Benefit to High Net Worth Individuals

An increasing number of Individuals are taking advantage of the fiscal and lifestyle advantages attainable by establishing residency in Gibraltar, which has no physical presence requirements.

HIGH NET WORTH INDIVIDUALS

TAX ADVANTAGES OFF-SHORE

An increasing number of Individuals are taking advantage of the fiscal and lifestyle advantages attainable by establishing residency in Gibraltar, which has no physical presence requirements...read more

Gibraltar Category 2 Status

A Guide for High Net Worth Individuals

An increasing number of High Net Worth Individuals (HNWIs) are taking advantage of the fiscal and lifestyle advantages attainable by establishing residency in Gibraltar . These include a capped tax liability under the Category 2 rules, coupled with the benefits of the strong sterling pound and secure financial industry.

Gibraltar has an excellent infrastructure and wide range of facilities close at hand, and attracts more than seven million visitors a year. If you are a High Net Worth individual you know that changes throughout Europe have created taxes that now penalise you for having income in their jurisdictions and applying these large tax percentages to your global assets is not easily digestible.

So why should you buy property and apply for residency in Gibraltar?

Key tax benefits

*Capped tax liability based on £80,000 of taxable income.

  • Maximum annual tax payable is thus capped at £29,800.
  • No requirement to disclose worldwide income.
  • In addition, there is no capital gains tax, inheritance tax, wealth tax or sales tax in Gibraltar. This makes it a very attractive low tax location for individuals.
  • Spouse and family income may be included.
  • No minimum physical presence requirement in order to retain residency RENTAL accepted

*Figures for July 2012/2013 tax year

If you qualify under the Category 2 rules, you are subject to a cap on your tax liability with income tax payable only on the first £60,000 of taxable income which arises in, or is remitted to, Gibraltar . This gives rise to a maximum annual tax liability of less than £22,000. As taxable income does not include, for example, capital gains, gifts or income from savings it is possible to lower the tax liability further. However, a minimum annual tax liability of £18,000 is applied, which is pro-rated in year of arrival. The Gibraltar tax year runs from 1 July to 30 June.

Main requirements

In order to become a Category 2 resident in Gibraltar , you must meet the following conditions:

  • have a minimum net wealth of £2 million
  • have exclusive use of approved property in Gibraltar . The property must be of a certain standard and appropriate to sustain the lifestyle of you and your family. The property may either be bought or rented. Unlike other jurisdictions, there is no minimum physical presence requirement in order to be tax resident
  • conform to the restrictions which apply if you have previously been resident or working in Gibraltar within the preceding five years
  • not undertake any business activities that compete with local entities that derive their income from within Gibraltar
  • The Category 2 individual must have medical cover in Gibraltar (usually in the form of private medical cover).

Category 2 status is granted on an indefinite basis, but the Category 2 residency certificate needs to be sent to the Gibraltar Finance Centre for endorsement every three years.

A City Law Firm LLP in Gibraltar can put you in touch with a tax advisor to explore these opportunities or it can assist you in purchasing property; applying for residency; moving your business to Gibraltar or advising you on all these options