Gibraltar Residency - Tax Benefits

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Hassans have been assisting High Net Worth Individuals and their families relocate to and establish in Gibraltar since its establishment in 1939. As the largest and one of the leading law firms in Gibraltar, with a network of advisers and connections that enables us to provide the best service, our clients have always enjoyed the benefit of ‘levelling up’ by choosing Hassans.

Gibraltar’s appeal as a place for High Net Worth individuals and their families to establish has been anchored on the security and stability of the Gibraltar proposition since the early 1990s. With solid and positive economic growth throughout, Gibraltar’s positioning as a financial services centre of excellence and the opportunities for access to the EU, and now the UK, this article will cover a number of the key areas of doing business in Gibraltar that matter to most.

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About Gibraltar

Gibraltar is a British Overseas Territory located at the southernmost tip of the Iberian Peninsula, covering a total of 6.8² kilometres, with an approximate population of about 33,000. Gibraltar’s modern and sophisticated constitutional relationship with the United Kingdom is governed by the Gibraltar Constitution Order 2006, the effect of which is that Gibraltar has full fiscal and political autonomy from the UK, save for the three powers reserved for the Governor as representative of Her Majesty the Queen. The so-called reserved powers grant the Crown in right of Her Majesty’s United Kingdom Government authority over the Police, internal security and Gibraltar’s foreign affairs. These reserved powers are, in practice, generally wielded in consultation with the local Government and Chief Minister of Gibraltar, currently the Hon Fabian Picardo QC, MP.

Gibraltar Weather

Gibraltar enjoys a sub-tropical climate with over 300 days a year of sunshine and mild winters. Gibraltar boasts a diverse economy built on four pillars – tourism and the port, financial services, online gaming and gambling and, bunkering and other port services.

Strong Financials

The International Monetary Fund (IMF) puts Gibraltar fourth in the world in terms of GDP per capita, indicating a prosperous nation with strong economic prospects. Strong economic performance throughout successive international challenges make Gibraltar a bastion of economic stability in a turbulent international economic context.

Stay Connected

Gibraltar has its own International Airport (Gibraltar International Airport – GIB) with numerous daily direct flights to and from the UK (covering destinations such as London, Manchester and Birmingham). The proximity to Spanish regional airports at Malaga, Jerez and Seville broaden Gibraltar’s accessibility to other European cities and international trade centres. Gibraltar also operates the third busiest bunkering port in Europe, as well as having a state-of-the-art cruise terminal and, facilities that host super yachts and luxury pleasure boats, providing a wide range of regulated and professional marine services.

Financial Services

In financial services, Gibraltar is acknowledged as a well-regulated and internationally tax compliant jurisdiction, with an agility and dynamism that ensures speed to market for a wide range of providers. Its recent development of business in the cryptocurrency and wider distributed ledger technology space has seen Gibraltar establish itself at the leading edge of global development in this space, offering legal, regulatory and tax certainty in respect of this emerging and exciting area of business. This bodes well for crypto and other fintech entrepreneurs and their families, as they are able to establish in the context of advisers and providers who understand their business.

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Tax Residency in Gibraltar

What does ‘Ordinarily resident in Gibraltar for tax purposes’ mean?

As a general rule, for the purposes of income tax in Gibraltar means an individual who, irrespective of whether such an individual is domiciled in Gibraltar or otherwise, in any year of assessment is present in Gibraltar for a period of at least 183 days in aggregate or is present in Gibraltar in excess of 300 days in three consecutive years. Non-resident means any person other than a person ordinarily resident.

There are a number of options available for taking up tax residency in Gibraltar, whether that is by virtue of taking up employment, starting a business or settling in Gibraltar. The key options for doing this are set out below.

Setting up a business in Gibraltar

Corporate Tax in Gibraltar is charged at a rate of 12.5% – that, and all the advantages arising from doing business in an efficient and modern jurisdiction means that Gibraltar has long-attracted entrepreneurs from around the world, in the online gambling and financial services contexts.

All the details relating to corporate tax are covered in our tax guide linked to elsewhere in this document but on the personal front, entrepreneurs and high executives can also benefit from capped tax by reference to the High Executive Possessing Specialist Skills programme.

High Executive Possessing Specialist Skills ‘HEPSS’ individual

“Established to attract talent and top flight executives to Gibraltar, the HEPSS regime requires the Finance Centre Director to be satisfied that the appointment of a HEPSS will ‘promote and sustain economic activity of a particular economic value to Gibraltar and that he/she will earn more than £160,000. Approved HEPSS individuals will pay tax only on the first £160,000 of assessable income, under the Gross Income Based Scheme” – click here for Hassans’ complete Tax Information Guide

Further to changes announced to the HEPSS regime on 20 July 2021, companies with HEPSS qualifying employees have the benefit of a two year transitional period whereby exisiting certificates are grandfathered for two years, allowing for changes to conditions to be negotiated and implemented

Settling in Gibraltar

The option of settling in Gibraltar without taking up employment or establishing a business here is also available as a means of moving to Gibraltar. These options are available largely to high net worth individuals looking to relocate family and wealth to Gibraltar or indeed, for retirees from the UK looking to settle in Gibraltar.

High Net Worth Individuals and their families

HNWIs and their families have, over the years, discovered in Gibraltar the full range of legal and structuring advantages typical of an English common law jurisdiction, coupled with the availability of modern specialist finance centre options for protecting wealth. These include the availability of the Gibraltar Protected Cell Company, the Asset protection trust and the option to establish purpose trusts.

Category 2 Status

HNWIs looking to Gibraltar can avail themselves of the provisions of the Qualifying (Category 2) Individuals Rules 2004 and apply for what is known as CAT 2 status, or Gibraltar category 2 tax residency. This is a tax residency status more fully set out in our Gibraltar Category 2 residency page, but which, in essence, enables the qualifying individual to cap the amount of tax payable on worldwide income to a maximum of £118,000 of assessable income, subject to a minimum of £37,000 income tax falling due for every qualifying year. Tax payable by CAT 2 individuals is required to be paid in advance, by 30 November each year.

Self-sufficiency Status

The fact that no tax is payable on a long and varied list of income in Gibraltar means that it is possible to register for residency in Gibraltar on what is referred to as ‘self-sufficiency’. A creature of default rather than of specific legislation, if a retiree is over 60 and in receipt of pension income from a pension approved by the Commissioner of Income Tax in Gibraltar, no tax is payable on that pension. In addition, there is no tax payable, by anyone, on inheritance, on capital gains, wealth, VAT and, as passive income, no tax on savings interests, dividend nor on income from companies quoted on a stock exchange.

In June 2022, the Chief Minister of Gibraltar announced that from 1 July 2022, non-Gibraltar nationals resident in Gibraltar, not in possession of a CAT 2 or HEPSS certificate, or in ‘true third party employment’ would pay tax on all savings, pension and other passive income. This measure was admitted to being in the nature of a penalty designed to tackle those ‘not paying their way’. On that basis then, all those affected can apply for CAT 2/HEPSS status to avoid the application of this new measure.

In order to qualify as a self-sufficient resident, the applicant is required to prove to the Civil Status and Registration Officer (CSRO), that the applicant has the financial means to support him or herself, that he or she has private medical insurance and that the applicant has for his/her exclusive use, access to property in Gibraltar. As part of this process applicants are required to provide to references and a banker’s letter/statements evidencing the relevant income.

Family Office and modern succession/wealth planning solutions

Gibraltar, as a common law jurisdiction, also offers a very complete range of wealth structuring and tax planning solutions, including Gibraltar trusts, foundations, asset protection trusts and protected cell companies. The home of many family offices, Gibraltar provides the structural backbone to many HNW families, adding controls and safeguards for a family’s wealth as one generation takes over from the last. For more information on all these solutions and how Hassans can assist, pay a visit to our Private Client expertise pages.

Moving to Gibraltar

Whether you’re considering moving to Gibraltar for the purposes of taking up employment in one of Gibraltar’s buoyant sectors, whether you’re retiring in the UK and are looking for a warmer place in the sun that feels like home and retains good links to the UK, or if you are looking to establish your financial services or gaming business in Gibraltar, there are many reasons to actively consider it. In order to help you better understand the key things to bear in mind, below you’ll find some general points of interest as well as some case studies for examples of the practical application of the key features of living and working in Gibraltar.

Immigration

British Nationals are able to come to Gibraltar to live and work subject to complying with certain administrative requirements. Gibraltar is proud to be a cultural melting pot which, over the years, has seen people from all over the world make Gibraltar their home. As a centre for leading international businesses in gaming, insurance and other financial services fields, Gibraltar welcomes citizens from around the globe, whether via their European or British citizenship or where workers come from further beyond, by means of work permits issued by the Department of Employment. Hassans is able to assist in these applications as well as with applications based on the Category 2 qualifying status or on the High Executive Possessing Specialist skills (HEPSS) basis set out above.

Currency

The official currency in Gibraltar is the Gibraltar Pound. The Gibraltar Government prints the Gibraltar Pound which is accepted interchangeably at equal value with the Great British Pound. Our banks track the Bank of England’s rates of interest as they are amended from time to time. Local businesses accustomed to trading in a busy tourist environment also widely accept Euros.

Gibraltar Residency - Tax Benefits