Tax and Social Insurance

For comprehensive advice on all taxation and social insurance benefits available in Gibraltar, we strongly recommend that you receive advice from the professional firms in Gibraltar. The full Income Tax Act can be downloaded here:

Income Tax Act 2010

Income Tax

The taxation of income of companies and individuals is governed by the Income Tax Act. Income tax is charged on most classes of income accruing in, derived from, or received in Gibraltar. The year of assessment runs from 1 July in any year to 30 June of the next year. Taxation in any year of assessment is normally levied on income derived from the preceding year, except in the case of income from employment that is subject to deduction on an actual basis via a pay-as-you-earn system.

Tax relief is available in respect of income tax paid or payable in another jurisdiction and chargeable to Gibraltar tax up to the lower of that tax, or tax in the other jurisdiction. In certain cases, income earned, taxed and retained overseas is not taxable in Gibraltar.

Who is liable to taxation in Gibraltar?

Income tax is charged on income accruing in, derived from or received in Gibraltar. It is likewise charged on certain income, accruing in, derived from or received in any place other than Gibraltar by any person ordinarily resident in Gibraltar. ‘Ordinarily resident’ refers to an individual who, irrespective of whether such individual is domiciled in Gibraltar or otherwise, resides in Gibraltar except for reasonable temporary absences. An individual that is a British subject or citizen of the Republic of Ireland who is employed in Gibraltar and resides in the surrounding area is also considered ordinarily resident.

Gibraltar has introduced a number of tax incentives that allow certain categories of resident individuals to limit the total tax payable in any tax year, subject to certain criteria being met.

Partnerships

An assessment is made on the partners in respect of the partnership profits split between the partners according to the proportion in which they share profits. The income is assessed on a prior year basis after adjustments.

Branches

The basis for taxation of branches of foreign enterprises is the same as for companies i.e. assessed on a prior year basis after adjustments.

Dividends

Except in the case where the income forms part of the company’s trading receipts, dividend income from companies listed on a recognised stock exchange is not taxable in Gibraltar. There is no withholding tax on dividends paid. However, a company must submit a return of any dividend paid within 30 days following the year end of each year of assessment. There is no liability to tax for dividends paid to a person who is not resident in Gibraltar. There is no tax on dividends paid by one Gibraltar Company to another.

Dividends received from participating interests or from any subsidiaries in the participating interest group are not liable to taxation in Gibraltar. A participating interest exists where there is a direct or indirect shareholding of at least 10%, as from 1 January 2009, in a company registered in the EU (or a company that is registered in a country that has a bilateral agreement with the EU).

What income is taxable in Gibraltar?

Income tax is charged on:
• Gains or profits from any trade, business, profession or vocation
• Gains or profits from employment
• Discounts, dividends and interest (except dividends arising from investments quoted on a recognised stock exchange, and interest paid by banks, building societies, or other financial services institutions that are exempt)
• Rents, royalties, premiums and any other profits arising from property
• The income of any person from the occupation of premises for residential purposes
• Dividends, interest, or emoluments of office accruing in, derived from or received in any place other than Gibraltar by a resident

With the exception of dividends, interest, pensions or emoluments of office, income which is not accrued in or derived from Gibraltar is not taxed in Gibraltar. Specifically, income derived from the following categories will not accrue in or derive from Gibraltar for the purposes of the Income Tax Act:
• The letting of property where that property is outside Gibraltar
• Trading in future delivery contracts for the purchase and sale of commodities in markets outside Gibraltar with parties outside Gibraltar
• Salvage operations taking place outside the jurisdiction
• The oversight of a construction operation outside Gibraltar
• The lending of money outside Gibraltar

Personal Taxation

Gibraltar has a dual tax system, whereby taxpayers are free to elect between a Gross Income Based System and an Allowance Based System.

The Commissioner of Income Tax will calculate the final assessment on the basis of the system which is the most beneficial for the taxpayer, irrespective of the system that is chosen by the taxpayer at the beginning of the year. Additionally, where a taxpayer opts for the gross income based system and the spouse does not, the availability of allowances to the spouse is restricted.

For further information, please contact the Income Tax Office, PAYE Section, St Jago’s Stone Block, 331 Main Street, Gibraltar
Tel: +350 20074924
Fax: +350 20040020
incometax@gibraltar.gov.gi
www.gibraltar.gov.gi

High Net Worth (Category 2) Individuals (HNWI)

Only the first £80,000 of assessable income is taxable subject to a minimum tax payable of £22,000 and a maximum of approximately £30,000.

Conditions on residential accommodation and previous residence and/or activities in Gibraltar apply. A Category 2 individual cannot ordinarily engage in a trade, business or employment locally.

Form of Application for a Certificate Qualifying an Individual as a Category 2 Individual Under the Provisions of the Qualifying (Category 2) Individuals Rules 2004

High Executive Processing Specialist Skills (HEPSS)

The tax payable by a HEPSS is limited to the tax due on the first £120,000 of earned income. The relevant skills must be deemed to be of exceptional economic value to Gibraltar. HEPSS are taxed under the Gross Income Based System. Conditions on residential accommodation and previous non-residency apply.

Form of Application for a Certificate Designating an Individual as a High Executive Possessing Specialist Skills Under the High Executive Possessing Specialist Skills Rules 2008

Residency

From 1 January 2011, persons become ordinarily resident in Gibraltar if they visit the jurisdiction either:

• 183 days or more a year; or
• More than 300 days in three consecutive tax years

An ordinarily resident individual is liable to tax in Gibraltar on their worldwide income, subject to double tax relief.

Non-resident Directors and Ancillary Income
If an individual is not ordinarily resident in Gibraltar and is also present for less than 30 days in a tax year, no tax is charged on income from director’s fees. There is a similar exception for non-resident employees and self-employed individuals whose duties and/or activities are exclusively undertaken outside Gibraltar, except for any duties and/or activities that are ancillary to that work.

Trusts
As from 1 January 2011, a Trust is resident in Gibraltar if one or more of the beneficiaries are ordinarily resident in this jurisdiction (excluding Category 2 individuals) or the class of beneficiaries may include an ordinarily resident individual.

A non-resident trust would only be liable for tax on income accrued in or derived from Gibraltar.

Partnerships

An assessment is made on the partners in respect of the partnership profits split between the partners according to the proportion in which they share profits. The income is assessed on a prior year basis after adjustments.

Branches
The basis for taxation of branches of foreign enterprises is the same as for companies i.e. assessed on a prior year basis after adjustments.

Dividends

Except in the case where the income forms part of the company’s trading receipts, dividend income from companies listed on a recognised stock exchange is not taxable in Gibraltar. There is no withholding tax on dividends paid.

However, a company must submit a return of any dividend paid within 30 days following the year end of each year of assessment. There is no liability to tax for dividends paid to a person who is not resident in Gibraltar. There is no tax on dividends paid by one Gibraltar Company to another.

Dividends received from participating interests or from any subsidiaries in the participating interest group are not liable to taxation in Gibraltar. A participating interest exists where there is a direct or indirect shareholding of at least 10%, as from 1 January 2009, in a company registered in the EU (or a company that is registered in a country that has a bilateral agreement with the EU).

Corporation Tax

Prior to 1 January 2011, companies were generally taxed on a prior-year basis. From 1 January 2011 onwards, all companies with income taxable in Gibraltar are taxed on an actual basis with the intention that the tax period of assessment is the same as the financial year of the company, in order to move from ‘prior year’ from ‘actual’ special transition rules apply.

With effect from 1 January 2011, the standard rate of Corporation tax is 10%, or 20% in the case of utility companies and companies enjoying and abusing a dominant market position. Companies are taxed on profits accrued in or derived from Gibraltar i.e. territorial basis of taxation.

Regarding companies licensed and regulated in Gibraltar, the profits are deemed to accrue in or derive from Gibraltar, except for activities carried on outside Gibraltar by a branch or permanent establishment.

Anti-avoidance

The new Act empowers the Commissioner to disregard part or all of any arrangements that are deemed to be artificial and/or fictitious and whose purpose is to reduce or eliminate the tax payable in Gibraltar.

The new Act includes specific anti-avoidance provisions in areas such as thin capitalisation, transactions with connected persons and back-to-back loans. Promoters of a scheme are required to notify the Commissioner of any arrangements or proposals that will reduce the tax due by a taxpayer.

Due Dates for Payment of Tax

Taxable Entity and Due Dates:

Employment Income Tax
Paid via PAYE

Companies Advance
Payment of 50% by 31 August

Advance
Payment of 50% by 28 February
Any remaining balance within six months of end of accounting period

Self-employed or other
On account payment of 50% by 31 December
On account payment of 50% by 30 June
Any remaining balance by 30 November following the end of the tax year

Submission of Accounts and Tax Returns

Taxable Entity and Due Dates:

Self-employed Accounts
By 30 June Tax Return and accounts by 30 November

Companies Accounts*
Per financial year end

Tax Return and accounts
Six months after financial year end

Resident Trusts Accounts
To 30 June

Tax Return and accounts
By 30 November

* Audited accounts unless turnover is less than £500,000. There is an additional three months allowed to submit audited accounts, although unaudited accounts are still required within six months of financial year end.

Stamp Duty

Stamp Duty is only payable on real estate and capital transactions at the following rates:
• £10 flat rate for share capital
• £10 flat rate for loan capital

On purchase of real estate:
• Nil for real estate costing up to £200,000
• 2% on the first £250,000 and 5.5% on the balance for real estate costing between £200,001 and £350,000
• 3% on first £350,000 and 3.5% on the balance for real estate costing over £350,000

Import Duties
Import duties are levied on goods imported into Gibraltar, mostly at rates 0% - 12%.

As of 1 July 2010, import duty on pedal cycles, electric cars, solar panelling and related equipment has been reduced to 0%. Import duty on hybrid cars has similarly been reduced, though it has increased for petrol and diesel powered vehicles.

Excise Duties
An excise or excise duty is levied on spirits, wines, tobacco and mineral oils.

Estate Duty
There is no Estate Duty in Gibraltar.

Capital Gains Tax or Other Capital Taxes

There is no Capital Gains Tax in Gibraltar, or any wealth, gift or other capital taxes.

Value Added Tax (VAT)

There is no VAT in Gibraltar.

Withholding Tax

There is no withholding tax on dividends, interest or royalties.

Online Gaming Tax

Online Gaming Tax is levied at a rate of 1% of relevant income, i.e. gaming yield for online casinos and bets placed for online bookmakers, capped at £425,000 with a minimum payable of £85,000.

Social Insurance Contributors System

The Social Insurance Contributions system has been merged with the Income Tax PAYE system and is consequently managed by the Income Tax Office.

Earnings-related Contributions

Social Insurance Contributions are no longer based on whether a contributor works more or less than fifteen hours. Contributions are based on a percentage of salary but subject to a minimum and maximum contribution level.

Social Insurance Contributions

Social Insurance Contributions will be based on a percentage of salary but subject to a minimum and maximum contribution.