Considering redomiciling your company? Why Gibraltar could be the right choice

The global regulatory and tax landscape is constantly shifting. As regulatory frameworks and statutory requirements change, so businesses may find it advantageous to reassess their place of incorporation and their corporate structure to identify whether there more commercially beneficial and efficient arrangements available.

In recent years, for example, global initiatives to increase transparency in respect of beneficial ownership and tax information have prompting many businesses to consider jurisdictions that offer both international compliance as well as improved stability and efficiency.
Understanding Redomiciliation.

Re-domiciliation is the process by which a company incorporated in one jurisdiction moves its place of incorporation or registration to another jurisdiction while maintaining its legal personality. This enables businesses to move their place of incorporation without the need to dissolve the company and re-incorporate, allowing them to retain their corporate history and existing relationships.

In the absence of a corporate re-domiciliation regime, companies that are migrating incorporation have to set up a new entity in the desired jurisdiction, transfer their assets, contracts and other business relationships, and dissolve or liquidate the entity in their previous place of incorporation.

This can be complex and time-consuming, often involving legal intricacies in transferring title to certain assets such as real estate or intellectual property, tax implications, creditor protections and compliance with local regulations.

Why Gibraltar? A jurisdiction of choice

Gibraltar stands out as an attractive jurisdiction for businesses seeking a well-regulated and business-friendly environment. Unlike many alternative jurisdictions, Gibraltar has been subject to the EU’s anti-money laundering directives and operates within a British common law system, offering legal certainty and compliance advantages. Key benefits of redomiciling to Gibraltar include:

1. Regulatory stability and compliance
Gibraltar has a well-established regulatory framework that aligns with international standards, ensuring transparency while providing businesses with a stable and predictable legal environment.

2. ‘Passporting Rights’ into the UK
Under the Gibraltar Access Regime (GAR), Gibraltar is the only jurisdiction worldwide that enjoys ‘passporting rights’ into the UK. Following Brexit, the UK and Gibraltar governments agreed that Gibraltar-licensed firms can continue to provide their services into the UK market and set up branches in the UK on the strength of their Gibraltar licence.

For EU entities that have lost their right to passport into the UK, a new Gibraltar subsidiary can enable them to continue to access the UK market from a more tax efficient platform.

3. No Economic Substance requirements
Unlike many jurisdictions, there are no economic substance requirements in Gibraltar, allowing businesses the flexibility to operate efficiently without the additional burden of demonstrating local activity.

4. Favourable tax environment

• Competitive corporate tax rate: the standard rate of corporate income tax (CIT) is 15% but companies are only subject to Gibraltar taxation on income accrued in and derived from Gibraltar.
• No tax on capital gains: businesses and individuals are not subject to taxes on the sale of assets, which is a significant advantage for wealth management and investment activities.
• No tax on dividend income: dividends received by a Gibraltar company from any other company are not subject to tax in Gibraltar.
• No tax on most interest income: interest income received or receivable is not generally taxed in Gibraltar unless it falls within the scope of trading income or is interest on loans by a company to another company in excess of £100,000.
• No withholding taxes: there are no withholding taxes on dividends, interest or royalties.
• No inheritance, wealth or gift taxes: this makes Gibraltar an ideal location for estate planning and wealth preservation.
• Most passive investment income is not taxable in Gibraltar: this includes bank interest, dividends from companies listed on a recognised stock exchange, or dividends paid to non-residents.
• No Value Added Tax (VAT): Gibraltar does not impose VAT, making it a highly cost-effective jurisdiction for goods and services.

5. Efficient incorporation and business processes
Gibraltar offers a streamlined incorporation process with minimal bureaucracy. Companies can be set up with a single director and shareholder, with no nationality or residency restrictions, and without minimum capital requirements.

6. Strategic location and legal certainty
As a British Overseas Territory, Gibraltar benefits from a common law legal system and robust financial infrastructure. Its geographic position at the crossroads of Europe and Africa further enhances its appeal as a global business hub.

Is redomiciliation the right move for your business?

Given the increasing regulatory obligations worldwide, businesses may find it advantageous to explore redomiciliation options that align with their long-term goals. Gibraltar’s well-regulated, tax-efficient and business-friendly environment, together with its access to the UK, makes it a compelling choice for companies looking to enhance their operational efficiency while maintaining compliance with global regulatory standards.

Sovereign has over three decades of experience in navigating the complexities of multijurisdictional corporate structures together with extensive expertise in redomiciling corporate entities. If you are considering relocating your company, our team is here to provide tailored solutions that will align with your business needs and strategic objectives.

For more information, contact Ejaz Niazi.