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Moving to Gibraltar: Pre-Brexit and Post-Brexit Developments Image

Moving to Gibraltar: Pre-Brexit and Post-Brexit Developments

February 04, 2022

From its sunny, balmy weather and beautiful beaches to its friendly locals, vibrant culture, history and cuisine, there’s much to recommend Gibraltar as a holiday destination, but what about as a home – Gibraltar Residency?


For expats looking to live abroad this British enclave has much to recommend itself, from the reassuring familiarity of a common legal and education system and an English-speaking population to a booming, buoyant economy, high employment levels and an extremely hospitable Gibraltar tax environment.


The charms of Gibraltar are manifold and become all the more impressive when taking into account the way in which this small but dynamic British overseas territory is successfully navigating post-Brexit waters, from taxation treaties and to border issues. Living in Gibraltar has never been more appealing.


Taxes in Gibraltar


Gibraltar is blessed with an advantageous tax regime that forms part of its core appeal to expats retiring to Gibraltar, as well as high-net-worth individuals and those with significant business interests.

Gibraltar residents are not subject to taxes on savings, capital gains tax, wealth taxes, VAT and inheritance tax (the latter, however, does not exempt those with UK domicile from any IHT liabilities in the UK).


There are also advantages for those deriving income from investments and pensions – for the former there would be no income tax to pay, and pensions transferred to a Gibraltar QROPS (Qualifying Recognised Overseas Pension Scheme) are subject to just 2.5% tax on income draw down – ideal for those planning on retiring to Gibraltar.


For businesses there are also attractive benefits including a 12% corporation tax. Conditions are also favourable for employees, too – Gibraltar income tax should not exceed a marginal rate of 25% regardless of earnings.


Skilled high-level executives may even qualify for a special scheme – HEPSS Status - in which income tax is capped at £39,940 for the first £160,000 of salary.


High-net-worth individuals also have the opportunity to obtain Category 2 tax status, which caps one’s tax liability to the first £105,000 of your worldwide taxable income. Category 2 individuals need only pay a maximum of £37,310 tax per annum, and a minimum tax of £32,000 regardless of income.


Post-Brexit Tax Treaties


Another important boost to Gibraltar’s reputation as a centre for business – particularly when it comes to the expansion of trade with the UK market – is the implementation of a double tax treaty between the UK and Gibraltar governments. Signed in 2019 and coming into force in March 2020, the agreement abolishes double taxation when it comes to income and capital gains tax, and formalises a commitment to tax transparency and the elimination of aspersion of Gibraltar tax haven.


Spain has also signed a tax agreement with Gibraltar that became law in March 2021. The agreement focuses on improving tax cooperation between the two countries, and key areas including formalising rules for Gibraltar tax residency and individuals in Spain and Gibraltar, as well as the elimination of double taxation.


The Gibraltar government’s post-Covid-19 strategy is to further strengthen the economy through such double taxation agreements.


Brexit and Gibraltar Residency


If you’re exploring how to become a Gibraltar resident, it is important to keep abreast of Brexit-related developments and how they may affect a future move. Prior to Brexit, applying for Gibraltar residency on self-sufficiency grounds was a popular option for individuals living off passive income such as savings, pensions or investments, given that such assets are either minimally or non-taxable in Gibraltar.


This scheme has now been put temporarily on hold for both EU and British nationals while the Gibraltar and UK governments negotiate a post-Brexit treaty with Spain and the EU regarding Gibraltar and the movement of goods and people.


Applications however from British citizens who have transferred their state pensions from the UK to Gibraltar, as well as those from self-sufficient individuals who are registered as self-employed and have business interests, are still being processed.


Post-Brexit Schengen Agreement


Discussions between the UK and Spain are ongoing regarding the issue of free movement between the latter and Gibraltar. An agreement, though not yet legally binding, was reached at the end of 2020 that will avoid the establishment of a hard land border between Gibraltar and Spain (with border checks moved to Gibraltar’s airport and port) and enable Gibraltar to become part of the Schengen passport-free travel area. Negotiations with the EU are ongoing, but if a treaty is signed then this will only enhance Gibraltar’s already considerable appeal to British nationals considering retiring to Gibraltar.


Gibraltar’s Property Market


Property is one of the most important issues on the Rock. The market was hugely impacted by Brexit, which created uncertainty in Gibraltar and caused property prices to flatten. Since then though the reaching of an agreement in 2020 to include Gibraltar in the Schengen area has resulted in stronger pricing of properties and a more robust property market.


Underlying this post-Brexit boon, however, is a chronic lack of living space. The influx of new arrivals – people and businesses – to the Rock eager to take advantage of Gibraltar’s strong economic position and favourable tax in Gibraltar - has created huge demand for housing. Consequently, the availability of properties for sale and rent is currently low. This is driving up prices, with a supply of new housing stock yet to catch up.


It is worth bearing in mind, however, that several new developments have been built in the last few years with more set to launch in the near future, such as the new residential and commercial urban district of Victoria Keys, as well as developments such as Euro-City.


Yet though housing stock is set to increase, expats looking to move to Gibraltar should nevertheless factor the question of property into their plans. As Gibraltar and Spain’s Schengen agreement develops, demand will be driven up even further as UK nationals flock to a destination where Gibraltar residency offers the opportunity to once again freely roam on the continent.


Seek Expert Advice


Having successfully negotiated challenges and now brimming with economic potential, Gibraltar’s allure as a destination for expats has never been stronger. A move to establish a new life in Gibraltar could be highly lucrative, but it’s important to carefully plan all the different elements of a relocation – from residency to taxation – by engaging the advice of expert financial planners and wealth advisors.



Book your free, no obligation consultation today! Email enquiries@fwm.gi or give us a call +44 207 998 0570.