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MULTI-JURISDICTIONAL GUIDE 2013/14 DOING BUSINESS IN...

Doing Business in Gibraltar Jonathan Hamilton, Jessica Calvert and David Borge Ramparts Law

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OVERVIEW E-commerce Greater interest in Gibraltar from an e-commerce perspective is grow- 1. What are the key recent developments affecting doing business ing beyond the e-gaming sector, including a growth of cross-border in your jurisdiction? e-money providers. E-gaming remains the most significant part of the electronic economy. However, the recent UK Draft Gambling (Licensing and Advertising) Bill seeks to amend the UK Gambling Act 2005 to Despite the global economic downturn, Gibraltar continues to grow include provisions on remote gambling. If passed, it would have an and diversify its economy. Gibraltar's GDP is estimated to have grown impact on the thriving e-gaming market in Gibraltar, where licensed by approximately 30% over the last four years. In December 2011, Mr operators currently have the same authorised status as UK licensed Fabian Picardo became the Chief Minister of Gibraltar (replacing the e-gaming operators. The UK Commons Select Committee and the former long-serving Chief Minister, Peter Caruana QC). Mr Picardo has European Commission are currently reviewing the proposed legisla- stated his aim is to help the economy grow by another 50% between tion to consider whether it is lawful under European law, practical 2012 and 2016. and proportionate.

The success of the financial and e-commerce sectors is due to a wide Income Tax Act 2010 range of factors, including: A new income tax regime came into force in 2011 and updated signifi- • A legal system based on English law. cant areas of the tax applicable to companies, trusts and individuals. It ended the distinction between offshore and onshore businesses. • Recognised status within the EU, allowing companies to benefit All companies are now taxed on profits accrued in and derived from from cross-border authorisation and passporting rights. Gibraltar. It retained a wide range of non-taxable income including • A cosmopolitan culture and can-do business climate. royalties and fund income from funds marketed to the public. • A favourable tax system with no capital gains tax or value added tax (VAT). LEGAL SYSTEM

Gibraltar is fast becoming the jurisdiction of choice for many e-com- 2. What is the legal system based on (for example, civil law, merce and financial services businesses that wish to be established common law or a mixture of both)? in the EEA.

Financial services The legal system of Gibraltar is based on English common law and Significant numbers of insurance companies (particularly UK insurers) principles of equity. In addition Gibraltar has a fused professional sys- have relocated to Gibraltar in recent years. It continues to be one of the tem for solicitors and barristers, who are able to carry out similar work. leading European captive insurance jurisdictions. Directive 2011/61/ EU on alternative investment fund managers (AIFM Directive) is cur- Legislation in Gibraltar is passed and statutes are enacted by Gibraltar's rently being transposed in Gibraltar and should enter into force in July Parliament with the exception of foreign affairs and defence, for which 2013. The AIFM Directive regulates funds that are not undertakings the UK remains responsible. Numerous older UK statutes are in force for collective investment in transferable securities (UCITS). It creates in Gibraltar by virtue of the Application of English Law Act 1962. a licence for AIFM and an alternative funds passport. Since non-EEA Gibraltar has been a member of the EU since the UK's accession in 1973 third countries will not benefit from the AIFM Directive until 2015 at (Article 355(3), Treaty on the Functioning of the European Union) (TFEU). the earliest, the trend for relocation of international alternative funds Gibraltar is specifically confirmed as a European territoryDeclaration ( to Gibraltar is expected to intensify in the short-term. Gibraltar has 55, TFEU). It is however outside some specific European legal frame- also recently seen the arrival of a number of international electronic works including in relation to the Customs Union and the VAT area. money companies in the new and growing e-money (electronic pay- ments and prepaid card) sector.

© This article was first published in the Doing Business in... Multi-jurisdictional Guide 2013/14 and is reproduced with the permission of the publisher, Practical Law Company. The law is stated as at 01 April 2013. FOREIGN INVESTMENT Gibraltar has its own currency, the Gibraltar pound (GB£), which is par with UK sterling. There are two main currency regulations relating to Country Q&A 3. Are there any restrictions on foreign investment (including currency manufacture but they are not related to exchange controls. authorisations required by central or local government)? 6. What grants or incentives are available to investors?

Foreign investment is actively encouraged by the Gibraltar govern- ment and in general there are no restrictions on foreign shareholders. Three main schemes exist in Gibraltar (none of which are exclusive However, some form of licensing or authorisation is required for a to foreign investors): range of local businesses including: • EU funds. Investors in Gibraltar are entitled to support through • Financial services. the European Regional Development Fund (ERDF), for business • Gaming. development, tourism, technology-transfer and infrastructure projects and the European Social Fund (ESF), for training and • Telecoms. retraining projects. See www.eufunding.gi/esf.html for further • Most trading and commercial entities (for example, import/ information. export business, sale of products, manufacturing). • Small grants scheme. This is a government initiative that grants up to GB£10,000 cash through a fast-track approval process for Any person who carries out a regulated financial service activity in small enterprises to a limit of 30% of the relevant investment. Gibraltar must be authorised by the Financial Services Commission (FSC) or benefit from an exemption. Breach of this requirement is a • Development aid. Licences may be granted for certain devel- criminal offence. opment projects providing economic and social benefits to Gibraltar. The development aid licence: The types of business that require such authorisation from the FSC -- entitles the developer to exemption from corporation tax in include: respect of any gains or profits from the relevant development • Auditors. until aggregate gains (less losses) first exceed the approved portion of capital expenditure on the project; • Banks. -- enables the profits of the licensed enterprise to be distributed • Bureaux de change. to the beneficial owners, free of tax, up to the amount granted • Collective investment funds (excluding private funds). under the licence; • Different types of investment entities. -- allows the interest received on loans made to any person for the purposes of a development project to which aid applies • Trust and company management firms. to be exempt from income tax, provided that the terms and • E-money and payment institutions. conditions of the loan have been approved; -- entitles occupiers of property relating to a project which has • Insurance companies, intermediaries, managers and dealers. been granted a development aid licence to relief on the rates • Money transmitters. payable. This takes the form of an allowance in percentage terms of the amount which would normally be payable. • Occupational pension schemes. • Professional trustees. In addition, certain qualifying individuals may receive advantageous income tax treatment if they satisfy the conditions of the rules to encour- age specialised senior employees to come to Gibraltar (Qualifying 4. Are there any restrictions on doing business with certain (Category 2) Individuals Rules 2004 or The High Executive Possessing countries or jurisdictions? Specialist Skills Rules 2008).

There are no restrictions on doing business with certain countries or BUSINESS VEHICLES jurisdictions in Gibraltar. However, Gibraltar has implemented Directive 2005/60/EC on the prevention of the use of the financial system for the 7. What are the most common forms of business vehicle used in purpose of money laundering and terrorist financing (Third Anti-money your jurisdiction? Laundering Directive). It has also enacted measures to comply with European international counter-terrorism requirements and sanctions lists. Gibraltar's provisions apply to a wide range of businesses and Private limited companies, public companies, partnerships, joint ven- professional services providers and in some respects goes further than tures and trusts are available, as in the UK. the entities specified in Directive 2005/60/EC. The private limited company is the most common form of business vehicle in Gibraltar for both national and foreign companies. The main 5. Are there any exchange control or currency regulations? reasons for using private limited companies are that they are easy to set up, offer flexibility of ownership and have limited liability.

Subject to anti-money laundering requirements, there are no restric- tions on the repatriation of earnings, capital, royalties or interest or 8. In relation to the most common form of corporate business on the importation of capital to Gibraltar.

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• They must file a full balance sheet, notes, directors' and audi- vehicle used by foreign companies in your jurisdiction, what tors' reports but the profit & loss account may be abridged. are the main registration and reporting requirements? • Small companies are defined as having: -- a net annual turnover of up to GB£4.8 million; Registration and formation -- a balance sheet total of up to GB£2.4 million; A limited company may be purchased off the shelf, but usually takes no more than five days to incorporate. It can be incorporated in one day for -- up to 50 employees. a higher fee. The following forms must be filed with Companies House: • They can file an abridged balance sheet only. • Memorandum of association. For all private companies the relevant documents must be filed within • Articles of association. 13 months of the end of the financial year. If the financial year-end is the company's first then the period allowed is the greater of 18 • Notice of situation of the registered office address (to be main- months from the date of incorporation or 13 months from the end of tained in Gibraltar). that financial year. • Particulars of directors and secretaries. Share capital • Statutory declaration confirming compliance with the various requirements. There is no minimum or maximum share capital requirement for private limited companies. There must be a minimum of one shareholder. • Statement of nominal share capital (including the GB£10 capital duty fee). Non-cash consideration • Registration fee: GB£75 (or GB£150 for a same day urgency fee) Shares allotted by a private limited company and any premium pay- as from November 2012. able on them may be paid up in money or money's worth (including goodwill and know-how). Companies cannot be registered with names that are considered to be sensitive, offensive or which would constitute a criminal offence. Rights attaching to shares The Company Registrar can direct a company, after its incorporation, Restrictions on rights attaching to shares. Companies are free to set to change its name if it considers it to be undesirable or too similar out specific rights and restrictions on the different classes of shares in to a previously registered one or if it gives a misleading indication of their articles of association. The main restrictions include: the company's activities. In addition, certain names require approval • A company is not allowed to purchase its own shares if, as a from the FSC. result of the purchase, there would no longer be any member of the company holding shares other than redeemable shares. The forms are available online at www.companieshouse.gi. • A company wishing to redeem or purchase its own shares out of Reporting requirements its share capital needs to fulfil certain requirements (payment A company must hold an annual general meeting and must submit from distributable profits). an annual return (containing details of the directors, shareholders and certain other details including capital structure) and annual accounts to Automatic rights attaching to shares. Rights of shareholders are Companies House. Companies with turnover in excess of GB£500,000 usually subject to significant variation and restriction in the agreed are required to file audited accounts within nine months of their finan- constitutional documents. Shareholders have the right to receive share cial year end. Companies with turnover of less than GB£500,000 are certificates. Ordinary shareholders have voting rights in respect of their required to file accounts accompanied by an independent accountant's shares. Where share capital is divided into shares of different classes report within nine months of their financial year end. certain rights can be varied and restricted, however additional rights apply in relation to any attempts to change the rights of sharehold- Information to be filed at the Companies Registry for annual accounts ers of a class. Minority shareholders have certain protections against vary according to the classification of the company: unfair prejudice. • Large companies are defined as having: -- a net annual turnover of over GB£19.2 million; 9. In relation to the most common form of corporate business vehicle used by foreign companies in your jurisdiction, outline -- a balance sheet total of over GB£9.6 million; or the management structure and key liability issues. -- more than 250 employees.

• They must file a full balance sheet, profit & loss account, notes, Management structure directors' and auditors' reports. Larger companies are often managed by a board of directors, which • Medium-sized companies are defined as having: are presided over by a chairman. A company must have: -- a net annual turnover of between GB£4.8 million to GB£19.2 • At least one director, who must be a natural person. million; • A secretary. -- a balance sheet total of between GB£2.4 million to GB£9.6 million or more; and A sole director of a company cannot also be the secretary of that -- between 50 to 250 employees. company.

practicallaw.com/dbi-mjg Management restrictions 11. Is a written contract of employment required? If so, what main

Country Q&A There are no restrictions on foreign directors. terms must be included in it? Do any implied terms and/or collective agreements apply to the employment relationship? Directors' and officers' liability Company officers must ensure that the company keeps adequate accounts, maintains the proper registers and complies with the report- It is not a requirement that contracts need be in writing, however: ing requirements as set out in the Companies Act 1930. Failure to do this can constitute a criminal offence. • A written statement of certain terms and conditions of employ- ment must be provided to employees. Directors also owe the company common law duties of skill and care, • The engagement (including basic terms and conditions) must be the equitable duty of confidence and fiduciary duties of good faith registered with the local government employment office. and loyalty, including: • The duty to act in good faith in the best interests of the In practice, most companies meet the requirements by using more company. detailed employment agreements and referencing or incorporating company policies. Certain mandatory terms are required by statute • The duty to act within the powers conferred by the company's such as a minimum wage and holiday entitlement. There are more memorandum and articles of association and to exercise powers general implied common law duties such as mutual trust and con- for proper purposes. fidence. Collective agreements, information and consultation rights • The duty not to fetter their own discretion. may also apply, depending on the size and nature of the business. • The duty to avoid conflicting interests and duties. 12. Do foreign employees require work permits and/or residency • The duty not to make unauthorised profits. permits?

Directors (whether past or present) can also be held personally liable for any fraudulent trading in the course of a company's winding up. Foreign employees who are not classed as an "entitled worker" require work permits. An entitled worker is (section 6(4), Employment Parent company liability Regulations 1994): A parent company is not generally liable for the acts of its subsidiary. • By virtue of their nationality or residence entitled to seek and take up employment in Gibraltar. EMPLOYMENT • An EEA national as defined in the Immigration, Asylum and Laws, contracts and permits Refugee Act.

10. What are the main laws regulating employment relationships? • A family member of an EEA national as defined in the Immigration, Asylum and Refugee Act. • Entitled by EU or EEA law to seek and take up employment in European legislation provides that a national of an EU state may work Gibraltar. in Gibraltar enjoying all the benefits and protections existing under EU law relating to the freedom of movement of workers. Work permits must be issued prior to commencing employment and will not be granted for more than 12 months at a time. Applications The main local law regulating employment relationships is the take two to three weeks to process. The employer must lodge a deposit Employment Act 1954. with the Director of Employment of sufficient funds to repatriate the employee on termination of the engagement. The employer must also Other relevant legislation includes: return the work permit to the Director within seven days of the date • The Equal Opportunities Act 2006. of termination. There is an exception for Swiss nationals who do not require work permits for employment in Gibraltar. • The Employment (Maternity and Parental Leave, and Health and Safety) Regulations 2005. Residency permits are also required if foreign employees intend to • Employment Regulations 1994. reside in and carry out economic activity in Gibraltar. A residency permit will be issued for a maximum of one year and renewed annually by • Employment (Information and Consultation of Employees) the Immigration Authorities. Regulations 2005. • Conditions of Employment (Standard Minimum Wage) Termination and redundancy (Amendment) Order 2012. 13. Are employees entitled to management representation and/or • The Working Time Act 1999. to be consulted in relation to corporate transactions (such as redundancies and disposals)? The laws apply to all employees working in Gibraltar, whether they are resident or not (a large proportion of the workforce in Gibraltar is made up of cross border workers living in neighbouring Spain). If Employers must consult: employees are required to work abroad as part of their employment, • Individuals in redundancy situations. then Gibraltar laws continue to apply to their employment.

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• Appropriate employee representatives if proposing to make five • Discuss ways to: or more people redundant within a period of 90 days or less. -- avoid redundancies; The consultation should begin at the earliest opportunity and at least 60 days before the first dismissal takes effect. -- mitigate the consequences; and • Employees or employee representatives, if they might be -- reduce the numbers being dismissed. affected by certain transfers related to a business (known as • Confirm in writing to the representatives and Minister for transfer of undertakings). Employment: • Employees, before making certain changes to pension schemes. -- the reasons for the proposed redundancies; • Appropriate employee representatives about arrangements for -- the number of dismissals; promoting, developing and checking the effectiveness of meas- -- its methods of selecting employees for redundancy; ures to ensure the health and safety of their employees. -- its procedure for carrying out the dismissals; and The Employment (Information and Consultation of Employees) -- its calculation of redundancy payments. Regulations 2005 establish a general framework for informing and consulting employees. In certain defined circumstances, employers must elect one representative per 50 employees or part of that number TAX (for example, 125 employees will require three employee representa- Taxes on employment tives) provided that the number is at least two and does not exceed 25. 16. In what circumstances is an employee taxed in your jurisdiction 14. How is the termination of individual employment contracts and what criteria are used? regulated?

Persons ordinarily resident in Gibraltar are charged on their world- Individual employment contracts can be terminated at will for employ- wide income. Otherwise, a person is charged on income accruing in ees with less than 52 weeks' continuous employment. Unless otherwise or derived from Gibraltar. Special provisions apply under the High agreed, the period of notice to terminate the contract depends on when Executive Possessing Specialist Skills Rules 2008 for qualifying employ- payments are made (for example, weekly, monthly, and so on), and ees (see Question 17, Tax resident employees: Rates of tax below). begins from the working day following the day on which notice is given. An individual is considered ordinarily resident if present in Gibraltar Employees with more than 52 weeks' continuous employment must for over 183 days in any tax year or over 300 days in aggregate over only be dismissed for a good reason or can otherwise claim unfair three consecutive years of assessment. If a director is not ordinarily dismissal. The employer has the burden of demonstrating that an resident in Gibraltar and is also present for less than 30 days in a tax employee has been dismissed for a good reason, which can include: year, no tax is charged on income from a director's fees. • A reason related to the capability or qualifications of the employee for performing work of the kind he was employed to 17. What income tax and social security contributions must be do. paid by the employee and the employer during the employment relationship? • A reason related to the conduct of the employee. • A redundancy situation. Tax resident employees • That the employee could not continue to work in the position Rates of tax. Income tax is charged on: without contravention (either by him or his employer) of a duty or restriction imposed by or under any enactment. • Gains or profits from any trade, business, profession or vocation. • Gains or profits from employment including any allowances, An unfairly dismissed employee is commonly entitled to compensa- perquisites or benefits-in-kind. tion although reinstatement and re-engagement are also available remedies. • Rents, premiums and any other profits arising from property.

An employee dismissed for an automatically unfair reason, such as Gibraltar has a dual tax system with differing rates of tax. Ordinarily pregnancy or membership of a trade union can usually claim unfair resident taxpayers are free to elect between: dismissal, even if that employee is yet to complete one year's continu- • The gross income based system. Under this system, no allow- ous service. ances are deducted before applying the rate of tax to gross salary. 15. Are redundancies and mass layoffs regulated? • For individuals earning GB£25,000 or less, the tax rate for the first GB£10,000 is 6%, the next GB£6,000 is 20% and the bal- ance is taxed at 28%. The Employment Act regulates situations where the employer proposes to dismiss five or more employees within a period of 90 days or less. • For individuals earning more than GB£25,000, the tax rate is: The employer is obliged to: -- for the first GB£17,000: 16%; • Consult employee representatives (including union representa- tives), at least 60 days before the first dismissal.

practicallaw.com/dbi-mjg -- from GB£17,001 to GB£25,000: 19%; contributions. Employers will continue to be required to pay their share of the contribution.

Country Q&A -- GB£25,001 to GB£40,000: 25%;

-- GB£40,001 to GB£105,000: 28%; Tax payment and filing. The Gibraltar tax year runs from 1 July to 30 -- GB£105,001 to GB£500,000: 25%; June. The deadline for filing a personal return for the year ended 30 June 2013 and claim for allowances for the year commencing 1 July -- GB£500,001 to GB£700,000: 18% ; 2013 is 30 November 2013. -- GB£700,001to GB£1 million: 10%; and Non-tax resident employees -- for amounts over GB£1million: 5%. Rates of tax. Non-resident employees pay tax on any income accruing • The allowance based system. Under this system, tax is calcu- in or and derived from Gibraltar. If however, they live in Gibraltar but lated on the remainder of salary once all relevant allowances work exclusively outside Gibraltar, they do not pay any income tax. have been deducted. • The tax rate for the first GB£4,000 of taxable income is 15%. The If a director is not ordinarily resident in Gibraltar and is also present rate for the next GB£12,000 of taxable income is 30% with the for less than 30 days in a tax year, no tax is charged on income from remainder over GB£16,000 taxed at 40%. All allowance based director's fees. There is a similar exception for non-resident employ- taxpayers benefit from an automatic tax cut based on the higher ees and self-employed individuals whose duties and/or activities are of GB£300 or 2% of the tax bill. exclusively undertaken outside Gibraltar.

Every taxpayer is entitled to tax allowances or deductions with a mini- Social insurance. Non-resident employees pay social insurance con- mum total deduction of GB£3,700. Men aged 65 and over and women tributions on the same basis as resident employees (see above, Tax- aged 60 and over have minimum allowances of GB£10,887. In addition resident employees: Social insurance). to a minimum personal allowance, other allowances are available which Tax payment and filing. The tax payment and filing provisions are the may significantly reduce the amount of taxable income relating to: same as for resident employees (see above, Tax-resident employees: • A dependant spouse or relative. Tax payment and filing). • A deduction for residence in Gibraltar. Employers • Child allowance (whether educated in Gibraltar or abroad). Rates of tax. Individuals who are tax resident employers are charged • Home purchase. income tax on the same basis as tax resident employees, unless they work exclusively outside Gibraltar. Companies are separately liable to • Children attending pre-school. corporation tax (see Question 18). • Medical insurance. Social insurance. Employers pay social insurance on behalf of their Special tax status is available for certain qualifying individuals: employees.

• For those coming within qualifying category 2, a maximum of Tax payment and filing. Employer companies are separately obliged GB£29,800 and a minimum of GB£22,000 tax is payable in to file accounts and pay their taxes see( Question 18). each year of assessment. Business vehicles • The taxable income of a high executive possessing specialist skills is capped at GB£120,000, above which no tax is payable. 18. When is a business vehicle subject to tax in your jurisdiction?

The Commissioner of Income Tax will calculate the tax due based on the system which is the most beneficial to the taxpayer, irrespective of Tax resident business the taxpayer's election at the beginning of the year. Where a taxpayer opts for the gross income based system and the spouse does not, the A company is considered tax resident in Gibraltar if it is managed and availability of allowances to the spouse is restricted. controlled by persons ordinarily resident in Gibraltar in accordance with the Companies Act 1930 (see Question 9). Location of management and Social insurance. Social insurance contributions are payable by every control is established under English law. However, a company that is employee in any week in which they work. Employees must pay 10% of ordinarily resident in Gibraltar but earns profits outside Gibraltar may gross earnings subject to a minimum of GB£5.00 per week or GB£21.67 not be subject to tax in Gibraltar if the service was rendered outside per month and a maximum of GB£25.16 per week or GB£109.03 per of Gibraltar or the activities which gave rise to the profits took place month. (The self employed pay 20% of gross earnings, subject to a outside of Gibraltar (unless those business activities require a licence minimum of GB£10.00 a week or GB£43.33 a month and a maximum or authorisation within Gibraltar). of GB£30.17 a week or GB£130.74 a month.) Non-tax resident business Payments received on maternity leave are exempt from employee and Any non-tax resident business is subject to taxation in Gibraltar if any employer social insurance contributions. of its income is accrued in or derived from Gibraltar. It is not necessary to establish whether or not the business has a permanent establish- Individuals aged 60 and over and those whose statutory occupational ment or branch in Gibraltar, as the relevant test is to look at where retirement age is earlier than 60, and are in insurable employment, the income is accrued or derived. are also exempt from paying the employee's share of social insurance

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Dividends received 19. What are the main taxes that potentially apply to a business EU law provides for the elimination of withholding tax on many divi- vehicle subject to tax in your jurisdiction (including tax rates)? dends received from associated European entities (subject to rules including concerning the strength of association). In any event there Types of tax/rates is no tax on dividend income received from outside Gibraltar by a company resident in Gibraltar. There is VAT or sales tax in Gibraltar. There is no capital gains tax or tax on non-trading interest from loans. The taxes which can apply to Interest paid a business vehicle include: Interest income is not taxable in Gibraltar (unless a company's business • Corporate income tax. The standard rate is 10%. A company is specifically involved with licensed banking or money lending), nor is is taxed on its jurisdiction source income or worldwide income it subject to withholding tax if paid to foreign corporate shareholders. depending on whether it is considered a tax resident or non-tax resident business. IP royalties paid • Business rates. An annual business property rate is levied on all IP royalty and licensing income is not taxable in Gibraltar nor is it businesses in Gibraltar. The amount levied will vary depending subject to withholding tax if paid to foreign owners. on the property and is reviewed annually. Groups, affiliates and related parties • Gaming tax. This is levied at 1% of the gaming yield or gross profit (casino) income or 1% of turnover (fixed odds betting) 21. Are there any thin capitalisation rules (restrictions on loans subject to a minimum of GB£85,000 and a maximum of from foreign affiliates)? GB£425,000.

• Stamp duty. This is payable on the transfer or sale of any There are anti-avoidance rules regarding thin capitalisation in the Gibraltar real estate or shares in a company owning Gibraltar Income Tax Act 2011. Interest paid on loans by a company to a related real estate. The amount payable is based on the market value of party (which is not a company): the real estate. For property prices worth: • Where the ratio of the value of the loan capital to the equity of -- GB£200,000 or less: 0%; the company exceeds 5:1. -- GB£200.001 to GB£350,000: 2% on the first GB£250,000 • Is considered to be a dividend payment. and 5.5% on the balance; • Is not a deductible expense for tax purposes. -- GB£350,000 and upwards: 3% on the first GB£350,000 and 3.5% on the balance. 22. Must the profits of a foreign subsidiary be imputed to a parent Stamp duty rates in respect of mortgages secured on real estate in company that is tax resident in your jurisdiction (controlled Gibraltar are: foreign company rules)? • For mortgages less than GB£200,000: 0.13%.

• For mortgages over GB£200,000: 0.2%. Only income accrued or derived in Gibraltar is subject to tax in Gibraltar so the profits of a foreign subsidiary will not be imputed to a Gibraltar Tax payment and filing tax resident parent company. Company tax returns are due six months after the date of the com- pany's financial year end. Companies will be required to calculate their 23. Are there any transfer pricing rules? corporate income tax liability for the year. The return together with the estimated liability needs to be accompanied by payment of the tax due. Business rates are payable annually on demand. Gaming tax is There are no transfer pricing rules but the Income Tax Act 2010 con- payable to the Gibraltar Gambling Commissioner on a quarterly basis. tains anti-avoidance measures which are modelled on UK legislation. Dividends, interest and IP royalties In relation to transactions between connected parties deemed not to be at arm's length: 20. How are the following taxed: • Allowable deductions are restricted to the lower of: • Dividends paid to foreign corporate shareholders? -- the amount of the expense; • Dividends received from foreign companies? -- 5% of gross turnover; or • Interest paid to foreign corporate shareholders? -- 75% of net profits (pre-expense). • Intellectual property (IP) royalties paid to foreign • If interest is paid at a non-commercial rate the excess is disal- corporate shareholders? lowed for tax purposes.

Dividends paid Withholding taxes do not apply to foreign corporate shareholders. A company must submit a return of dividends if it declares a dividend in favour of a Gibraltar resident individual or company.

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Country Q&A Abuse of a dominant position in the market is governed by the com- 24. How are imports and exports taxed? petition rules in Article 102 of the Treaty on the Functioning of the European Union (TFEU). Monopoly or dominant providers are subject to additional taxation requirements. Gibraltar is outside the customs union of the EU. Import duties are levied on goods imported into Gibraltar at varying rates between 0% and 12%. When travelling into Gibraltar purchases made outside Gibraltar 27. Are mergers and acquisitions subject to merger control? which exceeds the duty free allowance must be declared.

Exports are not subject to any Gibraltar taxes. The Companies (Cross-Border Mergers) Regulations 2010 apply where one or more of the merging parties is a Gibraltarian company. (They do Double tax treaties not apply where neither of the parties are Gibraltarian.) Court approval prior to the merger is required to confirm that the administrative 25. Is there a wide network of double tax treaties? requirements of the regulations have been satisfied which include: • A director's report. Gibraltar is not a party to any double tax treaties. When a Gibraltar • An independent expert's report. tax resident is in receipt of income which is liable to tax in Gibraltar and this income is derived from overseas and has already incurred • Publication of the merger on the companies' websites. tax at source, relief is allowed in respect of that income of an amount • Approval of members and creditors. equal to the lower of the tax already deducted or the Gibraltar tax. Court approval of the merger itself is also required. The regulations Gibraltar has signed over 25 tax information exchange agreements contain obligations to consult employees and deal with their transfers with Organisation for Economic Co-operation and Development (OECD) following a merger. member countries and is currently negotiating similar agreements with other countries. It is on the G20-instigated OECD white list as a There are no threshold requirements in order for the regulations to country complying with the global standard for tax co-operation and apply. exchange of information. INTELLECTUAL PROPERTY COMPETITION 28. Outline the main IP rights in your jurisdiction. 26. Are restrictive agreements and practices regulated by competition law? Is unilateral (or single-firm) conduct regulated by competition law? Patents Definition and legal requirements. A patent gives the owner the exclusive right to exploit the invention, which must: Competition authority There is no general competition commission or authority. • Be new. • Involve an inventive step. Restrictive agreements and practices • Be capable of industrial exploitation. Restrictive agreements and practices in Gibraltar are regulated in several ways: • Not be specifically excluded from protection. • EU competition legislation. This applies to all entities doing Registration. It is not possible to make an original application to reg- business in Gibraltar. ister a patent in Gibraltar. The application must be made to the UK Intellectual Property Office and extended to include Gibraltar within For further information, see http://ec.europa.eu/atoz_en.htm. three years of the date of issue of the UK patent (guidance can be found • Telecommunication regulation. The Gibraltar Regulatory at www.ipo.gov.uk). The Registrar for Patents is based at Companies Authority is responsible for enforcing fair competition between House, Gibraltar. providers in the telecommunications sector. See www.gra.gi for more information. Offences under the Communications Act Enforcement and remedies. The patent holder can take enforcement 2006 carry criminal penalties. action in the UK or Gibraltar. Remedies include: • Utilities contracts. National legislation governs the procedure • Injunctive relief. which must be applied to the award of utilities contracts. There • Damages. are no criminal penalties for failing to comply but the Supreme Court is able to set aside contracts and impose civil financial • An account of profits. penalties. • Delivery or destruction of the infringing product. • Criminal sanctions.

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Length of protection. This lasts for as long as the UK patent is valid Length of protection. Protection lasts for the lesser of either: (20 years from the date of issue in the UK, provided annual renewal • 15 years from the end of the calendar year in which the design fees are paid from the fourth anniversary of the filing date). was first recorded in a design document, or if earlier, from when an article was first made to the design. Trade marks Definition and legal requirements. A mark capable of being repre- • Ten years from the end of the calendar year in which articles sented graphically by which a business' goods and services are branded made to the design were first made available for sale or hire. and distinguishable from those of its competitors. This includes words, logos, designs and 3D shapes or a combination of these. Copyright Definition and legal requirements. Copyright protects the authors Protection. Registration in the UK can be extended to cover Gibraltar of works by preventing others from copying or reproducing the work. at Companies House, Gibraltar. The relevant forms can be found at In Gibraltar copyright protection applies to: www.companieshouse.gi. (For unregistered trade marks, the common • Original literary, dramatic, musical or artistic works. law remedy of passing off is available.) • Sound recordings, films or broadcasts. Enforcement and remedies. The proprietor or licensee (in some cir- cumstances) of the trade mark is entitled to enforcement action for • The typographical arrangement of published editions. remedies similar to those available for patent infringement (see above, Patents: Enforcement and remedies). (Intellectual Property (Copyright and Related Rights) Act 2005, which transposed the UK Copyright Design and Patents Act 1988.) Length of protection and renewability. Trade mark protection lasts ten years and is renewable after that, for ten year periods. If it remains Copyright is also available in relation to databases and performances. valid in the UK, it is valid in Gibraltar. Protection. Copyright protection arises automatically on the creation Registered designs of the qualifying work and registration is not required. There are unof- ficial registers where work can be registered though this does not offer Definition. The design must have three characteristics: an author any additional protection (see www.ipo.gov.uk). • It must be new. Enforcement and remedies. The copyright owner (or licensee in some • It must have individual character. cases), can bring an action for infringement of copyright and seek the • It must not have been disclosed anywhere else in the world same remedies as owners of patents, trade marks, registered and before registration. unregistered designs (see above, Patents: Enforcement and remedies). Copyright infringement is a criminal offence. There is a 12-month grace period following disclosure in which the designer can make an application for registration. Length of protection and renewability. This depends on the type of work but can last for up to 70 years after the death of the work's author. Registration. Designs registered in the UK (see www.ipo.giv.uk) are automatically protected in Gibraltar. Other There is a common law right in relation to confidential information. Enforcement and remedies. The owner of the design can enforce in To qualify, the information must be: the same way and for the same remedies as in respect of patents (see • Confidential in nature. above, Patents: Enforcement and remedies). • Communicated in confidence. Length of protection and renewability. Registration can be renewed every five years up to a maximum of 25 years, subject to the payment • Clearly identifiable. of fees and specific exclusions. Damages for breach of confidence will depend on whether the breach Unregistered designs is contractual or non-contractual and enforcement is similar to that for patents (see above, Patents: Enforcement and remedies). Breach will only Definition and legal requirements. The right to reproduce a design be possible for as long as the information actually remains confidential. for commercial purposes can apply to a design or an aspect of the shape or configuration (whether internal or external) of the whole or part of an item that has a functional rather than a decorative purpose MARKETING AGREEMENTS (unlike registered designs). 29. Are marketing agreements regulated? Protection arises automatically at the point the design is recorded in a design document or an article is made to the design. Designs made in Gibraltar qualify for reciprocal protection in UK (Design Right (Reciprocal Agency Protection) Order 1989 (No.2) 1989 (SI 1989/1294)). The Commercial Agents Act 1994 transposed Directive 86/653/EEC on self-employed commercial agents (Self-employed Agents Directive) Enforcement and remedies. The owner of the design right can enforce into Gibraltarian Law. It regulates: and seek remedies in the same way as the owners of patents, trade marks and registered designs (see above, Patents: Enforcement and • The rights and obligations between agents and their principals. remedies). • Remuneration. • The conclusion and termination of agency agreements.

practicallaw.com/dbi-mjg MAIN BUSINESS ORGANISATIONS Country Q&A

Financial Services Commission Gibraltar Betting & Gaming Association W www.fsc.gi Main activities. Promotes Gibraltar as a top tier international gaming and betting jurisdiction. Main activities. Statutory body responsible for financial services in Gibraltar. Gibraltar E-Money Association Main activities. Develops Gibraltar as a European centre of excellence Gibraltar Regulatory Authority for cross-border payments and pre-paid product and service providers. W www.gra.gi Gibraltar Funds & Investment Association Main activities. Statutory body responsible for communications sector W www.gfia.gi/gibraltar-funds-investments-association/funds- and enforcement of data protection. gibraltar.ph Companies House Gibraltar Main activities. Develop and maintain Gibraltar as a specialised W www.companieshouse.gi investments jurisdiction of choice within Europe. Main activities. Registry for companies, business and domain names, patents, trade marks, trusts and other groups.

Gibraltar Chamber of Commerce W www.gibraltarchamberofcommerce.com Main activities. Promotes trade interests in Gibraltar.

Distribution The acts cover a wide range of matters, such as: There is no specific legislation in Gibraltar which deals with distribution • Licensing. agreements. Regulation (EU) 330/2010 on the application of Article 101(3) of the TFEU to categories of vertical agreements and concerted • Approval for companies carrying out e-commerce transactions. practices (Vertical Restraints Block Exemption) applies. This provides • Liability issues. safe harbour block exemptions for vertical agreements (subject to the non-inclusion of certain hard-core restrictions). Vertical agreements • Recognition of contracts made electronically. are agreement between firms at different levels of the supply chain, • Money laundering requirements. for example an agreement between a supplier of raw materials, and a manufacturer. • Use and storage of personal data.

Franchising ADVERTISING There is no specific legislation in Gibraltar which deals with franchise agreements. Regulation 330/2010 (see above, Marketing agreements: 31. Outline the regulation of advertising in your jurisdiction. Distribution) applies which provides a safe harbour for most vertical agreements, since in some cases the benefits of a vertical agreement outweigh the anti-competitive effect the agreement has. There is no advertising standards authority in Gibraltar. Legislation exists which regulates advertising in certain areas, including: E-COMMERCE • Gambling. • Medicinal products. 30. Are there any laws regulating e-commerce (such as electronic signatures and distance selling)? • Financial services. • Tobacco. The laws regulating e-commerce are set out in: • Some food products. • Financial Services (Electronic Money) Regulations 2011. The Misleading and Comparative Advertising Act 2001 also trans- • Electronic Commerce Act 2001. posed EU law on advertising into national law (Directive 97/55/EC on • Data Protection Act 2004. misleading and comparative advertising (Misleading and Comparative Advertising Directive)). • Gambling Act 2005. • Communications Act 2006. • Financial Services (Distance Marketing) Act 2006.

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DATA PROTECTION ONLINE RESOURCES

32. Are there specific statutory data protection laws? If not, are Laws of Gibraltar there laws providing equivalent protection? W www.gibraltarlaws.gov.gi Description. Contains all Gibraltar primary and secondary legisla- The Data Protection Act 2004 and the Communications (Personal Data tion consolidated to date. and Privacy) Regulations 2006 incorporate EU law. EU law establishes rules, among others, in relation to the processing of personal data, backed by administrative sanctions and criminal penalties.

PRODUCT LIABILITY

33. How is product liability and product safety regulated?

Product liability and safety is not addressed in any specific legislation in Gibraltar. English common law principles of negligence apply in addition to the established EU law principle of liability without fault on producers where a product causes damage to a consumer (Directive 99/34/EC amending Directive 85/374/EEC on liability for defective prod- ucts (Product Liability Directive)). Practical Law Contributor Profiles

Jonathan Hamilton, Associate Jessica Calvert, Senior Associate Ramparts Law Ramparts Law T +350 200 61061 T +350 200 61061 F +350 200 64756 F +350 200 64756 E [email protected] E [email protected] W www.ramparts.eu W www.ramparts.eu

Professional qualifications.Legal Practice Course 2009; England Professional qualifications.Legal Practice Course 2002; England and Wales, Solicitor, 2011 and Wales Solicitor, 2005; Admitted to the Bar, Gibraltar 2011 Areas of practice. Commercial contracts; gaming; real estate. Areas of practice. Commercial contracts; gaming; real estate. Non-professional qualifications. LLB(Hons), Leeds University Non-professional qualifications. LLB(Hons), Leeds University Languages. English Languages.English

David Borge, Associate Ramparts Law T +350 200 61061 F +350 200 64756 E [email protected] W www.ramparts.eu

Professional qualifications.Legal Practice Course, 2010; England and Wales, Solicitor, 2012 Areas of practice. Gaming; tax; intellectual property. Non-professional qualifications. Pharmacy MPharm (Hons), Cardiff University Languages.English and Spanish

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