Taxation in Gibraltar is determined by the law of Gibraltar which is based on English law, but is separate from the UK legal system.[1] Companies and non residents do not pay income tax unless the source of this income is or is deemed to be Gibraltar. Individuals pay tax on a worldwide basis on income from employment or self employment if they are ordinarily resident in Gibraltar. There is no tax on capital income.[2]
In Gibraltar there is no capital gains tax, wealth tax, sales taxorvalue added tax. Import duty is payable on all items at 10%. The main tax for companies is Corporation Tax, and Social insurance contributions. There are also stamp duties on certain transactions, and property taxes ('rates'). Gibraltar benefits from an extensive shipping trade, offshore banking, and its position as an international conference center. It is a well known and regulated international finance centre and has been a popular jurisdiction for European offshore companies. The financial sector, tourism, shipping services fees, and duties on consumer goods generate revenue.[3] Non-resident companies can take advantage of a number of offshore regimes in order to reduce taxation, although in line with the elimination of unfair tax practices this is being phased out. Individuals pay quite high taxes on their income in Gibraltar unless they are able to take advantage of high-net-worth individual status or gain exemption as an expatriate executive. Import duties are quite high on some items.
Assessment and collection of tax is administered by the Commissioner of Income Tax; the tax year runs from 1 July to the following 30 June.
The information in this article is taken from the publication "Gibraltar Tax facts".[4] It may be incorrect or out of date. For the latest data see the Government of Gibraltar website listed in external links.
Gibraltar is a VAT free jurisdiction.
Levied at the rate of 1% of relevant income (gaming yield for online casinos and bets placed for online bookmakers), capped at £425,000 with a minimum payable of £85,000.
Import duties are levied on goods imported into Gibraltar, mostly at rates of 0% - 12%. As of 1 July 2010, import duty on pedal cycles, electric cars, solar paneling and related equipment has been reduced to 0%. Import duty on hybrid cars has similarly been reduced, though it has increased for petrol and diesel powered vehicles.
Levied mainly on spirits, wines, tobacco and mineral oils.
| Class | Rate | Minimum | Maximum |
|---|---|---|---|
| Employee (under 60) | 10% earnings | £5.00 | £25.16 |
| Employee (Aged 60 & Over) | 0% earnings | £0.00 | £0.00 |
| Employer | 20% earnings | £15.00 | £32.97 |
| Self Employed | 20% earnings | £10.00 | £30.17 |
Minimums and maxima shown are per week. No contributions are payable if the person is not in receipt of earnings. Income earned by a student on holiday is exempt.
Before 2009, the rate of corporation tax was 22%. With effect from 1 July 2009, regarding any new businesses, a start up rate of 10% will apply to any business established in Gibraltar after 1 July 2009. Tax will be assessed on an actual year basis. With effect from 1 January 2011, a new rate of 10% will apply to all companies except energy and utility providers, which will pay a 10% surcharge and thus incur a rate of 20%. These will include electricity, fuel, telephone service and water providers.
As an anti-avoidance provision, it will not apply in respect of any commercial activity being carried out before 25 June 2009 and that is reorganized by the taxpayer in the name of a different entity for the purpose of benefiting from the scheme.
| Class | Rate |
|---|---|
| dividends | 0% |
| In interest paid to resident individuals | 0% |
| On interest paid to resident companies | 22% |
| On interest paid to non-residents | 0% |
In addition, no tax is payable on dividends between Gibraltar companies
Gibraltar has two tax systems, one based on gross income which does not provide any allowances, and another with different rates which does. The choice of which system to apply is made by the taxable person.
1. Persons on gross income up to £16,000
| Income | Rate | Payable |
|---|---|---|
| 0 - £10,000 | 8% | £800 |
| £10,001 - £16,000 | 20% | £1200 |
2. Persons on gross income £16,000 to £25,000
| Income | On first | Rate | Balance at 20% | Payable |
|---|---|---|---|---|
| £16,001 - £17,000 | £6000 | 0% | £10,001 - £11,000 | £2,000 - £2,200 |
| £17,001 - £18,000 | £5,000 | 0% | £12,001 - £13,000 | £2,400 - £2,600 |
| £18,001 - £19,000 | £4000 | 0% | £14,001 - £15,000 | £2,800 - £3,000 |
| £19,001 - £20,000 | £3000 | 0% | £16,001 - £17,000 | £3,200 - £3,400 |
| £20,001 - £25,000 | £2000 | 0% | £18,001 - £23,000 | £3,600 - £4,600 |
3. Persons on gross income between £25,001 and £35,000
A rate of 20% applies less tapering relief on gross income between £25,001 and £26,000. With the tapering relief on gross income of £25,000, there is a tax-free amount of £2000 that reduces by £2 for every £1 increase in gross income.
4. Persons on gross income between £35,001 and £100,000
The effective (average) tax rate is reduced by 0.5% from the previous year using a complex formula to give a maximum effective tax rate of 26.25% on gross income of £100,000. The tax liability is arrived at by first calculating using the previous year's tax band (i.e. 20% for tax bands of £0 - £25,000 and 29% for £25,001 - £100,000), then reducing it by 0.5% and finally applying the resulting rate of taxable income (gross income less tapering relief). With the tapering relief on gross income of £35,001, there is a tax-free amount of £3284 that reduces by £2 for every £1 increase in gross income.
5. Persons on gross income between £100,001 and £353,000
A rate of 20% on the first £25,000 of gross income applies, with the balance taxed at 29%. With the tapering relief on gross income of £100,001, there is a tax-free amount of £1722 that reduces by £2 for every £1 increase in gross income.
6. Individuals on Gross Income over £353,000
| Taxed As Follows | Tax Rate |
|---|---|
| First £25,001 | 20% |
| £25,001 - £353,000 | 29% |
| £353,001 - £704,800 | 20% |
| £704,801 - £1,000,000 | 10% |
| Excess over £1,000,000 | 5% |
| Bands | Tax Rate | Tax on band |
|---|---|---|
| 0 - 4,000 | 17% (reduced rate) | £680 |
| 4,001 - 16,000 | 30% (standard rate) | £3,600 |
| Over - 16,000 | 40% |
A wide range of allowances apply for children, single parents, mortgage relief etc. (Below)
| Main Income Tax Allowances & Reliefs | |
|---|---|
| Personal Allowance | £2812 |
| Spouse Allowance | £2632 |
| Nursery School Allowance (per child) | £1023 |
| Child Relief in respect of first child only | £997 |
| Child Relief in respect of each child educated abroad | £1105 |
| Disabled Person | £2724 |
| Dependent Relatives (maximum for Resident) | £190 |
| Dependent Relatives (maximum for Non-resident) | £139 |
| Blind person | £627 |
| Apprentice | £380 |
| Single parent | £2632 |
| Home Purchase Allowance (deduction) | £11,500 |
| Home Purchase (Special - £1000 maximum p.a.) | £4000 |
| Social Insurance (Employee) | £335 |
| Social Insurance (Self-employed) | £432 |
Stamp Duty is only payable on real estate and capital transactions at the following rates:
On purchase of Real Estate:
In 2019, the International Agreement on Taxation and Protection of Financial Interests between Spain and the United Kingdom on Gibraltar was signed by all three countries. This agreement covers such issues as tax co-operation between the authorities in Gibraltar and Spain, the criteria for tax residence of individuals and companies and procedures for administrative cooperation.[5]
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