Gibraltar is a self-governing and self-financing parliamentary democracy within the European Union. It is located at the southernmost tip of the Iberian Peninsula. It covers 6.5 square kilometres and has a land frontier with Spain. Gibraltar is a separate and distinct legal jurisdiction.
The Rock has an extensive and diversified service-based economy. The principal contributors to its economic base are financial services, maritime services, egaming and tourism. It is forecast to grow from £1.1bn to £1.65bn between 2011 and 2015, and the government of Gibraltar has maintained a budget surplus throughout the recent economic slowdown that has affected much of the developed world. Gibraltar’s EU membership provides passporting rights in banking, investment services, insurance, insurance mediation and reinsurance across all 30 EU and European Economic Area countries and access to a market of 500 million people.
Gibraltar offers a competitive low tax rate within the EU. This, together with the fact that there is no tax on dividends, interest and royalties, no VAT and no capital gains tax makes it a very favourable jurisdiction in which to do business. It has become a catalyst for the development of the wider region.
The Chief Minister of Gibraltar, Fabian Picardo, reported in the 2013 Budget that Gibraltar has GDP growth touching 7.8 per cent per annum, is ranked in the top 20 in global terms of GDP growth and is placed in the top 10 ranking in terms of GDP per capita.
Gibraltar’s insurance industry has expanded from just 12 licensed insurers in 1993 to 56 licensed insurers writing new business today. In 2011, the total gross premium income that was written by insurance companies in Gibraltar was £3.2bn, and these companies held assets worth over £7.5bn. Gibraltar motor insurers currently write 10 per cent of the total UK motor market.
There are 16 banks and building societies currently licensed in Gibraltar, employing more than 500 people. They range from large global institutions to specialist private and investment banks and building societies. They are able to provide a full breadth of solutions to their clients’ needs in all areas of banking.
Almost 100 experienced investor funds have been established in Gibraltar since the Financial Services (Experienced Investor Funds) Regulations 2005 came into effect in August 2005. The government introduced new Financial Services (Experienced Investor Fund) Regulations in 2012, which allow large funds to use reputable and substantial administrators based in jurisdictions of equivalent standing to Gibraltar.
Tax information exchange agreements
In line with the government of Gibraltar’s commitment to transparency and effective exchange of information, Gibraltar has to date negotiated and signed 27 tax information exchange agreements with OECD and EU member states. Gibraltar is on the G20-instigated OECD “white list”, and is negotiating or concluding similar agreements with several other countries.
Gibraltar’s Financial Services Commission (FSC) is an independent statutory corporate body established by Gibraltar’s parliament. The FSC is responsible for the licensing and regulation of all financial services activity in Gibraltar. This includes banking, insurance, investment services and trust and company management. Further information can be found at www.fsc.gi. The government of Gibraltar takes regulation and compliance very seriously, whether it is complying with all EU directive obligations, the highest standards of regulation in financial services or online gaming. Gibraltar is one of very few EU jurisdictions to have no overdue transpositions of EU directives, despite Gibraltar’s size and lesser resources compared with most other EU jurisdictions. Gibraltar has committed to enter the US Foreign Account Tax Compliance Act and to enter into similar arrangements with the UK in accordance with the same timescale.
Gibraltar forms the eastern shore of a bay that has been of commercial importance from mankind’s earliest days. The Phoenicians recognised the advantages of its protective geographical features and founded the colony of Melcarthos on the north shore during the ninth century BC. Shipping and port services are significant contributors to the economy. Each year, 71,000 vessels pass through the Strait of Gibraltar. Today, the shipping industry accounts for around 25 per cent of Gibraltar’s economy. Bunkering, a shipping term for ship-to-ship transfer of fuel, remains a long-standing and prominent sector.
Gibraltar is the largest bunkering port in the Mediterranean and one of the largest in the world, providing over 4.5 million tons of fuel to vessels each year. The Gibraltar Ship Registry (GSR) is a member of the Category I Red Ensign Group of the UK and UK dependency registers. The advantages of registering a Gibraltar a ship in Gibraltar are many, not least fiscal: membership of the Red Ensign Group; the GSR is also an EU Member States’ Register and its vessels are entitled to full EU cabotage privileges. The Gibraltar Yacht Registry is a reliable register of yachts, independent of the commercial registrations. Forming part of the Gibraltar Maritime Administration, the high-quality registry offers a professional, efficient and Gibraltarian coins: distinct but still British cost-effective service, and is an ideal choice for yacht owners who want the confidence of belonging to a British Register and flying the Red Ensign.
The government of Gibraltar has been developing strategies to create a dynamic setting through which businesses can trade electronically, supported by a faster and more reliable framework of communications, infrastructure and legislation in order to assist the growth of electronic trade. Since manufacturing, packaging, delivery and fulfilment, as well as other physical activities, can be outsourced to different countries, the use of Gibraltar as a sound location for e-business activities is by no means limited to electronically downloadable goods, services or transactions. E-gaming is a vibrant sector of the economy that has helped to bring prosperity to Gibraltar. E-gaming accounts for around 20 per cent of GDP. Gibraltar is regarded as the most important jurisdiction in internet gaming worldwide, the “Silicon Valley” of online gaming and 60 per cent of the UK’s remote gaming business takes place from Gibraltar. E-gaming is tightly regulated and Gibraltar standards are recognised worldwide, covering moneylaundering, technical and security standards, as well as the controls required to ensure player protection. Gibraltar will continue a selective approach to licensing, with a high bar to entry.
Tourism and transport
Every year, millions of visitors come to Gibraltar by air, land and sea, meaning that tourism accounts for around 30 per cent of Gibraltar’s GDP. Total visitor arrivals in Gibraltar reached 12 million in 2011. Gibraltar has been described as having a British work ethic with a Mediterranean lifestyle. The region’s warm and sunny climate has undoubtedly played a major part in attracting businesses to the Rock, and the opportunity to pursue outdoor sports such as sailing and golf are compelling too. A new airport opened in 2012, with daily flights to an increasing number of UK destinations.
Gibraltar’s expertise in financial services, e-gaming and maritime services, together with its Mediterranean lifestyle, make it a very attractive commercial domicile, and one that is expected to grow and prosper over the coming years.