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Spain: Gibraltar: Solid as the Rock - Sarah Drane, Purple Cake Factory

Solid as the Rock

It’s impossible to have an extra-marital affair in Gibraltar, or so I am told, never tried myself. This is just one nugget of information I learned whilst ploughing through an eight-hour meeting on the Rock on Monday. Seems that the British overseas territory of just under 7km² and 30,000 in population is just that bit too small for a romantic rendezvous to slip under the radar. You might also want to take a peek over your shoulder before you request any embarrassing ointments in the pharmacy, you know the concept of Chinese Whispers...

There are however some far more pertinent facts about Gibraltar which underpinned my decision to make a special trip over from Palma and many of those relate to its business environment. The economy is growing at 6 per cent, there’s record employment and public debt sits around just 7.5 per cent of GDP (make that 57.5 per cent for the UK). It sounds like a work of fiction for an EU member but it’s absolutely true. Yes, global conditions are tough, but Gibraltar is both diverse and robust so feeling particularly upbeat.

Of course the Rock’s greatest allure, unless you’re ape about, um, apes, is its ‘positive tax environment’ (don’t mention the ‘haven’ word). There is no capital gains tax, no VAT, no inheritance tax and no wealth tax in Gibraltar and, instead of raising taxes (£1.50 a mile for driving at peak times in the UK anyone?) the Government has resisted and instead announced a wave of tax cuts in the 2009 Budget.

From 1 July 2009 any new company established in Gibraltar will enjoy a start-up rate of 10 per cent corporate taxation. And, from 1 January 2011, this lowest or equal lowest rate of corporation tax in the EU will apply to all companies. Meanwhile the top rate of taxation for individuals has dropped from 38 per cent to 35 per cent - a far cry from Darling’s much maligned 50 per cent top rate which has tempted British entrepreneurs into mass exodus. It’s these juicy morsels that lured me in a (top secret) business meeting on Tuesday.

The fact of the matter is that a formal association with Gibraltar is the simplest and most convenient way to capitalise on low taxes in a familiar environment based on English law (but without the dismal English weather). And, with affordable property and very few conditions on residence (no 183 day rule), the Rock steals a march on the tax haven competition. Then there’s the pound, the pint, Marks & Spencer’s and Morrison’s, as well as luxurious waterfront homes and berths for megayachts in swanky Ocean Village - this is Britain, but better.

Of course it’s not all a bed of roses, the Chief Minister took the opportunity in this year’s Budget to adjust-up some day-to-day costs of living and hiked the price of petrol by 4p a litre. (But with fuel around 40 per cent cheaper in Gibraltar compared to that of the UK, it’s hardly going to have citizens demonstrating in the streets…) And of course there’s that question mark over future clandestine liaisons – ah well, you can’t have it all…

Sarah Drane, Purple Cake Factory

Sarah is the proprietor of Purple Cake Factory, an Award-winning company that specializes in real estate, marine and travel PR.

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