What makes Gibraltar such a popular business base? We examine the favourable trading conditions that make ‘The Rock’ a top choice for UK enterprises.
A growing business often looks abroad to discover new markets. Although the world is the oyster of British businesses, Gibraltar remains one of the consistently most popular locations for UK firms’ expansion. This Mediterranean peninsula has a lot going for it. From a favourable tax environment and strong infrastructure, to the ease of doing business, there are many advantages for entrepreneurs looking to grow their business abroad.
Rewards and challenges faced by recruiters
Gibraltar offers plenty to employers in terms of a solid foundation for success. One of the top reasons that so many entrepreneurs and established companies choose to set up businesses in Gibraltar is that it has a stable economy that’s become incredibly diversified over the past few decades, with financial services, online gaming, tourism and shipping the primary sectors within this area. Since the goods and services here are VAT free, shopping also contributes considerably to the economy.
With its strong ties to the UK, and most of the population bilingual in English and Spanish, it’s a popular business base for British businesses as it makes the process of setting up a business here far easier.
Some Challenges remain
But recruitment here is not without its challenges. According to research, 70% of failed relocations are due to families not settling into the local area or failing to adjust to the new environment. It may be that children struggle to make new friends and feel isolated, that a spouse doesn’t fit in or that the family feels disengaged. Families might not have the support they need for the challenges unique to their family, such as finding support for children with disabilities or learning difficulties.
If an employee can’t assimilate with the culture of an area, they’re unlikely to settle and stay in the job for very long, which puts businesses back to square one in filling a vacancy. An example of a Gibraltar recruitment agency taking this to heart is SRG Europe, who prioritise helping candidates with a smoother relocation process to ease the culture shock and make a long-term move more likely.
In their own words: “retaining talent is possible through employee satisfaction [but] breaking barriers at the start is imperative to maintain long-term stability”. Visa delays can also pose an issue for recruiters hiring from elsewhere in the world, slowing the hiring process and making it difficult to fill vacancies at short notice.
So, what is it about Gibraltar that makes it worth the potential recruitment challenges that could be faced?
The benefits of Gibraltar as a business base
Accessibility to UK markets
In addition to Gibraltar’s strong economy, there is the accessibility to UK markets that make this such a popular business hub for so many sectors. Gibraltar has always had a ‘special status’ as, unlike other Overseas Territories and Dependencies of the UK, it was part of the EU until the end of 2020 and had direct access to the European Economic Area market of over 500 million people. However, despite Brexit, Gibraltar-licensed firms can still provide services to the UK market and have branches in the UK as part of the Gibraltar Authorisation Regime which provides mutual market access and aligned standards.
Favourable tax system
Another benefit for businesses looking to work out of Gibraltar is the favourable tax system. Most companies incorporated in Gibraltar are charged a rate of 10% on taxable profits. The only exceptions are utilities, fuel and energy suppliers where the rate increases to 20%. Gibraltar doesn’t levy withholding tax on dividends, interest, royalties or technical service fees, either. There is also no capital gains tax. For many individuals looking to relocate or take on a role in Gibraltar, these are tremendous pull factors. Entrepreneurs who start a business here and hire local candidates find one of the more attractive tax incentives in Gibraltar than other European locations.
Great residency programmes
Gibraltar offers excellent residency programmes for those relocating to the area. This can be an appealing option for individuals. But it also makes the recruitment process far easier for HR professionals, too. These programmes are designed to attract high net-worth individuals with specific skills. These incentives make Gibraltar an attractive option for high value candidates and, consequently, for talent agencies, too.
Need a specific example? The Qualifying (Category 2) Individuals rules limits tax exposure for high net worth individuals who wish to reside in Gibraltar. The High Executive Possessing Specialist Skills (HEPSS) encourages people to relocate if they have specialist skills which encourage economic activity within the region. However, there are some fairly strict benchmarks to qualify. Applicants need a basic salary of over £120,000, and specialist skills which aren’t available in Gibraltar.
Great for start-ups
Gibraltar’s small size makes it a wonderful spot for pilot testing products and services before rolling out to larger markets. Within the tech sector, this is a long-established practice. Many of the world’s best known centres of innovation have been developed in smaller nations. For many businesses starting up in Gibraltar, the smaller size is not an inconvenience: in many ways, it’s an asset.
Simpler recruitment and numerous rewards
Those willing to bear the natural risks of starting a business venture, or relocating for work, will be rewarded in countless ways by what Gibraltar has to offer. The entrepreneurial spirit is really strong here and an essential part of the nation’s ability to succeed in a competitive marketplace. It’s an ideal place for business owners and recruiters to work from since it offers a business-friendly environment, low taxation, a variety of financial assistance schemes and a range of industry associations that make it appealing for candidates to work from.