Tax Residency

TAX RESIDENCY

The moderate climate, Mediterranean lifestyle and Gibraltar’s reputation as an established finance centre, attracts ordinarily resident individuals as well as High Executives Possessing Specialist Skills (HEPPS) and High Net Worth Individuals (HNWIs).

Efficient Tax Residency for High Executives Possessing Specialist Skills (HEPPS)

HEPPS can establish an efficient tax residency in Gibraltar which caps that individual’s tax liability.

The moderate climate, Mediterranean lifestyle and Gibraltar’s reputation as an established finance centre, attracts ordinarily resident individuals and High Executives Possessing Specialist Skills (HEPPS). HEPPS can establish an efficient tax residency in Gibraltar which caps that individual’s tax liability.

This tax residency status is aimed at individuals with specialist skills, who come to work and live in Gibraltar. These individuals must earn more than £160,000 per annum. The individual must possess specialist skills (or have experience) that are not generally available in Gibraltar and which will promote and sustain activity that is considered of economic value to Gibraltar.

The rules for this form of residency can be summarised as follows:

Applicants must possess skills not generally present in Gibraltar.
Their coming to Gibraltar must also help promote and sustain economic activity in Gibraltar.
Applicants must earn more than £160,000 per annum.
Applicants cannot have been resident in Gibraltar for the three years immediately preceding the application.
HEPSS individuals must live in a Gibraltar qualifying property either by purchasing or renting a property in Gibraltar and have it for his or her exclusive use throughout the year. The accommodation must be of a certain standard appropriate to sustaining the lifestyle of a High Executive Individual.
Successful applicants will receive a certificate confirming the status but importantly, it is not transferable.
Taxation is charged following the Gross Income Based System (GIBS).

Tax Advantages:

The advantage of this form of tax residency is that taxation is limited to the first £160,000 of assessable income. This equates to a maximum tax payable of £39,940.

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.

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

The minimum amount of annual tax payable is £37,000, or £2,600 for each complete month or part month for which the status is in force. The Tax “cap” for income taxed under the certificate is £44,740.

Prohibited Activities

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.

Family

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.

Property Requirement

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.

References

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.

General Information

Gibraltar is a British Overseas Territory and a self-governing and self-financing parliamentary democracy within the European Union (EU).
Gibraltar is physically part of Europe; it is not an island and is located at the southernmost tip of Spain, allowing easy access to Spain, Portugal, Morocco and beyond.
With a state-of-the-art international airport, Gibraltar offers flights to and from a number of UK destinations on a daily basis and Morocco several times a week.
It is a Common Law jurisdiction and enjoys close ties with the United Kingdom.
No VAT, no capital gains tax, no inheritance tax, no wealth taxes. Its currency is the Gibraltar pound which is at par with UK sterling; Gibraltar is not a Eurozone country for the purposes of VAT and customs.

Lifestyle

Gibraltar offers a vibrant property market with an excellent choice of high quality housing it also provides diverse marina facilities capable of berthing large luxury yachts.
It is a Mediterranean territory and as such enjoys excellent weather and lifestyle.
The economy of Gibraltar is forecast to grow and the Government has maintained a budget surplus throughout the recent economic slowdown that has affected much of the developed world.
Gibraltar operates a low tax regime including a tax residency scheme for individuals with net assets in excess of £2m (conditions apply) capping the maximum personal income tax at £32,000, as well as a tax residency scheme for High Executives Possessing Specialist Skills.

Taxation

Assessment and collection of tax is administered by the Commissioner of Income Tax; the tax year runs from 1st July to the following 30th June.
Profits accrued in and derived from Gibraltar are charged with corporation tax of 12.5%. Profits accrued or derived outside of Gibraltar do not suffer corporation tax.