Gibraltar is an appealing jurisdiction for individuals who wish to enjoy a Mediterranean life style. As a British Overseas Territory, Gibraltar's culture also has strong elements of UK culture. Gibraltar's own laws are based on English laws and businesses and education are carried out in accordance with English practice.
Gibraltar's fine weather, culture and location are not its only attractive features. It is a favourable jurisdiction for high net worth individuals who wish to relocate to a jurisdiction where they can benefit from tax, wealth and succession planning opportunities.
It has a corporate tax regime that provides for a low level of 10% corporate tax. Furthermore, Gibraltar does not levy on Capital Gains tax, Inheritance tax, Gift or Wealth taxes or VAT.
Gibraltar affords individuals whose net worth exceeds £2,000,000 a special status known as the Category 2 status. For these purposes, the status limits the individual's tax liability to their first £80,000 of assessable income.
Assessable income includes all income deemed taxable under the Gibraltar Income Tax Act 2010 but excludes income accrued from abroad, or income received from a trust.
The Category 2 status is popular amongst retirees but is also available to individuals based in Gibraltar who are shareholders of companies whose activities are carried out outside Gibraltar. Such individuals may also be directors of such companies provided this is permitted under the conditions of their Category 2 certificate – consent is usually sought from the Finance Centre Director in such cases.
An individual who within the period of five years preceding his application for a Category 2 certificate, has been in Gibraltar for a period greater than 183 days in any one year or 90 days in any three of those five years, or has been in trade, business or employment in Gibraltar prior to his/her proposed application is not eligible for Category 2 status.
Under the provisions of the applicable law, an individual who benefits from Category 2 status will be subject to a maximum tax liability of around £30,000 per annum and a minimum of £22,000 per annum.
For those individuals who wish to obtain Category 2 status, an application for a Category 2 Certificate is made to the Finance Centre accompanied by a non-refundable deposit of £1,000. In order for the application to be successful, the individual must have residential accommodation (rented or purchased) in Gibraltar available to him/her for his/her own exclusive use and such accommodation must be approved by the Finance Centre.
The Finance Centre Director will issue a certificate if the individual meets the criteria set out above and he is satisfied that the applicant is of substantial and sound financial standing, of good character and that the issue of the certificate to the individual will not be harmful to Gibraltar's reputation as a well regulated Finance Centre.
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.