offers an attractive corporate tax regime, with a corporate tax rate of 15%. However, this tax is only applied to income generated in or from Gibraltar. Income earned outside Gibraltar is not subject to corporate tax, making it a favourable jurisdiction for international businesses.
b) Value Added Tax (VAT)
Unlike many European countries, Gibraltar does not impose VAT on goods and services. This absence of VAT is a significant benefit for businesses, particularly those involved in international trade.
c) Income Tax and National Insurance
If your business employs staff, you will need to register with the Gibraltar Income Tax Office and the Employment and Training Board to ensure that employee income tax and social security contributions are deducted and paid accordingly. Employers are responsible for deducting and remitting the income tax on behalf of their employees.
d) Other Taxes and Levies
Depending on the nature of the business, other taxes or duties may apply. For example, businesses involved in importing goods into Gibraltar may need to pay import duties.
4. Business Licences and Permits
Certain businesses in Gibraltar require specific licences or permits to operate legally. For example, businesses involved in financial services, gaming, or telecommunications must obtain regulatory approval from the Gibraltar Financial Services Commission (GFSC) or other relevant authorities. Additionally, businesses dealing with food, alcohol, or health-related products may require local government permits. It is essential to consult a solicitor to determine which licences apply to your business.
5. Compliance and Ongoing Obligations
Once the business is registered and operational, there are several ongoing legal obligations that must be met to remain compliant with Gibraltar law:
a) Annual Returns
Every company in Gibraltar must file an annual return with Companies House, detailing the company’s directors, shareholders, and registered office. A small fee is payable with the annual return.
b) Annual Accounts
Companies must maintain accurate financial records and file annual accounts with Companies House. Public limited companies and large private companies must also have their accounts audited.
c) Anti-Money Laundering (AML) Compliance
Gibraltar has strict anti-money laundering regulations, particularly for businesses operating in financial services. Companies must ensure they comply with AML requirements, including due diligence on clients, maintaining records, and reporting suspicious transactions.
d) Data Protection
Businesses that handle personal data must comply with Gibraltar’s data protection laws, which are closely aligned with the EU’s General Data Protection Regulation (GDPR). Companies must ensure that personal data is handled securely and that individuals’ privacy rights are respected.
Conclusion
Starting a business in Gibraltar offers many advantages, including a favourable tax regime, strategic location, and a robust legal framework. However, understanding and complying with the legal requirements is essential to ensure the business operates smoothly and avoids penalties. Consulting a solicitor experienced in Gibraltar’s corporate law is highly recommended to guide you through the registration process, tax obligations, and ongoing compliance.
