Corporate Tax Residency

Sovereign states set their own rules. Legal systems have jurisdiction within their borders. Since the law serves economic and social objectives, individual states can decide on their own environment for corporate tax residency. To ensure an equal playing field, the international community may impose additional measures on individuals and legal persons established in tax neutral environments. Therefore, location independent entrepreneurs, international consultants, small business owners and other professionals may be imposed with extra safeguards for corporate tax residency.  

The location of corporate tax residency for legal persons is a crucial determination in international business. Double taxation treaties and other domestic regulation must be honoured to avoid different tax assessments for the same commercial acts. Gibraltar companies with foreign ownership can receive a tax exempt status. Therefore, it is mission critical for the beneficiaries of such companies to maintain corporate tax residency in Gibraltar whilst doing business outside the jurisdiction.

To determine the corporate tax residency of a Gibraltar company, one needs to look into the subjects of corporate substance and presence. Next to the traditional domestic incorporation and the lesser used re-domiciliation of an international company, management and control of the business in Gibraltar is critical. This means that the foundation of local presence is the registration of the company combined with the location of the highest form of control and direction over the corporate affairs. Where presence is a local determination, corporate substance mainly refers to cross-border activities of the company. If substance for specific activities lies in host states or other jurisdictions, double taxation and conflict of laws may appear. As such, beneficiaries willing to set up their company in Gibraltar must be well-informed to strategize their corporate operation.

There are differences between local companies that trade within the jurisdiction and Gibraltar companies owned by non-residents and foreign nationals. The first is subject to a relatively low standard rate of corporation tax. The latter may qualify for a tax exempt status whilst taxation is mainly imposed on individuals with a personal tax residency in Gibraltar. Corporation tax is the overall levy on profits derived from domestic business activities. There is no divided tax, no capital gains tax, wealth tax or VAT. International efforts to limit unfair tax practices and intensify fair corporate competition make the rules for Gibraltar companies with non-resident ownership harder. Yet, these rules can be used to the advantage of legitimate international corporations. As such, Gibraltar is considered a hidden gem for European company formation purposes.

Operating a Gibraltar company as a non-resident has several advantages over plain vanilla offshore companies. The geographic location of the peninsula allows for swift access from most international hubs. This may be convenient when the corporate structure requires further presence by, for example, the planning and partaking of physical management sessions and board meetings in the jurisdiction.

In an era where the automatic exchange of information protocols are furthered with the Common Reporting Standard (CRS) and FATCA, the corporate registry plays an important role in regulatory fact finding missions. Although fishing expeditions without substance are prohibited and privacy regulation protects the identity of natural persons, the Gibraltar corporate registry provides several details on the companies included in its registry. Information is available upon request. Such information contains the name, registration and incorporation date, information on the annual return and accounts, the registered address of the company, details on the share capital, and the names of the shareholders, directors and secretary. Advanced protection of the identity of directors and shareholders can be done by the assignment of nominees. As such, public and private counterparties may request additional information that is not available in the corporate registry. They often ask the company to present a certificate of incumbency, certified and apostilled by the registered agent, that mentions the details of the company including the name of the ultimate beneficial owner of the company.

Gibraltar Corporate Tax Residency

The Gibraltar company with corporate tax residency owned by a non-resident beneficiary, provides for an efficient and often effective company structure. The combination of the legal residence and taxation for the company allows for confined administrative requirements that thus allows the company and its management to focus on the corporate growth and stability.

Gibraltar companies can be formed by non-residents and foreigners. As such, several digital nomads, perpetual travelers and other location independent professionals found their way to Gibraltar for company formation and corporate tax residency. The respectable reputation of the jurisdiction may disqualify novice entrepreneurs and start-ups who can find alternatives in several offshore financial centers. Yet, Gibraltar has an attractive force towards serious and professional international business activities.

For more information on Gibraltar company formations and corporate tax residency, feel free to contact us via the contact form below. One of our representatives will get back with you.

Contact us Today: