Gibraltar: High Net Worth Individuals

The Government of Gibraltar introduced new low tax limits in order to encourage wealthy individuals to establish a residence in Gibraltar. Such individuals known as High Net Worth Individuals ("HNWI") will pay tax on the first £45,000 of assessable income only with a minimum tax payable per annum of £10,000. Only income received or remitted to Gibraltar is taxable and therefore such individuals could still hold a Gibraltar tax exempt company or a Gibraltar qualifying company, or indeed hold deposits in their own name in a bank in Gibraltar, and the income from such companies or bank accounts would only be taxable if received by the individual for his own use in Gibraltar. Accordingly, the HNWI is able to make full use of Gibraltar's offshore financial centre whilst at the same time paying the prescribed low tax limits.

An application is made to the Financial & Development Secretary for the issue of a Certificate under the Qualifying (High Net Worth) Individual Rules of the Income Tax Ordinance. A £500 non-refundable application fee is payable and the application must be supported by two references, one at least of which must be from a banker.

In order for an individual to qualify as an HNWI he must have available for his exclusive use for a period of not less than 7 months approved residential accommodation in Gibraltar, and must reside in Gibraltar in that property during any year of assessment (July to June) for a minimum of 30 days which need not be consecutive.

The Government would also be looking to ensure that the individual is a HNWI and he has sufficient means to maintain himself and his family. They will therefore be looking for evidence of wealth although it is not necessary for the individual to declare his worldwide wealth or earnings. The Government would also be looking to ensure that the individual has private medical insurance to cover both him and his family whilst residing in Gibraltar.

Tax would be payable by the HNWI in accordance with the following bandings as contained in the Rates of Tax Rules:-

The first £7,000 of taxable income at the rate of 30%; The next £5,500 of taxable income at the rate of 35%; The next £3,500 of taxable income at the rate of 40%; Tne next £3,500 of taxable income at the rate of 45%; The remainder of taxable income at the rate of 50%.

There are no allowances or deductions, however tax is charged only up to the maximum assessable income of £45,000. Any income in excess of £45,000 is not subject to tax.

It is also interesting to note that there is no capital gains tax in Gibraltar and a HNWI will also be exempt from Estate Duty.

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.