Gibraltar - Economy

Economy

The British military traditionally dominated Gibraltar's economy, with the naval dockyard providing the bulk of economic activity. This however, has diminished over the last twenty years, and is estimated to account for only 7% of the local economy, compared to over 60% in 1984. Today, Gibraltar's economy is dominated by four main sectors – financial services, internet gaming, shipping and tourism (including retail for visitors).

In the early 2000s, many bookmakers and online gaming operators relocated to Gibraltar to benefit from operating in a regulated jurisdiction with a favourable corporate tax regime. However, this corporate tax regime for non-resident controlled companies was phased out by January 2011 and replaced by an across the board Corporate Tax rate of 10%.

Tourism is also a significant industry. Gibraltar is a popular port for cruise ships and attracts day visitors from resorts in Spain. The Rock is a popular tourist attraction, particularly among British tourists and residents in the southern coast of Spain. It is also a popular shopping destination, and all goods and services are VAT free. Many of the large British high street chains have branches or franchises in Gibraltar including Marks & Spencer and Mothercare. Branches and franchises of international retailers such as Tommy Hilfiger and Sunglass Hut are also present in Gibraltar, as is the Spanish clothing company Mango.

A number of British and international banks have operations based in Gibraltar. Jyske Bank claims to be the oldest bank in the country, based on Jyske's acquisition in 1987 of Banco Galliano, which began operations in Gibraltar in 1855. An ancestor of Barclays, the Anglo-Egyptian Bank, entered in 1888, and Credit Foncier (now Crédit Agricole) entered in 1920.

In 1967, Gibraltar enacted the Companies (Taxation and Concessions) Ordinance (now an Act), which provided for special tax treatment for international business. This was one of the factors leading to the growth of professional services such as private banking and captive insurance management. Gibraltar has several positive attributes as a financial centre, including a common law legal system and access to the EU single market in financial services. The Financial Services Commission (FSC), which was established by an ordinance in 1989 (now an Act) that took effect in 1991, regulates the finance sector. In 1997, the Department of Trade and Industry established its Gibraltar Finance Centre (GFC) Division to facilitate the development the financial sector development. As of 2012, Gibraltar has 0.103 Big Four accounting firm offices per 1,000 population, the second highest in the world after the British Virgin Islands, and 0.6 banks per 1,000 people, the fifth most banks per capita in the world.

The currency of Gibraltar is the Gibraltar Pound, issued by the Government of Gibraltar under the terms of the 1934 Currency Notes Act. These banknotes are legal tender in Gibraltar alongside Bank of England banknotes. In a currency board arrangement, these notes are issued against reserves of sterling. Clearing and settlement of funds is conducted in sterling. Coins in circulation follow British denominations but have separate designs. Most retail outlets in Gibraltar unofficially accept the euro, though some payphones and the Royal Gibraltar Post Office do not.