Gibraltar, strategically located at the southern tip of the Iberian Peninsula, combines the Mediterranean climate and lifestyle alongside an advanced, leading international finance centre with a favourable tax regime.
The jurisdiction benefits from an expansive economy with globally recognised businesses operating within industries such as gaming, shipping and property. These established industries have further provided the robust infrastructure, for innovative start-up businesses in sectors like distributed ledger (or blockchain) technologies, to enable nascent industries to develop into burgeoning ecosystems.
A fundamental attractor to international businesses and professionals alike to this diverse economy, which at its core ensures legal and regulatory certainty, is the jurisdictions abovementioned favourable tax regime.
Gibraltar has a corporation tax rate of 12.5%, no value added tax (VAT), inheritance tax, withholding tax or capital gains tax. Additional tax benefits are also extended to high net worth individuals (known as HNWI ‘Category 2 Individuals’) and highly skilled workers (known as the Higher Executive Possessing Specialist Skills (HEPSS) status).
What is a ‘Category 2 Individual’?
A Category 2 Individual is a special tax status designed for high net worth individuals as a means of limiting their potential taxable liability.
As a Category 2 Individual, you will only be taxed on the first £118,000 of your worldwide taxable income, irrespective of how much your income actually is. Tax is calculated under the Allowance based system. A Category 2 Individual’s maximum tax payable is therefore £44,740, or £3,728.33 for each complete month or part month for which the certificate is in force. The MINIMUM amount of tax payable by a Category 2 individual in 2022/23 is £37,000.
However, it should be considered that a Category 2 Individual certificate will not shield any individual from becoming tax resident in a different country.
Requirements and Restrictions
There is no specific legal requirement as regards to the length of stay in any particular year and the spouse or child of a Category 2 Individual may elect to benefit from the terms of the same certificate. With this being said, tax residence is a complex matter and advice should be taken in all relevant jurisdictions.
In order to qualify as a Category 2 Individual, potential applicants must have at least an estimated total net worth in excess of £2million. Potential applicants will then need to produce evidence of this during their application.
Category 2 Individuals must not have been resident in Gibraltar during the five years immediately preceding the year of assessment. Previous residency includes 183 days in any tax year during the previous 5 years or an average of 90 days in any three of the previous 5 years.
Category 2 Individuals must also have available for exclusive use approved residential accommodation in Gibraltar for the whole year of assessment (the accommodation can be either purchased or rented). Local estate agents and our advisors will be able to assist any individuals searching for such accommodation.
Category 2 Individuals may engage in any trade, business or employment in Gibraltar where the Finance Centre Director is satisfied that the exercise of such trade, business of employment would be of benefit to the economic development of Gibraltar.
How can Hassans help?
Hassans can assist any individuals in a number of ways, including but not limited to:
• assisting with the Category 2 Individual certificate application;
• incorporating companies and corporate structuring;
• establishing trusts; and
• providing general advice for high net worth individuals.
The above is only meant to provide an introduction and general overview to high net worth / Category 2 Individuals in Gibraltar. For further information on Category 2 Individuals or other taxation matters contact: