ARTICLE
9 October 2024

Gibraltar Tax On Sale Of Gibraltar Residential Properties Introduced, Where Owner Directly Or Indirectly Owns Three Or More Such Properties

TS
The Sovereign Group

Contributor

Sovereign began in Gibraltar in 1987 and has since grown into one of the largest independent corporate and trust service providers in the world. We currently manage over 20,000 clients that include companies, entrepreneurs, private investors or high net worth individuals and their families – and have assets under administration in excess of US$10 billion.
On 25 July 2024, the Government of Gibraltar published draft legislation taxing profits derived from disposals of interest in Gibraltar residential property, a measure announced in Minister Feetham's Budget address on 2 July 2024.
Gibraltar Tax

On 25 July 2024, the Government of Gibraltar published draft legislation taxing profits derived from disposals of interest in Gibraltar residential property, a measure announced in Minister Feetham's Budget address on 2 July 2024.

This draft legislation taxes profits from the sale of Gibraltar residential properties, from 1 August 2024, where the owner owns three or more Gibraltar residential properties, directly or indirectly, other than their primary residence or other exempted property.

Exempted property includes hotels, pre-war properties, properties unfit for habitation or in need of substantial repair if the Commissioner of Income Tax is satisfied that the purchase is for the purpose of development to permit resale or letting.

It applies to individuals, companies, trusts, foundations and partnerships, in Gibraltar or elsewhere (so worldwide owners), to any ownership percentage in a Gibraltar residential property, including off-plan property.

It applies if three or more such property interests are owned, or an aggregate of three or more are owned over a five year period.

It applies on the disposal of the property, and on the disposal of shares, directly or indirectly in a property holding entity (i.e. an entity whose principal activity in the last basis period consists of ownership, holding or management of Gibraltar property).

Property interests of connected persons may taken into account in determining whether the law applies.

Some disposals are exempted e.g. disposal by estate of a deceased person.

Government Guidance is expected to be issued.

Summary

  • Who is affected: Any owner (worldwide – individual, company, trust, foundation, partnership) of three or more Gibraltar residential properties (excluding exempted property), regardless of the ownership percentage in the property and whether held directly or indirectly (including through a property holding entity).
  • Start date: Deemed to come into operation on 1 August 2024.
  • Profit calculation: Costs wholly and exclusively incurred for the purpose of production of the income should apply in calculating the taxable profit, for example, the property interest purchase cost.
  • 2024/2025 Applicable Gibraltar Tax Rates:
  • Individuals resident in Gibraltar: up to 25% effective rate.
  • Category 2 resident individuals: 39%.
  • Individuals not resident in Gibraltar: up to 39%.
  • All Companies: 15% (20% for fuel supply or utility companies).

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.

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