Efficient Tax Residence for High Net Worth Individuals
HNWIs can establish an efficient tax residency in Gibraltar which caps that individual’s tax liability.
- Applicant must possess net assets to the value of at least £2m.
- A qualifying person is known as having “Category 2”status.
Tax is applied to the first £80,000 of taxable income only. The minimum amount of annual tax payable is £22,000, or £1,833.33 for each complete month or part month for which the status is in force. The maximum is approximately £30,000 (or £2,500 per month or part month).
The individual must undertake not to engage in any trade, business or employment in Gibraltar other than duties incidental to any trade, business or employment based outside Gibraltar. However, this restriction is currently under review and may result in a legislative amendment.
In the interim, as a general rule, Category 2 individuals are permitted to invest in or do business in Gibraltar so long as any assessable income is subject to taxation. However, the specifics of the business activities need to be brought to the attention of the Finance Centre Director prior to the application.
The rules restrict an individual from having been a resident or employed in Gibraltar prior to application for a Category 2 status. Further, he or she must not have been engaged in a trade, business or employment in Gibraltar other than duties incidental to any trade, business or employment based outside Gibraltar.
The spouse or child of a Category 2 individual may elect to benefit from the terms of the same certificate.
Length of Stay
There is no specific legal requirement as regards the length of stay in any particular year. However, the Category 2 certificate will not shield any individual from becoming tax residence in a different country.
The individual is required to either purchase or rent a property in Gibraltar and have it available for his or her exclusive use throughout the year. The accommodation must be of a certain standard appropriate to sustaining the lifestyle of a wealthy individual.
Property Approval Application
The applicant is required to apply for ‘Residential Accommodation Approval’ from the Finance Centre Director. At the time of the application or within two months of the issue of the certificate, the individual is required to submit a copy of the deed of title or the rental contract.
The applicant is required to submit two character references from recognised and established professionals (one of which must be from a bank and the other from a law or accountancy firm), a copy of his or her passport, a curriculum vitae and proof of his or her financial standing. Note: The Finance Centre Director may in individual cases require the applicant to submit further information before determining the application.
Europa Trust Company can assist you or your clients to make the application, to find a suitable property and to meet the Finance Director’s requirements. We can also facilitate the physical relocation of our clients and their family.