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Gibraltar Tax Rates

Gibraltar Income Tax

Gibraltar has a dual tax system, whereby taxpayers are free to elect between an allowance based system and a gross income based system.

The gross income based system includes zero rate bands and a 10% band for low income earners. Rates under the Gross Income Based system are:

20% on the first GIP 25,000
29% on the next GIP 75,000 and
35% on gross income exceeding GIP 100,000.

Individuals who have opted to be taxed under the Allowances Based System are charged to tax on their taxable income which is arrived at by deducting personal and other allowances from the assessable income at the following rates:

17% on the first £4,000 of taxable income
30% on the next £12,000 of taxable income
40% on the remainder of the taxable income

The minimum amount of tax payable by individuals holding Category 2 residence status (available to high net worth individuals) is GIP 20,000 per annum and the maximum tax is GIP 25,880.



Low Income Earner's Tax Allowance

An 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 £3,700

An individual who, during a year of assessment, has total deductions amounting to less than £3, 700 shall be entitled to claim a special allowance from the amount of his assessable income equal to the difference between £3, 700 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 entitlement 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


Permitted Individual

A permitted individual is an individual who is a non-resident individual who carries on, or undertakes in Gibraltar any trade, business, profession, vocation or employment.
Permitted individuals are entitled to the same personal allowances and graduated rates of income tax as those afforded to ordinarily resident persons in Gibraltar. However if a permitted individual does not carry on, exercise or undertakes any trade, business, profession, vocation or employment in Gibraltar for a complete calendar month in any year of assessment, the deductions, allowances and reliefs allowed under the Act shall be reduced by one-twelfth for every such complete month. One-twelfth shall reduce the banding for each calendar month that the employment, etc. is not exercised in Gibraltar.


Qualifying Individuals

A Qualifying Individual is an individual who is non-resident and who derives no income from Gibraltar other than from an exempt Company. The Finance Centre Director sets out the rate of tax which is charged on the Qualifying Individual's worldwide income. The rate of tax shall not be less than 2% and the total amount of tax charged shall not exceed £20,000.


Qualifying (Category 2) Individual

A Qualifying (Category 2) Individual is an individual who for the year of assessment:
(1) has available to him for his exclusive use approved residential accommodation in Gibraltar for the whole of the year of assessment.
(2) is not resident in Gibraltar and has not been in the previous five years;
(3) has applied to the Finance Centre Director and has been issued with a certificate qualifying him as a Category 2 individual.
(4) an individual who has been issued with a Category 2 Individual certificate shall be liable to income tax on the first £ 80,000 of assessable income only and the amount of tax due and payable in any year of assessment shall be not less than £ 22,000.


Qualifying (Category 3) Individual

An exempt company which satisfies certain requirements, may apply to the Finance Centre Director and be issued with a certificate designating an individual employed by that company as a Qualifying Category 3 Individual. The individual must possess skills essential to the operation of the company, which are not available in Gibraltar. He must not have been employed in or from Gibraltar in the five years preceding the application and have approved residential accommodation in Gibraltar.

Tax of £15,000 per annum shall be payable in twelve equal monthly instalments on the taxable income of the individual.


Qualifying (Category 4) Individual

The rules and conditions in respect of a Qualifying (Category 4) Individual are the same as for a Category 3 Individual. However, in this case the company must satisfy the Finance Centre Director that in connection with the appointment of the Category 4 individual it has created a new and additional employment which will endure for at least the whole of the period during which a certificate has been issued.

A Category 4 Individual whose taxable income does not exceed £50,000 per annum shall be charged £7,500 tax in that year of assessment. When the income exceeds £50,000 per annum the amount chargeable will be £15,000 in that year of assessment.


High Executive Possessing Specialist Skills Individual

The rules and conditions of a High Executive Possessing Specialist Skills Individual are similar to those for a Qualifying (Category 3) and (Category 4) Individual. However, in this case the employer must satisfy the Finance Centre Director that the appointment of this High Executive Possessing Specialist Skills Individual will promote and sustain economic activity of particular economic value to Gibraltar and the Individual will earn more than £ 120,000.

A High Executive Possessing Specialist Skills Individual shall be charged to tax limited to the first £ 120,000 of his assessable income, under the Gross Income Based System.


Tax year - Assessments are made on an annual basis, the year of assessment being the period of 12 months commencing 1 July and ending 30 June the following year. Income subject to PAYE is assessed on an actual basis, while the income of selfemployed individuals is assessed on a prior year basis.

Filing and payment - Tax on employment income is withheld by the employer under the PAYE system and remitted to the tax authorities. Income not subject to PAYE is self-assessed and the tax return must be submitted by no later than 30 September following the year of assessment. Payment is due by the deadline stated in the assessment.

Penalties - A penalty of 10% of the tax due is imposed if the payment deadline is not met. Penalties also apply for failure to comply with a notice from the authorities and for filing an incorrect return by omitting or understating income. Imprisonment is possible for wilful violations.


Stamp duty - Stamp duty applies to purchases of Gibraltar real estate, as follows:

property costing under GIP 160,000 - exempt
between GIP 160,000 and 250,000 - 1.26%
between GIP 250,000 and 350,000 - 1.6%
exceeding GIP 350,000 -2.5%


Social security - Employee contributions are payable on a weekly basis, up to a maximum of GIP 23.74 per week (effective 1 July 2021).

Basis - Ordinarily resident individuals and nonresidents are taxed on income accrued in or derived from Gibraltar.

Residence - There is no minimum amount of days present required to establish residence in Gibraltar. A resident is a person who is living in Gibraltar apart from temporary absences.

Filing status - The earned income of a wife is taxed separately unless she elects otherwise.

Taxable income - Gibraltar has a territorial tax system, whereby any income accrued in or derived from Gibraltar is taxable.

Capital gains - There is no capital gains tax in Gibraltar.

Capital acquisitions tax - No
Real property tax - No, but stamp duty applies (see above).
Inheritance/estate tax - No
Net wealth/net worth tax - No


 

Gibraltar Corporation Tax

The rate of corporation tax in Gibraltar is 22%.

With effect from 1 January 2022 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.



Interest and Dividends

The following income is not chargeable to tax:

(i) interest paid directly or indirectly arising from investments quoted on a recognised stock exchange, including debenture stock, bonds, certificates of deposit and any other instruments creating or acknowledging indebtedness including bills of exchange accepted by a banker and issued by or on behalf of a government, a local or public authority; or
(ii) interest paid by banks, building societies or other financial institutions licensed in Gibraltar or in any other jurisdiction to undertake deposit taking or investment business;or
(iii) interest paid by the Gibraltar Savings bank.

A company is required to deduct tax at source from any mortgage or debenture interest, or interest on any loan advanced to the company for a capital purpose, paid to any person.  Such interest attracts a withholding tax of 30% if paid to an individual and 22% if paid to a company and shall be available for set off against any tax that may be charged on that income.

Dividends paid by a company which is ordinarily resident in Gibraltar are liable to tax in Gibraltar when paid  to a shareholder who is an individual ordinarily resident in Gibraltar or a permitted individual.  A tax credit at the rate of tax paid by the company on the profits out of which the dividend is being paid shall be available for set off against any tax that may be charged on that income.



Gift Aid

If you pay tax in Gibraltar on your income, gains or profits and then make a Gift Aid donation, locally registered charities (including ecclesiastical institutions and trusts) can claim back standard rate tax relating to that donation directly from the Income Tax Office.

Any person (including a company or a body of persons) is eligible to make a Gift Aid donation, if:

- It is made on or after 1st July 2006.
- It takes the form of a payment of a sum of money.
- The aggregate sum gifted shall at present not exceed £1,000 in any year of assessment.
- It is not subject to a condition as to repayment.
- Neither the donor nor any person connected with the donor receives a benefit in consequence of making the gift.
- At the time the gift is made, the donor is in receipt of income chargeable to tax in Gibraltar.
- The donor gives an appropriate declaration to the charity.

In order for the gift to qualify as a Gift Aid donation, a declaration must be made to the charity that:

- The donor wants the gift to be treated as a Gift Aid donation; and
- The donor has paid sufficient tax in Gibraltar for the year of assessment the donation is made to cover the standard rate tax the charity will reclaim from the Income Tax   Office.



Exempt Company

An exempt company is a company in respect of which the Finance Centre Director has issued a certificate under the Companies (Taxation and Concessions) Act exempting the company, inter alia, from corporation tax on the profits of the company.
The exempt company regime will end by 31st December 2010.



Capital Gains Tax

There is no Capital Gains tax in Gibraltar.



Estate Duty

With effect from 1 April 1997, Estate Duty was abolished in Gibraltar.



Double Taxation Arrangements

A Gibraltar resident who is in receipt of income which is liable to tax in Gibraltar that is derived from and has already suffered tax in any other jurisdiction, shall be entitled to double taxation relief in Gibraltar in respect of that income of an amount equal to the tax already deducted or the Gibraltar tax, whichever is the less.
 
 

Gibraltar vat

There is no VAT (Value Added Tax) in Gibraltar



 

 

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Last Update:  Nov 2010

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