Gibraltar Location

5.11 Expatriates

5.11.1 Apportionment of Tax Bands and Tax Allowances

When a person obtains employment in Gibraltar, who was not resident in Gibraltar immediately prior to obtaining employment:

When allowances are apportioned, the individual is given one-twelfth of the annual allowance for each month, or part of a month, that they are resident in Gibraltar.

When tax bands are apportioned, the individual is given one-twelfth of the annual tax band for each month, or part of a month, that they are working in Gibraltar.

5.11.2 Relocated Employees: Exemptions from Benefits in Kind

There are generous tax breaks available with respect to the provision of accommodation and payment of relocation expenses by employers, as described in Sections 5.9.3 and 5.9.6.

5.11.3 Category 2 (high net worth) individuals

Under the Qualifying (Category 2) Individuals Rules 2004, an individual may apply to the Finance Centre Director for a Category 2 individual certificate. Such a certificate can only be granted to applicants who:

  1. Have available, for their exclusive use and that of their families, approved residential accommodation in Gibraltar.
  2. Have not been a resident in Gibraltar for the previous five years.
  3. Have not been engaged for the previous five years, and will not be engaged in the futurewhile being a Category 2 individual in a trade, business or employment in Gibraltar, other than, in general, duties that are incidental to any trade, business or employment based outside Gibraltar, or providing consultancy services from Gibraltar in certain circumstances (see below) - unless otherwise agreed by the Finance Centre Director.
  4. Submit two character references from recognised and established professionals (a bank and a law or accountancy firm), a copy of passport, a curriculum vitae and a proof of financial standing (in practice this should be in excess of £2 million).
  5. Pay an application fee of £1,000.
  6. Have received a certificate from the Finance Centre Director confirming their status.

An individual who has obtained a Category 2 individual certificate is assessable to income tax on the first £80,000 of income only, resulting in a maximum amount of tax payable of £27,560. This cap on taxable income generally does not apply to income accrued in or derived from Gibraltar, for example, director’s fees and rental income from properties located in Gibraltar, which would be taxed separately. Category 2 Individuals are taxed under the ABS system.

The minimum tax payable under the scheme is £22,000, which is prorated if the certificate was obtained or expired partway during the tax year.

In certain circumstances, the income of the spouse and children will be deemed to be that of the certificate holder so that no additional tax will be payable on that income. Finally, there are tax advantages for individuals with Category 2 status in connection with trusts (see Section 5.12 below).

5.11.4 High Executive Possessing Specialist Skills (HEPSS)

The tax payable by an HEPSS is limited to the first £120,000 of earned income (maximum tax payable of £29,940). The GIBS is applied to HEPSS individuals. The individual must have skills or experience that are not available in Gibraltar and deemed necessary to promote and sustain economic activity of particular economic value to Gibraltar.

The individual must also occupy a high executive or senior management position, earn more than £120,000 p.a. and have approved residential accommodation available for the exclusive use in Gibraltar. Moreover, the individual may not have been a resident or employed in Gibraltar during the three years prior to the year in which the application is made (the finance centre director (FCD) may, however, waive this requirement). There is a non-refundable fee of £1,000 for the issue or renewal of the certificate.

5.11.5 Imported Pension Schemes (QROPS)

Under the UK legislation, persons not resident in the UK, or who are planning to live permanently outside the UK may transfer their UK pension scheme to a non-UK pension scheme that is recognised by the UK tax authorities (HMRC), potentially avoiding some of the restrictions that apply to UK schemes. In 2012, the HMRC confirmed that Gibraltar was a jurisdiction with the requisite tax and pension rules in place. This has enabled pension schemes to be set up in Gibraltar and registered with the HMRC. Such schemes are known as QROPS. As of the 15th July 2016, there were 48 Gibraltar schemes listed by HMRC as having notified the HMRC that they meet the conditions to be a QROPS.

Members of a QROPS may be resident in Gibraltar or elsewhere.

The following are the main features of a Gibraltar QROPS:

5.11.6 Qualifying Non-UK Pension Schemes

A QNUPS is defined in the UK as a pension scheme established outside the UK that is not a UK-registered scheme, but meets the requirements of the Inheritance Tax (Qualifying Non-UK Pension Schemes) Regulations 2010. Such schemes may be established in Gibraltar.