| Gibraltar Income Tax The standard rate of tax for individuals is 30%.
Income tax is charged on income accruing in, derived from or received in Gibraltar by any person or company.
Dividends, pensions and emoluments of office accruing in, derived from or received in any place other than Gibraltar by an ordinarily resident person are also taxable in Gibraltar. When taxed in the country of accrual and not received in Gibraltar such income is exempt.
Income arising outside Gibraltar, which although not actually received or transferred, is obtained in Gibraltar by the taxpayer in the form of an equivalent benefit, is treated as having been received in Gibraltar.
Income tax is charged for the year of assessment - running from the 1 July in one calendar year to 30 June in the next - on the basis of the income of the preceding year except for income from employment or pension which is charged on the basis of the income for that year. The taxpayer's aggregate income, other than exempt income, is the "assessable income" and the "taxable income" is the assessable income, as reduced where appropriate in the case of an individual by the allowances described hereafter.
Low Income Earner's Tax AllowanceAn individual whose assessable income is:
£8,000 or less, he shall be entitled to claim for that year of assessment an allowance in the amount of £4,000.
More than £8,000 and up to £17,500 shall be entitled to claim for that year of assessment an allowance in the amount of £1,300.
More than £17,500 and up to £18,500 shall be entitled to claim for that year of assessment an allowance in the amount of £920.
More than £18,500 and up to £19,500 shall be entitled to claim for that year of assessment an allowance in the amount of £500.
Special allowance for individuals with total allowances amounting to less than £3,600
An individual who, during a year of assessment, has total deductions amounting to less than £3,600 shall be entitled to claim a special allowance from the amount of his assessable income equal to the difference between £3,600 and the total of all other deductions.
Tax credit for the individual's aged 60 years and over
A tax credit of £4,000 by way of a reduction to his tax liability shall be given to an individual who is aged 60 or over and is in receipt of earned income.
This tax credit does not apply to an individual who;
- Has income exceeding £2,000 from an occupational pension or annual amount of an annuity, or
- Is entitled to receive income exceeding £2,000 in respect of the capital sum in excess of 25 per cent of the capital value of a pension or annuity to be paid on his retirement or
- Has commuted his occupational pension or annuity entittlement payable to him and the capital sum in excess of 25 per cent of the capital value of the pension or annuity would provide a pension or annuity in excess of £2,000 or
- Has elected to be chargeable to tax under the Gross Income Based System.
Residence
Ordinarily resident when applied to an individual means an individual who resides in Gibraltar
Non-resident means any person other than a person ordinarily resident
Deductions for personal reliefsThe allowances and deductions are:
Personal Allowance: £2,735
Spouse Allowance: £2,560
Dependant Relative Allowance - Resident in Gibraltar (max. 2): £185
Dependant Relative Allowance - Non-resident (max. 2): £135
Home Purchase Allowance: £11,500
Deduction (£1,000 max p.a.): £4000
Child Allowance: Only first child educated in Gibraltar £970
Child Allowance: Each other educated abroad £1075
Disabled individuals Allowance: £2,650
Single Parent Allowance: £2,560
Nursery School Allowance - Attending private nursery during the pre-school year: £995
Medical Insurance (Max Relief): £1090
Life assurance, etc:
This deduction is given in respect of amounts payable by the taxpayer or his wife during the year of assessment for insurance premiums on his life or that of his wife and for contributions to a pension scheme approved by the Commissioner of Income Tax. The deduction allowable in respect of premiums payable under a policy of assurance shall be granted by way of relief at the rate of 17%. No deduction shall, for any year of assessment exceed;
- one-seventh of the total assessable income in respect of life assurance premiums;
- 25% of the total assessable income in respect of contributions to a Personal Pension Scheme or a Retirement Annuity Contract;
- one-sixth of the total assessable income in respect of life assurance premiums and contributions to an Occupational Pension Scheme; and
- 7% of the capital sum excluding bonuses, etc, in the case of a policy securing a capital sum on death.
Health Insurance
This deduction is given in respect of amounts payable by the taxpayer, during the year of assessment, towards an approved insurance policy, for premiums paid for the purpose of providing health insurance for himself, his spouse or his dependant children. This deduction is limited to £1090 in aggregate.
Special deduction for senior citizens
Individuals of state pensionable age ( i.e. men 65 years of age or over and women 60 years of age or over) are entitled to an additional personal allowance being the difference between £10,590 and the standard personal allowance and the wife allowance where applicable. The deduction is reduced by one-twelfth for each complete calendar month during the year of assessment that the individual is not resident in Gibraltar.
Mortgage Interest relief
A deduction is given in respect of the amount of interest paid on a mortgage or loan taken out by an individual for the purchase or improvement of a house or flat in Gibraltar for his own residential occupation. The deduction shall be limited to the interest paid on the principal sum of a loan limited to a mximum not exceeding £300,000.
Pensions
A pension from any statutory pension scheme or provident or other fund approved by the Commissioner and received by an individual who is:
- aged 60 or over; or
- compulsorily retired at age 55 by operation of section 8 (2) of the Pensions Act,
shall form part of the assessable income of the individual but shall be taxed at 0%.
Charge to taxIndividuals may choose to pay tax under the Allowance Based System or the Gross Income Based System.
Under the Gross Income Based System individuals will receive no allowances and will pay tax on their gross assessable income at the following rate;
Individuals with gross assessable income not exceeding £16,000:
the first £10,000 of assessable income - 10%
balance - 20%
Individuals with gross assessable income between £16,001 and £25,000;
income of £16,001 to £17,000, on the first £5,000 - 0%
balance - 20%
income of £17,001 to £18,000, on the first £4,000 - 0%
balance - 20%
income of £18,001 to £19,000, on the first £3,000 - 0%
balance - 20%
income of £19,001 to £20,000, on the first £2,000 - 0%
balance - 20%
income of £20,001 to £25,000, on the first £1,000 - 0%
balance - 20%
Individuals with gross assessable income exceeding £25,000
the first £25,000 of assessable income - 20%;
the next £75,000 of assessable income - 29%;
the remainder of the assessable income - £35%
Individuals who have opted to be taxed under the Allowances Based System are charged to tax on their taxable income which arrived at by deducting personal and other allowanced from the assessable income at the following rates:
For every pound of
the first £4,000 of taxable income - 17%
the next £12,000 of taxable income - 30%
the remainder of the taxable income - 40%
Gibraltar Corporation Tax The rate of corporation tax is 22%
With effect from 1 January 2011 a new rate of 10% will apply to all companies except energy and utility providers who will pay a 10% surcharge and will thus suffer a rate of 20%. These will include electricity, fuel, telephone service and water providers.
A start up rate of 10% will apply to all businesses established in Gibraltar after the 1st July 2009. Tax will be assessed on an actual year basis.
However, businesses that have recently been established are also able to take advantage of the start up scheme if they meet the following conditions:
- the business must have commenced after the 1st July 2007;
- the company must agree to be taxed on a preceding year basis;
- the first year for which the company is liable for tax is the tax year 2008/09, and tax will be payable at the rate of 27%; and
- in the tax year 2009/10 the tax rate will be 10%.
Small companies whose taxable profits do not exceed £35,000 are charged at the lower rate of 20%. If their profits fall between £35,000 and £44,333 corporation tax will be charged at 22% less relief of 3/40 on the difference between £44,333, and the amount of taxable profits.
The definition of a "small company" is a company whose trading activities has a minimum of 80% of its trading receipts derived directly or indirectly from sources other than;
(i) dividends, interests or discounts;
(ii) rents, royalties, premiums and any other profits arising from property.
Gibraltar Capital gains taxThere is no Capital Gains tax in Gibraltar.
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