Language: The official language is English, but Spanish is also widely spoken because of Gibraltar's closeness to Spain.

Population: The population is approximately 30,000 and consists of Gibraltarians, Moroccans, Indians and British expatriates.

Political System: Gibraltar is a Crown Colony and a British Dependent Territory, but with internal self-government. The United Kingdom is responsible for foreign affairs, internal security, financial stability and defence. However, it has its own elected House of Assembly, which legislates domestic matters. Gibraltar is a member of the European Community and enjoys special status because of its close relationship with the U.K. It is exempted from the Common Agricultural Policy, the Common Customs Tariff and the Value Added Tax.

Legal System: The legal system is based on English Common and Statute Law, even though Gibraltar has its own independent legal system and judiciary. The highest court is the Supreme Court; then there is the Court of First Instance and the lower Courts. The Privy Council in England is the ultimate Court of Appeal.

Taxation: Gibraltar does not have any double-taxation agreements, and the tax authorities do not exchange or disclose information with or to any other tax authorities. The taxation rate for resident individuals and companies varies between 20% and 50% on income. Non-residents pay tax on income only if the income arises in Gibraltar. There is no capital gains tax.

Incorporation: There are three types of companies available:

1. Public or private companies limited by shares.
2. Companies limited by guarantee with or without a share capital.
3. Unlimited companies with or without a share capital.

Gibraltar offshore companies can be divided into four different categories: Gibraltar 1992 Companies, Exempt Companies, Qualifying Companies and Non-Resident Controlled Companies.

Gibraltar 1992 Company: This type of company offers an excellent dividend route for non-EC parent companies that wish to repatriate profits from EC subsidiaries. This is essentially a holding company that has certain advantages when used in conjunction with EC Directive 90/435. This Parent/Subsidiary Directive makes it possible for the company to receive dividends from its EC subsidiaries free of withholding taxes. The Gibraltar 1992 Company is not liable to pay tax on those dividends and may also remit dividends out of Gibraltar(and out of the EC). The company is subject only to a withholding tax on dividends of 1%.

A Gibraltar 1992 Company has to meet certain requirements:

• To be certified, the company must have been registered or incorporated in Gibraltar on or after Jan. 1, 1992.
• The company must be ordinarily resident in Gibraltar, which means that control of its business (mainly carried on outside Gibraltar) and management must be exercised in Gibraltar.
• It must have at least two employees.
• The company is required to have at least 450 square feet of business premises in Gibraltar.
• The principal object must be to hold interests that amount to relevant participations (defined as an interest in the voting share capital of another company equal to at least 5% of the total share capital).
• In any year of assessment, a minimum of 51% of the company's income must have been derived from relevant participations or other investments including bonds, shares, deposits, royalty rights and other debt claims.
• The company must maintain an equity/debt ratio to the satisfaction of the Financial and Development Secretary of Gibraltar.
• No resident of Gibraltar can have beneficial interest in the shares of the company, other than as a shareholder in a publicly quoted company incorporated outside Gibraltar.
• The company must have a registered office address in Gibraltar, and the address has to be notified to the Registrar of companies.
• The minimum number of directors, who may be an individual or a corporation, is one.
• A company secretary, who can be either a person or a corporation, should be appointed; however, it is not a requirement.
• At least two shareholders are required, and the maximum number is 50. Shareholders can be individuals or corporations of any nationality.
• The information regarding directors and shareholders is available to the public and must be filed at the registry.
• Annual General Meetings must take place in Gibraltar, but proxies are permitted.
• The share capital must be of nominal value, and capital duty of 0.5% must be paid on the authorized share capital. The share capital may be in any currency.

The Articles of Association govern the internal affairs of the company and the Memorandum of Associations must include:

• The name and objects of the company.
• The authorized share capital and the classes of shares.
• Limited liability.

Exempt companies pay tax on a per annum flat-rate basis, regardless of profits. Foreign companies pay 300 pounds; companies that are not ordinarily resident in Gibraltar pay 200 pounds; and resident exempt companies pay 225 pounds.

For the grant of exempt status, companies apply under the Companies Ordinance to the Financial and Development Secretary. The Exemption Certificate is valid for 25 years and is renewable after that. The companies can be either foreign, branches of foreign companies or companies incorporated in Gibraltar. Exempt companies may be controlled and managed from within Gibraltar without losing their freedom from local taxation.

Requirements for exempt status are following:

• No resident of Gibraltar or Gibraltarian is allowed to hold any shares or have any interest in the company.
• The company may not transact any trade or business with Gibraltar residents (except with other exempt companies).
• The minimum share capital paid up is 100 pounds or the equivalent in any other currency.

Bearer shares can be issued, but requires deposition of the warrants in an approved bank. The Financial and Development Secretary has to approve, in advance, any transfer of shares and bearer warrants. Shareholder confidentiality is easier achieved by using nominee shareholders instead of bearer warrants.

Qualifying Companies: In order to apply for registration as a qualifying company, the company must be either a registered branch of a foreign company or a company incorporated in Gibraltar. The tax rate for this type of company depends on negotiations with the Gibraltar authorities, but it is usually between 2% and 18%. There is also a withholding tax on dividends dependent on the negotiated tax rate.

The share capital must be at least 1,000 pounds or the equivalent in a foreign currency. A one-time fee of 250 pounds has to be paid for obtaining the qualifying certificate (valid for 25 years), and 1,000 pounds must be deposited with the Gibraltar government as security for future taxes.

The requirements for obtaining qualifying status are otherwise similar to those regarding exempt companies.

Non-Resident Controlled Companies: Gibraltar companies that are owned and controlled by non-residents are not subject to local taxes if they do not earn, trade or remit income to Gibraltar.

Special Features:

1. Gibraltar benefits from the latest in digital and fiberoptic telecommunications thanks to a joint venture between the Gibraltar government and the Nynex Corporation of the USA.
2. A Gibraltar company can be incorporated within one week, and ready-made companies are also available.
3. The Financial Services Commission, an entirely independent self-funding body with wide regulatory powers, grants and supervises licenses for carrying on activities such as: the establishment of investment exchanges and clearing houses; and the promotion, establishment and operation of collective investment schemes.

• No double-taxation agreements
• Membership of the E.C.
• Modern offshore legislation providing flexibility and security
• Exemption from Gibraltar taxes
• Well-developed commercial and economic infrastructure
• Excellent communications system
• No exchange controls
• Special provisions for European holding companies and for high-net-worth individuals
• Excellent domestic and international banking, and supervision of financial services
• Political, social and economic stability