Business structure

Your business could take one of three main legal forms. Whichever business structure you chose, you must not start trading until the legal requirements have been met. The three structures are:
sole traders
partnerships
limited companies.

Sole traders

This is the simplest way of starting a business. You can trade under your own name by registering as a self-employed entity with the Income Tax Office and Employment Service. However, if you want to trade under a business name, you have to register the name with Companies House before you register as self-employed (see Business names). If you trade as a sole trader, you have personal responsibility for any losses your business makes and it may be harder for you to obtain credit for your business if you are a sole trader.

Partnerships

A partnership is similar to a sole trader except that two or more people run the business. They share the risks, costs and responsibilities of the business. Each partner is self-employed. If a partner dies, leaves or goes bankrupt, the partnership must be dissolved. Another option is a limited liability partnership. In this case, the partners are not responsible for another partner’s misconduct or negligence. Also your level of liability is limited to the amount of money investment and any personal guarantees you made to raise finance.

Limited companies

This option gives the business a completely separate identity from the people who run the business. It is more complicated to set up. All companies must keep to rules in the Companies Act 1930. Company details can be made public. Accounts have to be submitted generally every year. Anyone thinking of setting up a limited company should seek the advice of a lawyer, accountant or legal practitioner.

Registering a business name

Any individual, partnership or company must register as a business name if they are trading in a name other than their own. ‘Business’ includes a profession like a solicitor or doctor. It also includes the establishment or operation of a website in or from within Gibraltar or through an internet service provider in Gibraltar, which promotes in any way any trade or profession wherever it physically is located. Even if an individual is trading in her/his own name, it is recommended that they should register as a business name.

For more information and the necessary application forms, contact:

Companies House (Gibraltar) Limited
1st Floor
The Arcade, Don House
30 – 38 Main Street

P O Box 848
Tel: 200 78193
Fax: 200 44436
Email: mail@companieshouse.gi
Website: www.companieshouse.gi

The forms are also available on the website - go to ‘Forms’ then ‘Business Names’.

The Registrar must approve the business name before registration. Usually names are approved on the spot at the Registry.

When you have registered and paid the fee, the Registrar will issue a Certificate of Registration of a Business Name. Once registered, the business name is unique to the owner and no-one else can use that name. However, you can’t use the name nor print stationery etc until your Certificate of Self-Employment has been issued.

Once a business name has been registered, it can’t be changed. However, changes to the details stated in the application form, for example, a change of address, change in the nature of business, or the addition of new partner must be notified to the Registrar. Do this by filling in a Form of Change in Particulars and paying the fee.

If the business folds and the business name is no longer required, you have to present a Form of Notice of Cessation of Business to the Registrar. There is no charge for this.

You must make an annual return accompanied by a declaration as to the accuracy of your business name.

You have to pay fees, as follows:

Registration Fee - £20.00
Change of Particulars - £10.00
Annual returns: £15

Business licences
Depending on the sort of business you are starting, you may need a licence from the Government before you can start trading. For more information about licences, see doscument called Business licences.

Registering with the Income Tax Office

If you want to trade as a sole trader you must fill in an application for registration as a self-employed person form. Return it to the Income Tax Office. Once your application has been approved, you will be given a Self-Employed Registration Certificate which you must take to the Employment Service – see below.

Registering as self-employed with the Employment Service

You can’t carry on business in Gibraltar until you registered with the Employment Service. You have to pay a fee - £50 for registration and £20 for annual renewal of your registration. To register, take the following certificates, together with ID, to the Employment

Service:

a Self-Employed Registration Certificate
Business Name Certificate (if you are going to trade in a name other than your own).

For more information about the Employment Service, contact:

Ministry of Employment
76/77 Harbours Walk
Tel: 200 40408
Email: employment.service@gibraltar.gov.gi
Website: www.gibraltar.gov.gi

Premises

You could consider trading in the following ways:

from home. This has the advantage of low costs but you will need to make sure that the tenancy agreement, mortgage agreement or title deeds of the property do not place any restrictions on business use. You may also need to get planning permission
from premises you have bought or rented. You should consider how much space you need as well as heating, lighting and ventilation requirements. You need to make sure the property has been approved for business use. Planning permission may also be necessary. If you are considering buying or renting premises for a business, you should see a solicitor

Tax
You have to pay tax as a sole trader or a company if the income accrues in or derives from or is received in Gibraltar. Also if you are ordinarily resident in Gibraltar, you have to pay tax on income coming from another country.

Certain allowances and deductions are made before your tax is calculated – for example, expenses which are ‘wholly and exclusively’ incurred production of your income. Also if you buy plant or machinery for your business in the first year of trading, this is fully deductible – these are called capital allowances. There is no VAT in Gibraltar and there is no Capital Gains Tax.

Social insurance contributions

If you run a business, you have to pay social insurance contributions. This system is merged with the Income Tax PAYE system and managed by the Income Tax Office.
Social insurance contributions are based on a percentage of salary but there is a minimum and maximum contribution level. For example, as an employer, you have to pay 20% of your employee’s gross income, with a minimum of £15 per week and a maximum of £32.97 per week (2101 figures).

More information about tax and social insurance contributions
For more information about tax and social insurance contributions, contact:

Income Tax Office
St Jago’s Stone Block
331 Main Street

Tel: 200 78474 (self-employment section);

200 52737 (social insurance contributions)
Email: incometax@gibraltar.gov.gi

Webpage about income tax: http://www.gibraltar.gov.gi/images/stories/PDF/taxation/Guide_to_Gib_July_2006.pdf

Website about social security insurance if you are self-employed:
http://www.gibraltar.gov.gi/images/stories/PDF/taxation/Self_Employed_Persons_Guide_To_Social_Insurance_2010.pdf

Website about social security insurance if you are an employer:
http://www.gibraltar.gov.gi/images/stories/PDF/taxation/Employers_Guide_to_Social_Insurance_2010.pdf

Employing staff

If you employ staff, there are laws that you must follow. For example, you must notify the Employment Service that you have employed someone, not later than the day when you engage them. The form to do this is called a Notice of Terms of Engagement. Also, if a vacancy arises in your firm, you must register it with the Employment Service. You must also notify them when the employment of one of your employees is terminated.

EU nationals are entitled to work in Gibraltar and do not require any special permission. You may be entitled to employ a non-EU national but they have to obtain a work permit first.


There are rules about how you must treat employees. For example you must give them a certain amount of paid holiday and sick pay. There are rules about making employees redundant and giving notice if you have to terminate their employment. There is a standard minimum wage. You must not discriminate against them, for example, because of race, sex, pregnancy or disability.

For more information about employment law that you must comply with, contact the Labour Inspectors on: 200 74999.

There are health and safety standards that you must keep to – for more information, contact the Health and Safety Inspectors on: 200 47958.

Book-keeping and accounting

It is extremely important that accurate and detailed records of the business are kept. If you are trading as a sole trader or in a partnership, you may be able to keep your own books or employ a bookkeeper or accountant. But if you are trading as a limited company, you will need the help of an accountant.

Insurance

Depending on the business and how you trade, you will be required by law to take out certain types of insurance. Other types of insurance are not compulsory but it is important to consider which ones are appropriate. The types of insurance you may need are:

employer’s liability insurance. If you employ other people, you must have this insurance. It provides cover for claims made by employees who are injured or become ill as a result of their employment
vehicles insurance. Vehicles used for business purposes must be insured even if already insured for private use
public liability insurance. This provides cover against claims by members of the public who have been injured or had property damaged as a result of carelessness at work by you or your employees
premises insurance. Insurance will be necessary for the premises you work from, even if you work from home and there is already a policy. This is because the insurance will usually only cover residential use
contents, stock and materials insurance. This insurance will be necessary to cover the replacement costs of stock, materials and the contents of the premises even if is work is being done from home and there is already a home contents insurance policy
health and accident insurance. These will pay a regular income or lump sum if you are unable to work because of an accident or sickness.

Pensions

As a self-employed person, you will get old age pension if you have met the contribution conditions. You could also consider getting a private personal pension.