Imagine a place that has all the cosy charm of traditional, small-town British life but still enjoys 300 days of sunshine on average per year. No need to imagine it, just #ThinkGibraltar
With Gibraltar's "passive income" provisions, you don't have to pay tax on income arising from pensions or investments – which means less time worrying about the future and more money in your hands right now, with which to enjoy your golden years.
"Portugal cuts tax break for expat pensioners"
"British pensioners in Portugal to lose tax-free status"
"Portugal plans to end tax exemptions for some foreign residents"
– FT
Unlike elsewhere in Europe, Gibraltar offers zero tax on pensions.
Plus, as a British territory with full and unrestricted access to
the UK, you also get the peace of mind of knowing that, unlike
other Mediterranean hotspots, in Gibraltar it's business as
usual after Brexit.
An Enviable Location
Gibraltar's warm climate and magnificent topography, not to mention its proximity to all the popular beaches and golf courses along Spain's Costa Del Sol, has made it a hugely popular the world over – though its popularity with travellers is hardly a recent phenomenon.
To ancient mariners the Rock of Gibraltar marked the very edge of the world, beyond which point one might literally sail right off its very edge; a belief which greatly benefited the Phoenicians, one of the Rock's first colonists, as they expanded their trade networks deeper into Atlantic waters.
Over the ensuing centuries, various naval powers vied for control of strategic position, from Rome and Carthage in the Classical period, to the Spanish and the Moors in the Middle Ages before finally becoming a British territory in 1713.
The British then set about expanding Gibraltar's port facilities, fortifying the Rock and repelling Spanish attempts to regain the territory. Gibraltar has endured a total of fourteen sieges throughout its history, and yet still it endures.
Hence the reason that, for centuries, this iconic outcrop has long-since been a metaphor for strength and stability, as exemplified by the phrase "as solid as the Rock of Gibraltar."
Today Gibraltar is as solid as ever; a self-governing British Overseas Territory with a legal system based on English Common law and its own currency, the Gibraltar Pound, which is pegged to the British Pound.
It also boasts one of the largest and busiest ports on the Mediterranean as well as several direct flights daily to several major UK cities.
The Rock-Solid Economy
As a specialist onshore finance centre, Gibraltar balances a well-earned reputation for economic stability, reliability and regulatory and financial prudence with a highly favourable tax regime, making it the jurisdiction of choice for international businesses looking to establish a strategic European presence.
Gibraltar's economy is predominantly service-based, with a significant number employed in the financial services, insurance, telecommunications and gaming sectors. The full list of these companies are too numerous to mention, but include a significant number of well-known UK brands like Lloyds, Barclays, Royal Bank of Scotland, Admiral Insurance, GVC Holdings (Ladbrokes, Coral, Bwin) and William Hill, to name just a few.
Gibraltar's strategic position at the mouth of the Mediterranean, acting as the literal dividing point between Europe and Africa, means it has a thriving shipping industry while its warm climate and arresting natural beauty provides for a flourishing tourism sector.
Thanks to this diversity of industries, Gibraltar's economy has proven both recession-proof and Brexit-proof, growing steadily year on year. This, in turn, has made it an increasingly attractive proposition to entrepreneurs, foreign investors and those looking to buy property.
Gibraltar Tax Benefits
Gibraltar's fixed Corporate Tax rate of just 10% is one of the main reasons why so many international companies have opted to make Gibraltar their home, though increasingly the jurisdiction is proving equally appealing to private individuals for several key reasons:
- No Capital Gains Tax
- No Stamp Duty
- No Wealth tax
- No Estate Duty
- No Inheritance Tax
- No Tax on Pensions
- No Tax Dividends
Income Tax for Individuals
Income tax for individuals ordinarily resident in Gibraltar is calculated on either an allowances-based system with steps/bands of taxation or, on a gross-based system, both of which have an effective rate of about 25%.
Category Two Tax Status
A high net worth tax residency status is available for qualifying individuals whose net worth exceeds £2,000,000 and who rent or buy what is referred to a 'qualifying property'. This regime is referred to as the Category 2 status. For these purposes, the status limits individuals' tax liability to the first £80,000 of assessable income, limiting the maximum tax payable on all worldwide income to around £28,000 per year.
In addition, Gibraltar has recently entered into a Double Taxation Agreement with the U.K as well as a tax treaty in relation to cross-border taxation with Spain. These two relatively recent developments make Gibraltar an even more attractive jurisdiction where advisers can advise clients with certainty.
Anti-Avoidance Provision
The Income Tax Act has general anti-avoidance provisions which are supplemented by a series of specific measures, including thin capitalisation rules, transactions with connected persons, interest on certain secured loans, dual employment contracts, anti-avoidance defences and transfers of assets abroad.
Setting Up Gibraltar Trusts
Gibraltar has established itself as a successful trust and private client jurisdiction with many active trust companies and international law firms with dedicated trust and private client departments.
Trusts established by a non-resident of Gibraltar for a class of beneficiaries that exclude residents of Gibraltar will be exempted from Gibraltar income tax.
Interested in Moving to Gibraltar?
Hassans, the biggest law firm in Gibraltar and trusted since 1939, is a Legal 500 EMEA Top Tier Firm with a broad range of expertise including property law, tax, wills and probate, succession planning, trusts, Spanish law and litigation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
