VAT in Gibraltar
Updated on Thursday 02nd April 2020
Gibraltar is a country with a mixed background, a peninsula in the Southern part of Europe, very close to Africa. Member of the European Union, Gibraltar is a territory that belongs to the United Kingdom, but in terms of taxation, it does not subdue to UK’s taxation laws. If you are an investor interested in opening a company in Gibraltar, you should know that that the business environment here is welcoming, with a low tax regime for companies.
History of the VAT in Gibraltar
Gibraltar has a low tax regime and in terms of company formation there are many advantages, as the taxation system is free of value added tax. Although the law of Gibraltar is based on the United Kingdom’s legal system, in terms of taxation is completely separate.
In the European Union, value added tax is one of the compulsory taxes and all member states must align to certain VAT rules, but for this state the principle does not apply.
United Kingdom became a part of the European Economic Community in 1973 and so did Gibraltar. Although normally Gibraltar should have complied with the European tax laws, this never happened as a result of the fact that the state did not join Customs Union (the main body regulating VAT levels throughout Europe). For this reason, Gibraltarian government didn’t have to impose a VAT on its territory.
As such, Gibraltar represents a point of interest for tourists, as prices on luxury products are much lower, but also for entrepreneurs interested in company formation in Gibraltar, as the corporate tax regime presents a series of financial advantages.
You can also find out information on the value added tax in Gibraltar from the video below:
Benefits of Company Formation in Gibraltar
As mentioned above, the small peninsula represents a perfect location for an entrepreneur seeking a place for company formation. The cost of opening a company in Gibraltar varies between 500 – 1,000 GIP (Gibraltarian pound) and the Gibraltarian government offers tax exemptions on the following:
• dividends received from another company,
• capital gains.
When seeking to open a company in Gibraltar, you should know that the most important business industries are the financial sector, tourism, shipping and consumer goods and services.
If you need to find out more information about the value added tax and the business environment in Gibraltar, you can contact our company formation team.