Gaming Law 2022 Comparisons

Despite the impact of any Brexit negotiations between the United Kingdom government and its European partners, in which HM Government of Gibraltar has been considerably involved, Gibraltar remains confident in the critical mass of knowledge, personnel, regulatory experience and political support for the online gambling industry, all of which has built up continually and been enjoyed by its residents over the years. These features and the jurisdiction’s broader attractions are, and will remain, in place. Gibraltar is determined to ensure that its economy will remain highly competitive and very attractive as a base from which to operate international business.

On 31 December 2020, the Chief Minister of Gibraltar announced that a framework agreement had been reached between the United Kingdom and Spain in respect of Gibraltar following Brexit that will ultimately be formalised as an agreement between the European Union and the United Kingdom. At the time of writing (December 2022), the Gibraltar government is working closely with the United Kingdom government in negotiating this agreement. Whilst discussions are ongoing, the framework agreement provides for Gibraltar to be included as part of the “Schengen Acquis” area of free movement of persons. Negotiations between the relevant parties are now under way, with an update on progress expected in the coming months.

HM Government of Gibraltar, via the Gambling Division, has been working on a general review of the gambling licensing and regulatory framework, given that the principal legislation, the Gambling Act, was passed in 2005, and the online gambling industry has developed significantly since.

The first consultation paper has been published and circulated within the industry and given to interested stakeholders. Responses have been received and are now being fed into the analysis of the changes proposed. This envisages building on the strong regulatory licensing and tax regime already in place. The less prescriptive environment into which Gibraltar and the United Kingdom may be moving may indeed provide space for further reforms and adjustments. The Minister for Gambling and the Gambling Commissioner have announced that significant progress on the legislation has been made, with the new Act now expected to be adopted during 2022.

In October 2019, HM Government of Gibraltar signed a double taxation treaty with the government of the United Kingdom (the “UK DTA”), evidencing Gibraltar’s commitment to international standards of tax transparency and co-operation. The UK DTA will bolster Gibraltar’s reputation as a robust and reputable financial centre and position its offering on an equal footing with competing jurisdictions that currently enjoy the benefit of a double tax agreement with the United Kingdom.

Furthermore, in March 2019, a tax treaty between the United Kingdom and the Kingdom of Spain regarding Gibraltar was agreed. This treaty seeks to improve co-operation between Gibraltar and Spain with respect to taxation and provide workers who commute across the Gibraltarian–Spanish border with relief from double taxation.

The online offering of betting, bingo, casino, lotteries and poker are all regulated gambling activities that may be offered from and within Gibraltar.

In Gibraltar there is no legislation that specifically or implicitly addresses the concept of social gaming. However, as is more particularly described in 3.2 Definition of Gambling, the Gambling Act 2005 (the “Act”) is clear and unambiguous in that, to fall within the definition of “gaming” (and thus fall within the gambling legislative and regulatory framework), the activity in question must involve a prize. As such, this firm takes the view that if a game does not involve a prize element, it falls outside the regulatory regime and can generally operate from Gibraltar without obtaining a licence. The activity will not be treated as “gambling” or “gaming” and thus any operator or provider of such games would not require any specific licence in Gibraltar.

The land-based offering of betting, poker, bingo, casino, gaming machines and lotteries (with restrictions) are all regulated gambling activities that may be offered in Gibraltar pursuant to an appropriate licence.

The Gambling Act 2005 represents the main piece of legislation in connection with gambling activity in Gibraltar. The Act is significantly modelled on the United Kingdom’s Gambling Act 2005, incorporates European Union obligations and covers the licensing and regulation of land-based and remote gambling. It sets out the guidelines to be followed, makes provision for the form of application for a gaming licence and establishes the standards with which existing and prospective operators are expected to comply.

The legal definition of “gambling” is contained in Section 2(1) of the Act to include:

“(a) betting (including pool betting) and bookmaking;

(b) gaming; and

(c) promoting or entering a lottery.”

Furthermore, “betting” is defined as: “making or accepting a bet on –

(a) the outcome of a race, competition or other event of any description;

(b) the likelihood of anything occurring or not occurring; or

(c) whether anything is or is not true;

but does not include any bet made or stake hazarded in the course of or incidental to any gaming and the expressions bet, betting and bookmaking shall be construed accordingly”.

“Gaming” includes all types of casino games, poker slots, machine gaming, bingo and all other number games without limitation. It is defined in the Act as “the playing of a game of chance for a prize” and a “game of chance” includes:

“(a) a game that involves both an element of chance and an element of skill;

(b) a game that involves an element of chance that can be eliminated by superlative skill;

(c) a game that is presented as involving an element of chance; or

(d) a game where a computer generates images or data taken to represent the actions of another participant or participants in the game”.

Finally, a “lottery” is defined as “any scheme for the distribution of prizes by chance or lot in which the participants or a substantial number of them make a contribution for the purposes of participation in the chances of the lottery and includes tombola, but does not include any gaming”.

Whilst there is no specific definition of “land-based gambling” in the Act, any form of gambling that falls within the remit of the definitions outlined in 3.2 Definition of Gambling will be regarded as land-based gambling where it is not offered remotely, but is offered from a physical premises on Gibraltar soil at which consumers are able to gamble.

“Remote gambling” is defined in the Act as “gambling in which persons participate by means of remote communication, that is to say, communication using –

(a) the internet,

(b) telephone,

(c) television,

(d) radio, or

(e) any other kind of electronic or other technology for facilitating communication”.

The carrying out of any of the aforementioned regulated services without holding the requisite licence is an offence under the Gambling Act. Furthermore, a licence holder shall be guilty of an offence if it contravenes any term to which the licensee is subject.

Where unlawful gambling takes place, it is the operator (or its representatives) that will fall foul of the law. Gibraltar is a small jurisdiction and this assists in allowing the authorities to closely monitor any unlicensed suppliers. A key theme of the approach to gambling regulation in Gibraltar is maintaining the highest regulatory standards achievable through direct and ongoing engagement with licence holders and suppliers.

The authorities impose significant penalties on those persons providing gambling services without having previously sought and obtained the relevant approvals and licences. On summary conviction, the penalty will include (i) a fine of up to GIP5,000 and/or (ii) a maximum of three months in prison. On conviction on indictment, the penalty will include (i) a fine and/or (ii) a maximum of one year in prison.

The Gibraltar government recently published a Command Paper on a draft Bill for a new Gambling Act which is currently in the final stages of industry consultation. It is anticipated that the new Gambling Act will be formally adopted Q1/Q2 2023. It is expected that there will be a transition period.

The regulation of all licensed gambling activity falls within the remit of the Gambling Commissioner and their regulatory team. The Gambling Commissioner is appointed by the Minister for Gambling, whose office extends to the role of the licensing authority (the “Licensing Authority”), and is required to ensure that operators holding licences act within the terms of their licence agreements and the Act, and in a way that maintains the good reputation of the jurisdiction.

In connection with the Act, the Gambling Commissioner has issued various Codes of Practice (the “Codes”) for the gambling industry that specify detailed requirements to be met by remote and non-remote licence holders in Gibraltar; these Codes can be found on HM Government of Gibraltar’s website.

The Gambling Commissioner’s guidance in the “Generic Code” expands upon a range of requirements found in the Act, such as the duty for operators to publicise rules, and the procedures relating to complaints, responsible gambling, operating procedures and internal controls. With regard to remote gambling licence holders, this Generic Code also goes into detail in respect of, inter alia, the relevant information to be included in websites, the integrity of equipment and customer registration.

The Gambling Commissioner has also published a “Code of Practice” dedicated to anti-money laundering arrangements and guidelines on the “Remote Technical and Operating Standards for the Gibraltar Gambling Industry” respectively. The latter elaborates upon the principles established in the Codes and provides clear and comprehensive assistance on how to meet the broader policy requirements of Gibraltar’s regulatory framework.

The Gambling Commissioner welcomes an open approach and direct communication with all licensees that assists in effectively monitoring activity. Accordingly, they can ensure that licensees conduct their operations in conformity with their licences and maintain the good reputation of Gibraltar.

However, Section 42 of the Act grants extensive powers of investigation, reporting and powers of entry where a licence holder is suspected of carrying on activity contrary to the provisions and terms of its licence, the Act or in a manner that is otherwise prejudicial to the public interest, the interest of any customer or potential customer, or to the reputation of Gibraltar. This part of the Act also sets out the powers of the Licensing Authority to suspend or revoke a licence and enables a Justice of the Peace, if satisfied with the information laid before them, to grant the Gambling Commissioner or the police with a warrant to search premises.

In addition to the Command Paper on a draft Bill for a new Gambling Act (see 3.7 Recent of Forthcoming Legislative Changes), the Gibraltar government has published a Licensing Fee Consultation which outlines the new proposed licensing fees to be adopted under the revised Gambling Act and legislative framework.

The new Gambling Act will create a new licensing and regulatory framework in Gibraltar which will recast and replace Gibraltar’s existing licensing and regulatory framework. Whilst the broad principles and policies underpinning Gibraltar’s existing regime will be maintained, the new legislation will bring about a number of significant changes. These include amendments to the scope of regulated activity, the creation of a new type of licence (the “Gambling Operator Support Services licence”), recasting of arrangements relating to suppliers and the introduction of an “approved individual” regime. 

The new fee regulations will also recast the current licence application and annual fees payable by licensees. Exact details of the fees which will be payable are currently subject to consultation. 

Under the Act, the Licensing Authority may grant licences of the following descriptions to effect the law:

• a bookmaker’s licence;
• a betting intermediary’s licence;
• a gaming operator’s licence;
• a gaming machine licence;
• a lottery promoter’s licence;
• a pools promoter’s licence; and
• a remote gambling licence.

Remote gambling licences are issued for B2C or B2B activity.

As part of the reform of the Gambling Act, the government of Gibraltar has also proposed the introduction of a new category of licence: a Gambling Operator Support Services licence. This licence will apply to activity including marketing/affiliate services and entities acting as holding companies for remote gambling activity occurring outside Gibraltar.

Whilst licences are generally available, the jurisdiction continues to encourage applications only from blue-chip or well-established companies with a proven track record and solid reputation in gambling; at present there are 41 licensed entities in Gibraltar (including both B2C and B2B). Whilst start-up companies have historically not been encouraged to apply for Gibraltar licences, the Gambling Commissioner has expressed a willingness to consider proposals with significant industry experience, strong financial support and a serious commitment to infrastructure.

Remote gambling licences are issued for a period of five years, but must be renewed annually upon payment of a licence fee. The licence can be renewed upon expiry of the principal five-year term.

Licensing application and processing will depend on the type of licence being sought (non-remote or remote). In general terms, the applicant will need to prove their reputation, provide a business plan and demonstrate their skills in the sector. The investment in the jurisdiction and local plans will be very relevant in the assessment to be made by the Licensing Authority.

While the legislation envisages that anyone can apply, there are various criteria applied by the authorities in determining whether to license an operator. The principal criterion is that described above: real presence with senior individuals managing the business and with key technical equipment and infrastructure in the jurisdiction. Paragraph (4) of Schedule 1 to the Act provides that in determining whether the applicant for a licence is a “fit and proper person”, the Licensing Authority shall take into account, to the extent appropriate:

• the person’s character, honesty and integrity;
• their business reputation, current financial position and financial background;
• the business plan in respect of the activities;
• their experience of conducting the gambling activity to which the proposed licence would relate;
• their conduct, or that of any person associated with them, under any similar licence granted by the appropriate authorities in any comparable jurisdiction outside Gibraltar;
• the actual or proposed ownership and the structure of the business;
• the ability to maintain a minimum required reserve so as to ensure that all winnings or prizes, as the case may be, are paid;
• the technical infrastructure and ability to conduct the gambling that would be authorised under the proposed licence;
• the proposed control measures to ensure that any website proposed to be operated by the licence holder contains no obscene or indecent content, or any links to such content;
• the proposed control measures to ensure that, so far as is reasonably practicable, compulsive gamblers and persons under the minimum permitted age are not able to gain access to any of the gambling facilities that would be authorised under the proposed licence; and
• the proposed control measures and procedures to seek to identify money laundering and other suspicious transactions.

Most licence applications in Gibraltar arise in the context of remote gambling operators. Gibraltar law prohibits the provision of any facilities for remote gambling without a valid licence. For the purposes of the Act, a person is viewed as providing such facilities if even one piece of remote gambling equipment is situated in Gibraltar. Although there is no limit on the number of remote gambling licences that may be issued in Gibraltar, given the current licensing policy, which requires a bricks-and-mortar operation with key equipment in the jurisdiction, the numbers of licensees are selectively kept low and it is not anticipated that there will be a sharp increase in licences.

The application for an online gambling licence is a two-stage process. It involves an initial approach to the Licensing Authority for an in-principle response on whether an application would be favourably considered before progressing to the second, formal application stage. Once an in-principle approval is received, the formal licence application is prepared and submitted. This would consist of, inter alia:

• an application form;
• a detailed business plan;
• due diligence of the group, its partners and core gaming suppliers; and
• individual questionnaires for key individuals.

Given the territorial limits of the jurisdiction, there is little movement on land-based gambling operations. In the context of machine-based games in Gibraltar, such gaming is only allowed on the premises of the holder of a gaming machine licence; anybody in breach of this requirement is guilty of an offence. Under the Act, the term “gaming machine” is defined as “a machine constructed or adapted for playing a game of chance... which –

(a) has a slot or other aperture for the insertion of money or money’s worth in the form of cash or tokens; and

(b) requires no action by the player other than the actuation or manipulation of the machine or apparatus in order to play the game of chance;

and, for this purpose, “machine” includes any apparatus”.

An initial proposal may take any time between two and four weeks to be considered, after which the Licensing Authority may communicate an in-principle indication to grant a licence subject to satisfaction of all due diligence and other statutory requirements. Once the applicant has received an in-principle steer, the full application process, including due diligence, may take between three and six months, although there is no statutory minimum period.

There is a non-refundable GIP10,000 fee payable to HM Government of Gibraltar on application.

On 27 May 2021 new regulations to the Act came into force. These new regulations impose new fees on change of control applications:

• a GIP5,000 to GIP7,500 fee for a straightforward material change;
• GIP10,000 to GIP15,000 for a moderately complex material change; and
• up to GIP30,000 for a complex material change (including multi-jurisdictional considerations).

The following taxation, duty and licensing fees are payable by operators annually.

• General gaming duty for B2C gaming operators at 0.15% of gross gaming yield (GGY) minus refunded chargebacks, paid quarterly based on management accounts. No other discounts from GGY.
• General betting duty for B2C bookmakers at 0.15% of gross margin (gross betting yield, or GBY) minus voided and refunded bets, paid quarterly based on management accounts. No other discounts from GBY.
• Betting intermediary duty (betting exchanges) at 0.15% of commissions received, paid quarterly based on management accounts. No discounts from commissions.
• The first GIP100,000 of revenue is exempt from duty.
• An annual B2C licensing fee of GIP100,000 paid for each category of licence held. Licences issued in three categories above. A B2C licence permits approved B2B activities.
• An annual B2B licensing fee of GIP85,000. A B2B licence is restricted to supplying services to commercial partners and does not incur any gambling duties.
• Licensing fees to be paid quarterly at the same time as quarterly duty payments.

There is a general prohibition on conducting or providing facilities for non-remote betting and gaming on any premises without a licence covering these premises.

See 1.1 Current Outlook and 1.2 Recent Changes.

B2C licence holders provide the means by which their consumers may access the gambling services they offer. It must be noted, however, that most of the larger B2C operators also provide, as a significant element of their business, B2B services. The majority of these are white-label services pursuant to which the operator provides the core gambling services – as well as customer services, registration and account handling – to a third party that owns a brand and websites.

The Act creates a requirement for licence holders to safeguard the integrity of equipment and allows the Gambling Commissioner to impose restrictions upon licence holders in respect of their software suppliers. The Act also creates obligations in respect of ensuring that there are systems in place to promote responsible gambling and ensure the registration of all participants.

There are numerous B2B operators in the jurisdiction that provide hardware, software and operational or platform support and solutions to B2C gambling operators. There has been a very steady increase in the number of B2B providers applying for and obtaining Gibraltar licences that recognise opportunities for their business in the local market and in using Gibraltar as a hub for provision to operators in other regulated jurisdictions.

As mentioned above, the Act creates a requirement for licence holders to safeguard the integrity of equipment and allows the Gambling Commissioner to impose restrictions upon licence holders in respect of their software suppliers.

Currently, affiliates are not directly regulated but may, as part of the reform outlined in 1.2 Recent Changes, require some form of licence in the future.

All white labels entered into by Gibraltar operators require prior Licensing Authority approval, which in most cases involves the submission of satisfactory due diligence documentation on the white-label partner.

See 1.2 Recent Changes.

No information is available in this jurisdiction.

The Licensing Authority and Gambling Commissioner impose firm rules relating to responsible gambling and the prohibition of underage gambling. The Codes of Practice state that licence holders must provide self-exclusion facilities for their customers. Customer requests for self-exclusion should be implemented by the licence holder as soon as practicable and once the ban is implemented, the operator should prevent the customer from using all known existing accounts under its control. Furthermore, the customer will be prevented from opening new accounts using the same or similar registration details.

In the case of remote licence holders, there is a requirement that operators make information available online to customers in respect of responsible gambling practices, usually by way of a clear link on their website to responsible gambling information, including details of organisations committed to tackling problem gambling; this should be provided in the language of the predominant users or intended users of the websites. Furthermore, with regard to non-remote licence holders, there should be pamphlets offered at the premises promoting responsible gambling.

In addition, operators are obliged to take reasonable steps to prevent minors from engaging in gambling activities; the minimum age for gambling in Gibraltar is 18. This age restriction requires online operators to ensure that the registration requirements for prospective consumers include a positive action on behalf of the consumer to acknowledge the age limit as well as providing their date of birth and the relevant registration details. In cases where a substantive reason to believe a customer is underage arises, the operator must ensure that gambling is suspended and no winnings are paid out.

Further information in respect of the Gibraltar online gambling industry’s commitment to promoting responsible gambling can also be found on HM Government of Gibraltar’s website, which contains links to the various codes of conduct, and on the Gibraltar Betting and Gaming Association (GBGA) website. The GBGA is a trade association representing online gaming operators in Gibraltar.

There are no recent of forthcoming changes to the legislation in this regard. However, the Gambling Commissioner together with the Centre of Excellence in Responsible Gaming at the University of Gibraltar has recently held a safer gambling week to promote this area. Events were held to encourage collaboration between academia and the industry to create a safer gambling environment and protect customers from gambling harm.

See 7.1 RG Requirements.

The European Commission’s anti-money laundering arrangements (including counter-terrorist financing) in the Fourth Anti-Money Laundering Directive to have been transposed into Gibraltar law. The overarching legislation in relation to AML requirements is as set out in the Proceeds of Crime Act 2015 (the “2015 Act”), which consolidates established and new obligations. The Codes of Practice issued by the Gambling Commissioner relating to anti-money laundering input the requirements of the 2015 Act and other international obligations.

Following Brexit, Gibraltar’s current policy is to continue to adopt relevant European Union directives and regulations which relate anti-money laundering and thereby align Gibraltar with the European Union standards.

The Command Paper on a draft Bill for a new Gambling Act provides for the Money Laundering Reporting Officer to be a regulated function and for the individual to be an “approved person” under the new regime.

These requirements apply to all financial transactions associated with defined gambling activities carried out by licence holders. Detailed guidance is also provided in respect of considerations specific to remote licence holders and non-remote casino licence holders.

With regard to remote gambling, the Act and the Gambling Commissioner’s Code of Practice specify that a licence holder may take all reasonable and proportionate steps in relation to a customer’s account should it become aware, or have reason to suspect, that the customer has obtained a benefit by any illegal conduct, including the immediate suspension or closure of that account. Licence holders must notify the Gambling Commissioner in writing, within 24 hours or as soon as reasonably practicable, of any alleged money laundering; any resulting investigation carried out by the Gambling Commissioner, Financial Intelligence Unit or any other law enforcement body requires the co-operation of the licence holder.

In addition, the licence agreements entered into by online operators and the Licensing Authority require a licence holder to confirm that it fully understands and will comply with the anti-money laundering obligations under Gibraltar law and the guidelines published by the Gambling Commissioner.

The Gambling Commissioner and their regulatory team regulate all advertising.

There is no specific definition of “advertising” in the Act.

There is a general provision on control of advertising in the Act that empowers the Minister for Gambling to prescribe rules governing the advertising of gambling activities authorised under a remote gambling licence after due consultation with the Gambling Commissioner, the Licensing Authority and individual remote gambling licence holders.

In relation to the advertising of products, the legislation explicitly requires that it is not:

• indecent, pornographic or offensive;
• false, deceptive or misleading;
• intended to appeal specifically to persons under the minimum permitted age; or
• in breach of copyright laws.

Failure to comply with the regulations will constitute a breach by the licence holder of the terms of its licence. Depending on the extent of such breach, a fine or revocation of such licence could follow.

The Command Paper on a draft Bill for a new Gambling Act provides for marketing and advertising to be a regulated activity. It is proposed that companies undertaking these services for the Gambling Industry will require a Gambling Operator Support Services licence.

There is an exemption available for marketing carried out on behalf of a licence holder by a person or entity that carries on, or holds itself out as carrying on, to or for the public at large, the business of advertising or marketing.

Under the Act, a licence holder (or prospective licence holder) is under a duty to give notice of any material change of control of gaming and gambling companies to the Licensing Authority.

For the purposes of 10.1 Disclosure Requirements, “material change” extends to changes relating to shareholders, directors or executive managers, share capital, shareholdings, or any other person able, or likely to be able, to influence the conduct of the business of the licence holder, and any change in the information provided to the Licensing Authority with respect to the aforementioned.

There is no applicable information in this jurisdiction.

Part VIII of the Act contains all the enforcement provisions in relation to the compliance by licence holders with the terms of their licences. Section 42 of the Act grants extensive powers of investigation, reporting and entry when a licence holder is suspected of carrying on activities contrary to the provisions of its licence or the Act; or in a manner that is otherwise prejudicial to the public interest, the interest of any customer or potential customer, or to the reputation of Gibraltar. This part of the Act also sets out the powers of the Licensing Authority to suspend or revoke a licence and enables a Justice of the Peace to grant the Gambling Commissioner and/or the police with a warrant to search the premises.

Where an offence under the Act has been committed by a body corporate, it is possible for any director, secretary or other officer of the body corporate (or any such person purporting to act in such capacity) to be found to be liable for such a breach. This may be the case if an offence is proved to have been committed with the consent or connivance of, or be attributable to any neglect on the part of, any director, secretary or other officer.

The Gambling Commissioner welcomes an open approach and direct communication with all licensees that assists in effectively monitoring activity. Accordingly, they can ensure that licensees conduct their operations in conformity with their licences and maintain the good reputation of Gibraltar.

The Command Paper on a draft Bill for a new Gambling Act introduces enhanced enforcement powers, for the Licensing Authority, which provide for further regulatory investigatory powers and enforcement power and sanctions.

The Act imposes significant penalties on those persons providing remote gambling services without having previously sought and obtained the relevant approvals and licences (these penalties apply equally to B2B and B2C operators). On summary conviction, the penalty may include a fine of up to GIP5,000 or a maximum of three months in prison, or both. On conviction on indictment, there may be a fine or imprisonment for a term not exceeding one year, or both.

This firm takes the view that if a game does not involve a prize element, it falls outside the regulatory regime and can generally operate from Gibraltar without obtaining a licence.

There is a growing esports and interactive entertainment scene in Gibraltar. Continued growth is expected in this area.

Daily fantasy sports-style games would fall within the scope of the Act and require a valid licence.

If a game falls outside the definition of “game of chance” in the Act, it can generally be provided without a gambling licence.

At present, Gibraltar does not allow licensees to use virtual currencies for gambling. Whilst the Gibraltar government announced the release of its Distributed Ledger Technology Regulations on 1 January 2018, there is currently no indication that the use of cryptocurrencies will be adopted and accepted by the Licensing Authority in the context of gambling. Having said that, proposals from operators incorporating blockchain technology into their gambling business would be considered by the Regulatory Authority.

Furthermore, Gibraltar is generally encouraging of blockchain proposals and activity that falls outside the gambling licensing scope.

The taxation of companies and individuals in Gibraltar is governed by one piece of primary legislation, the Income Tax Act. This is supported by subsidiary legislation enabled by the provisions of the Income Tax Act.

Gambling

With regard to non-remote licence holders, each operator shall pay such charges, fees and gaming taxes as may be prescribed by the Licensing Authority in connection with the carrying on of activities authorised by the particular licence and business.

With regard to remote gambling, licence holders are subject to gaming duty at the rate of 0.15% of the GGY on gaming receipts in each year, with an exemption up to the first GIP100,000. A licence fee of GIP100,000 will also be required by the Licensing Authority upon the granting of a B2C gaming licence and GIP85,000 for a B2B gaming licence and is payable annually thereafter.

With regard to Gibraltar’s corporate tax rate, all companies in Gibraltar are subject to a standard tax rate of 12.5%. Furthermore, despite its position as part of the EU, Gibraltar does not levy any value added tax on any services rendered.

Corporate

Corporate tax is established at a rate of 12.5%, although it may be possible to mitigate this in the appropriate circumstances.

In this regard, Gibraltar also transposed the EU Parent Subsidiary Directive under the Parent Subsidiary Company Rules 1991. Under these provisions, a parent company is not liable to tax in certain circumstances in respect of dividend income paid by a subsidiary to its parent. Likewise, a Gibraltar company making a dividend payment would not have to withhold tax.

HEPSS and Cat 2

It should be noted that Gibraltar offers tax incentives to certain individuals wishing to relocate to Gibraltar that cap the amount of liability to local income tax; these incentives are available to those undertaking specialised employment in Gibraltar and high net worth individuals.

There are two main schemes available. The HEPSS system (high executives possessing specialist skills) is specifically targeted towards attracting senior executives. Individuals wishing to apply will need to possess special skills and experience that are of benefit to Gibraltar. A HEPSS certificate holder will be taxed only on the first GIP160,000 of gross assessable income.

A second system, Category 2 Individual Status (“Cat 2”), exists to encourage the relocation of high net worth individuals to Gibraltar; only the first GIP118,000 of their assessable income is taxable in Gibraltar, subject to a minimum tax payable of GIP37,000. It is common for gaming companies and other international businesses seeking to relocate to Gibraltar to make use of such schemes in structuring the presence of the owners or senior management locally.

Taxation of Capital

There is no estate duty, capital gains tax, inheritance tax, or wealth, gift or other capital tax in Gibraltar.

VAT

There is no VAT in Gibraltar.

As noted above and throughout this chapter, the Gibraltar Government has published a Command Paper on a draft Bill for a new Gambling Act and a Licensing Fee Consultation.