A Brief Background to Gibraltar

A Brief Background to Gibraltar, the Economy and Financial Services:

Gibraltar is a fully self-governing and fully self-financing British Overseas Territory to which the Treaties establishing the European Union apply, with only certain exceptions. We are within the EU single market for the purposes of the free movement of persons, the freedom to provide services and the free movement of capital. We are not within the Common Customs Union and we do not have to apply a VAT regime. Our status applies until the United Kingdom formally exits the European Union. We therefore expect that whatever status the UK negotiates for itself post Brexit will also apply to Gibraltar. We enjoy an excellent relationship with the Government of the United Kingdom.

EU Regulations apply directly, and EU Directives are transposed by Gibraltar’s Parliament. This includes all measures on financial supervision and regulation, direct taxation and anti-money laundering. Our corporation tax rate is 10% and we have a maximum effective rate on personal tax of 25%. There is a 20% rate of tax that applies to utilities and any company that may have a dominant market position. Gibraltar also applies EU legislation on the avoidance of base erosion profit shifting and the avoidance of double non-taxation. Our taxation regime is subject to European Union scrutiny.

Gibraltar has a diversified and prosperous economy. The principal sectors of the economy include, tourism, financial services, E-gaming and shipping, port and ship refuelling. Tourism generates some 10 million visitors a year and we are a major destination for cruise calls, financial services accounts for employment of 16% of the workforce, E-gaming companies (of which there are 20 of the largest firms in the world physically present in Gibraltar) employ a similar number of individuals and Gibraltar is the largest ship refuelling port in the Mediterranean. Gibraltar has full employment, a budget surplus, net borrowing of less than 20% of GDP as well as solid GDP growth year on year. Inflation is approximately 2.6 % currently. Gibraltar’s currency is the pound sterling.

The areas of business most affected by Brexit are financial services which currently enjoys single market access in (inter alia) Insurance, Reinsurance, Insurance Mediation, Banking, Investment Services and E-money. Thus, in a post Brexit scenario (assuming for these purposes, a hard Brexit) Gibraltar would continue to have access to the United Kingdom market but not the other Member States of the European Union.

Post Brexit, Gibraltar will continue to apply existing commitments on exchange of information, anti-money laundering and financial supervision etc. Going forwards from that date, we will then choose whether to voluntarily apply any new EU legislation or to adopt international standards which have the same effect. We are working hand in hand with the UK on these matters to ensure ongoing ‘equivalence of regulatory outcomes’.