The main features of the Gibraltar Tax system are as follows - No wealth tax, no inheritance tax, no capital gains tax and, in particular, no VAT. As a specialist, EU finance centre with an offshore capability, Gibraltar offers significant opportunities to a range of clients, corporate and personal, to take full advantage of the range of tax planning structures available.

Whilst the notion of tax and wealth planning has come under fire in recent years and many of the quintessential strategies applied in finance centres around the world fall foul of changing political and social standards, Gibraltar has emerged, by virtue of its modernised tax environment, as a centre for efficient yet OECD and EU compliant tax structuring.

Our expertise is second to none - we have assisted in a wide variety of tax planning and structuring scenarios, involving private individuals, business and charitable organisations to achieve maximum efficiency.

Private Client & Family Office

As a trust jurisdiction, Gibraltar offers many of the advantages of such a system whilst being in the EU, but remaining outside the Customs Union. Gibraltar is and has been for many years, the ideal location for the structuring of private wealth of relocating or retiring high net worth individuals. Our comprehensive, common-law legal system based on that of England & Wales, provides other tools which are being used by clients in their structuring.

Funds & Protected Cell Companies

The establishment of funds-based, family wealth management and preservation solutions is a strategy that more and more clients are turning to post the crash of 2008.

Whether it's in the shape of a protected cell company, which allows, by statute, the effective ring-fencing of assets and investment classes/strategies, or the use of a private fund, families are taking control of their wealth using tax structures which are flexible enough for the increasingly complex modern high net worth family dynamic, yet robust enough to effectively protect the wealth and maximise tax efficiency.

We are pragmatic and practical about the advice we give - in order for tax planning to remain effective today, it is critical that business or personal affairs are conducted strictly in accordance with plans both made and stated.

International Tax Planning

Gibraltar's location in and membership of the EU represents a sizable tax opportunity for global business. Benefiting from the application of most EU legislation, using Gibraltar can mean tax-neutral tax planning and important savings. Gibraltar offers some of the best EU-based solutions, unlike many of its competitors, bringing savings not just in tax, but in the cost of setting up and maintaining/administering such tax structures.

Gibraltar Corporate Tax

Gibraltar has a flat rate of 10% corporate tax payable across the board. Add to that the fact that no capital gains tax nor tax on 'passive' income is payable, and it's no surprise to see that Gibraltar's appeal continues to grow - membership of the EU means, e.g., that payment service providers can establish operations in Gibraltar, passport their services into the whole of the single market whilst enjoying the many advantages Gibraltar enjoys, not least the lack of VAT.

Personal Tax

For private clients, the lack of capital gains, wealth or inheritance taxes as well as the lack of payment of tax on passive income' i.e.' dividend and pension income to name a couple, allied to specialist tax regimes such as the Category 2 individual status, means that there are many many reasons to consider tax planning with Gibraltar in mind - not to mention the 300 days of sunshine a year.

Gibraltar Income Tax

The taxation of the income for both individuals and companies is governed by the Income Tax Act 2010 (“Tax Act”), Rules and Regulations. The Tax Act introduced a system of self-assessment that requires both self-employed individuals and companies to calculate their own tax labiality for any year of assessment as well as make returns of their own income.

Category 2 (“Cat 2”) status

Gibraltar offers the opportunity for high net worth individuals to obtain Cat 2 status which places a cap over the tax liability of that individual. Tax is applied to the first £80,000 of assessable income (including worldwide income) meaning that a Cat 2 individual will pay a maximum of circa £29,000 tax per annum, subject to a minimum tax payable of £22,00 per annum (current rates).

Requirements for Cat 2 status

- Must have available for exclusive use approved residential accommodation in Gibraltar for the whole year of assessment (can be either purchased or rented).

- Must produce two independent references from recognised institutions/professionals (1 must be from a bank and the other from a law or accounting firm).

- Must produce valid passport and full CV.

- Must produce a statement of worth showing a minimum of £2m.

- Not have been resident in Gibraltar for 5 years immediately preceding the Cat 2 application.

A non-refundable application fee of £1,000 is payable on submitting an application.

High Executive Possessing Specialist Skills (HEPSS)

HEPSS status is a special employment status available to those individuals who intend to relocate to Gibraltar and take up employment.

An individual in respect of whom a HEPSS certificate is issued shall be charged to tax on the first £120,000 of their assessable income only. This would mean that an individual with HEPSS status would pay a fixed rate of £29,940 tax per annum (current rates) regardless of how much they would earn from that employment.

Requirements for HEPSS

- Must have available for exclusive use approved residential accommodation in Gibraltar for the whole year of assessment (can be either purchased or rented).

- Possess skills that are necessary to promote and sustain economic value in Gibraltar.

- Possess skills that are not readily available in Gibraltar.

- Not have been resident in Gibraltar for 3 years immediately preceding the Cat 2 application.

- Earn more than £120,000 per annum from that employment.

- Must produce two independent references from recognised institutions/professionals (1 must be from a bank and the other from a law or accounting firm).

- Must produce valid passport and full CV.

A non-refundable application fee of £1,000 is payable on submitting an application.

Find out about tax law-related updates from our news pages

UK Spain Double Tax Treaty Approved

Gibraltar ratifies Double Tax Agreement with the UK

International Tax Conference asks, ‘Technology: Friend or Foe’?

ISOLAS LLP’s leading tax team contribute to The Legal 500’s Tax Country Comparative Guide 2019

 

 

Key Contact:

Peter A. Isola

Senior Partner