Residency and Cat 2 in Gibraltar

Individuals who wish to enjoy the benefits of Mediterranean living in a beneficial tax environment may avail themselves of the Qualifying (Category 2) Individual Rules 2004 (the Rules) which were made under the Income Tax Act.  Such individuals may become residents of Gibraltar and in this connection may apply for a Qualifying Certificate under the Rules.

Under the Rules, individuals in possession of a Qualifying Certificate are liable to tax only on the first £80,000 of assessable income.  Under the rates of tax currently enforced in Gibraltar, the maximum liability to tax for such individuals would be approximately £28,360 per annum.  There is, however, a minimum tax of £22,000 per annum, payable irrespective of the individual’s income in that year of assessment.

Under the sliding rates of tax imposed on an individual’s assessable income, receipt in Gibraltar of an amount greater than £80,000 per annum would expose an individual to an amount of tax greater than the minimum sum of £22,000 per annum, but always subject to the maximum amount outlined above.

Only individuals not currently resident in Gibraltar and who have not been resident in any of the previous five years of assessment may apply for a Qualifying Certificate.

Applications should be made to the Finance Centre Director of Gibraltar and must be accompanied by two references (one of which must be from a bank) and a non-refundable fee of £1,000.  Applicants will usually be informed that the application has been successful within one or two weeks of the application being made. In order to be successful, the Applicant must have, for the exclusive use of himself and his family, approved residential accommodation in Gibraltar.

Details of the property acquired or rented must be forwarded to the Finance Centre Director within two months of the issue of the Qualifying Certificate.  The Finance Centre Director may decide whether or not a property is an approved property.  This usually consists of verifying that the size and type of property is consistent with the size and makeup of the Applicant’s family and the Applicant’s status as a Qualifying Individual.

There are various modern, high quality developments in Gibraltar which would be suitable as an approved property, as well as other properties located in and around the town centre.

Individuals with substantial assets and/or income may therefore take advantage of the Rules by establishing their tax residence in Gibraltar.  This should facilitate an individual’s tax planning and may be useful in limiting tax liability in other jurisdictions on worldwide income.

Notwithstanding the residential status acquired by an individual who has obtained a Qualifying Certificate, such individual may make use of certain tax structures to assist in the planning of fiscal affairs.  These tax structures are usually only available to non-residents of Gibraltar.  Therefore, the use of a Gibraltar trust, which (under certain conditions) is not subject to taxation, may be available to such individuals.  These possibilities together with the fact that there is no capital gains tax, inheritance tax or estate duty in Gibraltar make the jurisdiction an attractive proposition to individuals able to fulfil the criteria required.

The proximity of Spain also provides further diversion and attraction to individuals who may wish to establish a residence in Gibraltar. The Andalucian cities and countryside are rich in history and tradition and there are numerous cultural and leisure activities on the Costa del Sol, including several top international golf courses.

The residence rules available in Gibraltar make the Rock an ideal location for persons wishing to combine the advantages of residence in a warm Mediterranean climate with a singularly advantageous tax regime.

Gibraltar stands out globally as a jurisdiction in that it “punches far above its weight”. At Hassans, we pride ourselves on contributing substantially to that “punch”.

As Gibraltar’s largest law firm, Hassans benefits from specialist tax, private client, corporate and commercial teams enjoying extensive experience in the establishing of financing and asset holding corporate structures as well as private wealth and estate planning structures. Our clients include some of the world’s largest and most successful quality businesses and notable families. Hassans frequently acts for large multi-nationals in conjunction with global leading law firms and tax advisers in respect of intricate and complex inter-group restructurings. We also pride ourselves in being trusted advisors to notable ultra-high and high net worth families and individuals. We have excellent working relationships with the local authorities. Most of all, we are continually recognised for understanding our clients’ strategy and needs first, combining careful due diligence with world-class legal skills and professional execution, in order to properly serve your specific needs.

Hassans, Gibraltar’s largest law firm, was founded in the 1930s by Sir Joshua Hassan QC.  We pride ourselves on our reputation for trust, honesty, integrity and efficiency. Our firm is trusted by a large number of global clients, and we handle hundreds of millions of pounds in transactions annually.

Our personal relationships with clients go beyond the standard relationship that many clients have with large firms.  We stand firmly behind all our clients and assist them in whatever the situation and whatever the problem.  Our clients will attest to the fact that we are always ready, able and willing to assist.  Our philosophy is to seek solutions and work through problematic and often complex situations which our clients may face.

Hassans invites you to take advantage of the global competitive advantage we can offer you by assisting you with your structuring to maximise what you can achieve.

In the event that you have any queries or would like to discuss any matter, please do not hesitate to contact us.