Private Clients

Introduction

Gibraltar is a self governing British overseas territory consisting of 2.5 sq. miles at the southern- most tip of the Iberian Peninsula adjoined to Spain by a narrow strip of land. Strategically positioned at the entrance of the Mediterranean between the continents of Europe and Africa; Gibraltar offers a good quality of life, security, an excellent education system and a Mediterranean climate with access to all types of sports and leisure activities either locally or across the border in Spain.

A leading international financial centre within the European Union complying with all EU Directives and regulations it makes it an ideal location to passport services into the EU and for cross border trade having the added advantage of being outside of the VAT (value added tax) zone. Gibraltar is a politically stable country with a business friendly culture and with English as its main language and a legal system modelled on the UK it finds favour with wealthy British nationals and UK firms looking to relocate.

A small and adaptable jurisdiction Gibraltar has responded well to the financial crisis with a robust, diversified and thriving economy. The signing of eighteen Tax Information Exchange Agreements “TIEA’s” has resulted in the OECD white-listing the territory whilst the recent fiscal changes marks and completes a long journey from offshore tax haven to mainstream European financial centre.

Gibraltar offers compelling tax and estate planning benefits for wealthy private individuals considering a new country of residence. Whether this is for personal tax restructuring, estate planning or simply to change lifestyle there are significant benefits to be gained from becoming a Gibraltar resident.

With a new attractive fiscal regime Gibraltar is fast becoming the favoured jurisdiction for wealthy private individuals and businesses looking to reduce their overall personal or corporate tax liability in a perfectly legitimate way.

If you are one of the many Britons or European nationals considering moving to a more favourable tax regime to escape the increasingly higher level of taxes levelled on business owners and private individuals who are able to live off their invested wealth you may well want to look at the benefits which Gibraltar residency offers.

There are a couple of Gibraltar residency options available to wealthy private individuals which appear below.

CATEGORY 2 Individual

Why should you consider applying for Category 2 Gibraltar Residency status?

It would appeal to you if you are looking to protect either trading or earned income from higher rates of taxation in your country of residence or where you declare your income.

The key conditions which you must satisfy in order to qualify and obtain Category 2 Gibraltar Residency status can be summarized as follows:

• The Category 2 individual must have sufficient means to maintain himself and his family and with minimum net worth in excess of £2 million.
• The Category 2 individual must submit a Curriculum Vitae detailing his qualifications and work experience as well as supply passport copy and two references one of which must be from a Banker confirming that the individual’s net worth is in excess of £2,000,000
• The Category 2 individual must purchase an approved residential property in Gibraltar to be maintained throughout the residency period. The property must be available for the Category 2 individual’s exclusive use and be large enough to house their direct family. Even though it is also possible to rent approved residential accommodation in Gibraltar this may expose the individual to challenge in another country over the permanency of residence.
• The Category 2 individual cannot have been resident in Gibraltar during the five years immediately preceeding the year of assessment.
• The Category 2 individual is not allowed to engage in a trade, business or employment in Gibraltar unless it is in a sector or activity which is not in direct competition with a local business. There are exceptions to this rule where it can be proved to the satisfaction of the Ministry of Finance that there is an exceptional economic benefit to Gibraltar which merits an exemption from the general principle. The Gibraltar Finance Centre has issued guidelines covering the list of permissible activities which a Category 2 individual may undertake however these are without prejudice to the assessment and decision of the Finance Centre Director.
• The Category 2 status is granted on an indefinite basis however the residency certificate needs to be sent to the Gibraltar Finance Centre for renewal every three years.
• The Category 2 individual must have private medical insurance cover in place to insure them and their family in the event of illness in Gibraltar.
• There is no minimum physical residence requirement in Gibraltar for a Category 2 resident however this does not guarantee that an individual will not trigger deemed tax residency in another jurisdiction particularly if residency rules are being flaunted. Individuals who are considering Gibraltar residency should seek professional tax advice and tidy their tax affairs prior to applying for residence.
  

  How much income tax would you pay as a Category 2 Gibraltar Resident?

  Tax liability is capped at £80,000 of income with a minimum tax of £22,000 and a maximum tax of £29,880.

  THE ADVANTAGES OF BECOMING A CATEGORY 2 GIBRALTAR RESIDENT

• No Inheritance Tax.
• No Wealth Tax.
• No Capital Gains Tax.
• No Gift Tax.
• No VAT.
• No taxation on savings interest.
• No taxation on dividend income arising from companies quoted on a recognised stock exchange.
• No taxation on pension income from an approved occupational scheme for individuals aged 60 or over. (An advanced ruling from the Commissioner of Income Tax would be required to establish whether pension income is subject to tax or not.)

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 been taxed in another jurisdiction shall be entitled to double taxation relief in Gibraltar in respect of that income of an amount equal to the tax which has already been deducted or the Gibraltar tax, whichever is less.

A Category 2 individual can switch Gibraltar Residency status and qualify on a self sufficiency basis.

SELF SUFFICIENCY

Why should you consider applying for Gibraltar tax residency on “Self Sufficiency” grounds?

It would appeal to you if you are in receipt of passive income which already enjoys a benign tax regime.

The key conditions which you must satisfy to qualify and obtain Gibraltar Residency status on self sufficiency grounds can be summarized as follows:

• The self sufficient individual must provide two references from a banker, lawyer or accountant confirming number of years’ applicant known and that they are of a good standing and repute.
• The self sufficient individual must provide a letter from the bank showing receipt of pension payments or a 3 month bank statement confirming income into Gibraltar in amounts that demonstrate the individual is able to support himself financially.
• The self sufficient individual who resides but does not work in Gibraltar whether by choice or necessity regardless of whether they are of pensionable age or not, will require private medical insurance for themselves and any dependants. This rule applies to EU nationals and others but excludes UK Pensioners.
• The self sufficient individual must provide evidence of having accommodation in Gibraltar either a property rental contract or title deed to a property.

How much income tax would you pay as a Self Sufficient Gibraltar Resident?

There is no tax to be paid save for any income which is earned or remitted to Gibraltar.

THE ADVANTAGES OF BECOMING A SELF SUFFICIENT GIBRALTAR RESIDENT

• No Income Tax except for earned or remitted income.
• No Inheritance Tax.
• No Wealth Tax.
• No Capital Gains Tax.
• No Gift Tax.
• No VAT.
• No taxation on savings interest.
• No taxation on dividend income arising from companies quoted on a recognised stock exchange.
• No taxation on pension income from an approved occupational scheme for individuals aged 60 or over. (An advanced ruling from the Commissioner of Income Tax would be required to establish whether pension income is subject to tax or not.)

An individual who has obtained Gibraltar Residency  on self sufficiency grounds would be unable to switch status and apply to become a Category 2 Gibraltar Resident.

At a time when governments around the world are increasing personal and indirect taxes to increase revenues, Gibraltar offers a refreshing and significantly less painful alternative.

At Fiduciary Wealth we provide a complete tax led wealth management service to individuals and businesses looking to relocate to Gibraltar. As a financial advisory practice we can take care of all your Gibraltar residency requirements through a single point of contact. 

If you are looking for a new place of residency then Gibraltar could well be the right “address” for you or for your business.

To speak directly to a financial adviser or for further information Tel: +350 200 50982 or email wealth@fiduciarywealth.eu

For further information on how to source or rent a Gibraltar property, raise mortgage finance, arrange private medical cover as well as advice on the transfer of your UK pension benefits into a QROPS please download our free Gibraltar Residency Guide.