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Tax in Gibraltar


Individuals pay quite high taxes on their income in Gibraltar unless they are able to take advantage of High Net Worth Individual status or gain exemption as an expatriate executive.

The budget announced in 2007, contained a number of changes affecting individual taxation as below.

New Gross Income Based System

Every taxpayer may choose between the normal system and this new Gross Income Based system and pay under whichever results in the lower tax.

Gross Income Based system has no allowances and tax rates of :-

20% on first £25,000 income
30% on next £75,000
40% above £100,000

(6,500 local taxpayers will be significantly better off under this new system).

Rules relating to the Gross Income Based system will prevent one family member benefiting from the new system and another getting the benefits of the allowances (e.g. mortgage interest etc) under the other system.

Under this GIB System No taxpayer with income below £25,000 per annum will pay more than 20% tax. NO taxpayer with income below £50,000 per annum will pay more than 25% tax.

Changes to Existing Personal Tax System

Top Rate reduced from 42% to 40 % (7,000 taxpayers).

Standard Rate (30%) band widened by £3,000, to £16,000. (7,000 taxpayers)

Existing Low Income Tax Credit of £275 per annum for those who earn less than £8,000 per annum is increased to £595 per annum and will now be paid through the PAYE Code.

No person earning less than £7,000 per annum will pay any tax.

Low Income Tax Credit extended to those who earn between £8,000 and £19,500.     In combination with widening the Standard Rate band, all these taxpayers (13,300) will receive a benefit of at least £300 per annum, mostly through PAYE Code.

HNWI’s and Category 2 Status

Status remains. But with effect from 1 July 2007 minimum tax payable increased from £14,000 to £18,000 per annum and taxable income level increased from £50,000 to £60,000.

Category 3 Status

Category 3 status abolished for new entrants.

Existing holders can keep it until end of current certificate or 30 June 2009, whichever later.

With effect from 1 July 2007 tax payable rises from £10,000 per annum to £15,000 per annum.

 Category 4 Status

Category 4 status abolished for new entrants.

Existing holders can keep it until expiry of current certificate or 30 June, whichever later.

With effect from 1 July 2007 tax payable increased from £5,000 per annum to £7,500 per annum.

New ‘High Executive Possessing Specialist Skills’ (‘HEPPS’) Status

New ‘HEPPS’ status created.

For specialist skills of exceptional economic value to Gibraltar, earning more than £100,000 per annum.

Taxation limited to first £100,000. Payable under normal dual choice system.

All existing Category 3 holders who earn more than £100,000 per annum may migrate to HEPPS status.

New status not time limited. Same property requirements as Cat 3. 3-year non- residence requirement for new entrants.

Corporate Tax

Corporate tax rates will reduce as follows:

Year of assessment 07/08, by 2% from 35% to 33%

 Year of assessment 08/09, by 3% from 33% to 30%

 Year of assessment 09/10, by 3% from 30% to 27%

The new low flat rate is anticipated to come into effect in 2010

Gibraltar Residence and Liability for Taxation

For taxation purposes, an individual is either resident or non-resident, and nationality is not a factor in determining tax status. An individual is considered resident in Gibraltar if he has accommodation there and sets foot on the territory during the tax year (1st July to 30th June in the following year). This is the basis that was applied in the UK until 1993/94.

Gibraltar introduced 'High Net-Worth Individual Status' to encourage wealthy people to live there. A person who has not been resident in Gibraltar for the last 5 years may apply for this status, which limits total tax payable. Expatriate executives or people with specialist skills may be able to obtain a similar limitation on total tax payable.

The tax treatment of non-resident individuals, and with attention to category 3 and 4 individuals, is also described under Offshore Legal and Tax Regimes.

Residents are liable to tax on their world-wide income


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