Residence in Gibraltar

Introduction

An EU national, as of right, is entitled to live and work in Gibraltar. Such a resident would be liable to Gibraltar tax on his/her income in the same way as Gibraltarians who are ordinarily resident in Gibraltar.

There are two special low-tax regimes available in Gibraltar which are known locally as Category 2 Residence and HEPPS status.

In advance of taking up residence in Gibraltar it is extremely important that a full review of the home jurisdiction tax position is undertaken as it is still possible that, particularly under UK law, following the introduction of the Statutory Residence Test, that an individual may not have become officially non resident.

Low-Tax Fiscal Residence in Gibraltar (Category 2 Residence)

In Gibraltar this type of residence is popularly known as Category 2 Residence. This enables a non-Gibraltar resident to obtain tax residence in Gibraltar avoiding thus paying personal taxes in his/her own higher tax jurisdiction.

To qualify for Category 2 Residence, it is necessary to establish two things:

  1. ownership of assets, which can include property and shares, worth in excess of £2 Million, and

  1. the availability to the applicant of approved residential accommodation in Gibraltar for his/her exclusive use.

Proof of Wealth

Bank statements or letters from a bank manager or accountant are acceptable as proof of wealth. Non-monetary assets such as shares and property are acceptable upon production of suitable documentary evidence of value such as an accountant’s valuation or surveyor’s report.

Approved Property

A residential property approved by the Finance Centre Director must be purchased or rented within two months of being granted Category 2 Residence.

Taxation

The amount of tax payable to the Gibraltar Government currently ranges between a minimum of £22,000 and a maximum of £30,000 per annum maximum. The precise amount of tax will depend upon:

  1. how much money is remitted to the applicant in Gibraltar and

  1. the amount of taxable income earned by the applicant within Gibraltar in each financial year.

The tax year starts on 1st July. A return, with the local Tax Authorities, needs to be filed by 30th November each year. 50% of the tax is payable by 31st December and the remaining 50% by 30th June.

Application Procedure

The following documents must be produced.

  1. Documentation showing wealth in excess of £2 Million.

  2. A character reference from a bank and a second one from a lawyer, accountant or other bank.

  1. A CV documenting the source of the applicant’s wealth.

  1. An application form which we will provide through one of our strategic partners.

A non-refundable application fee of £1,000 is payable to the Gibraltar Government.

Spouses & Children

There is provision in the law to allow spouses and children (under 18 or in full time education) to be granted Category 2 Residence under the same certificate as the principal applicant.

Alternative Residence Status – High Executive Possessing Specialist Skills (“HEPPS”)

HEPPS status allows specialist skilled workers who earn more than £120,000 per annum to have special fiscal status in Gibraltar. The same conditions apply as for a Catagory 2 application i.e. the need to buy or rent a suitable property in Gibraltar but there is no requirement to provide proof wealth.

Once a HEPPS application is accepted by the Finance Centre Director, they will be able to limit their tax liability to tax on the first £120,000 only. In practice this amounts to £32,050 per annum.

This is a popular route taken by employees of the various gaming companies that have relocated to Gibraltar.

TFO Tax and TFOG can assist potential and existing new arrivers to apply for residence in Gibraltar whilst at the same time ensuring compliance with both the Gibraltar and UK authorities.