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Gibraltar 1992 Company
The Gibraltar 1992 Company was introduced to implement the requirements of the EC Parent/Subsidiary Directive. The main objectives of the Directive are to ensure that profits earned within the EC are taxed only once and eliminate fiscal barriers to cross border investment.

The Directive requires Member States to:
- eliminate withholding taxes on profits distributed by subsidiaries within the EC to parent companies in different member states.
- exempt from further taxation in the hands of the holding company, dividends received from subsidiaries in other member states.

In accordance with this Directive, dividends received by a Gibraltar 1992 Company are exempt from further tax in Gibraltar. Other income received by the Gibraltar company will be taxed at the normal corporate rate of 35%.

Benefits
The benefits deriving from qualifying status are the following:
- The company or registered branch will be liable to taxation on its profits at a low prescribed rate.
- Fees payable to non-residents (including directors) and dividends paid to its shareholders are subject to withholding tax at the same prescribed rate as the company.
- There is no Estate (Death) duty in Gibraltar.
- There is no stamp duty on the transfer of shares of a qualifying company.

Conditions
In order to qualify as a Gibraltar 1992 Company, the company must:-
- have as its main object to hold participation in other companies incorporated in or outside Gibraltar amounting to at least 5% of the voting share capital.
- in any year of assessment at least 51% of the income of the Gibraltar 1992 Company should be derived from such investments.
- have business premises in Gibraltar of at least 400 sq.ft and employ at least two employees in Gibraltar.
- not have any persons ordinarily resident in Gibraltar with a beneficial interest in the shares of the company;
- maintain an equity/debt ratio to the satisfaction of the Finance Centre Director.

Benefits
The benefits of setting up a Gibraltar 1992 Company are:-
- The Gibraltar 1992 company can receive dividends free of Gibraltar corporation tax from EC companies in which the Gibraltar 1992 company has at least 25 % of the share capital. It should be noted that withholding tax on dividends paid from subsidiaries located in Germany, Portugal and Greece may continue to be imposed as a result of certain derogations under the Directive.
- The Gibraltar 1992 company can pay dividends to an individual or a corporate shareholder ( other than an EC 25 % corporate shareholder) under withholding tax of just 1%;
- Interest payments to non-resident entities are exempt from withholding tax;
- There is no further liability to Gibraltar tax by the recipient of any dividends or interest paid by a Gibraltar 1992 Company;
- The Gibraltar 1992 company can pay dividends to parent companies in other EC Member States (as specified in the Directive) without paying any Gibraltar withholding tax, so long as the latter has at least 25% of the share capital of the Gibraltar 1992 company.
- There is no Capital Gains Tax in Gibraltar.

Applications
It is perceived that the Gibraltar 1992 company will be particularly attractive to a non-EC parent as such a company can pay dividends to an individual or a corporate shareholder with withholding tax of only 1%.