Gibraltar Location

5.4 Individuals: General

5.4.1 Overview

Taxpayers may choose between the gross income based system (GIBS) and the more traditional allowance-based system (ABS) (see Sections 5.5 to 5.7). In addition to income tax, social insurance contributions are payable by employers, employees and self-employed persons (see Section 4.6).

5.4.2 Ordinary residence

As of 1 January 2011, an individual who is present in Gibraltar for at least 183 days in a tax year or more than 300 days in total during three consecutive tax years is deemed to be ordinarily resident in Gibraltar. “Present” means being in Gibraltar at any time during a 24-hour period commencing at midnight, whether or not accommodation is used.

An individual who is ordinarily resident is generally taxable in Gibraltar on their worldwide income (subject to double tax relief and to an exception for rental income, which is only taxable if the property is located in Gibraltar). An individual who is not ordinarily resident is only taxable on income accruing in or derived from Gibraltar (see Section 5.10 for some further exemptions for non-residents).

5.4.3 Sole traders

Self-employed individuals are liable to income tax on their profits, as adjusted for tax purposes in a similar manner as is the case for companies:

Deductions are allowed against income — as described in Section 5.3.5 Certain items are not deductible, or the deductions may be restricted — as described in Section 5.3.6 Losses may be carried forward indefinitely against future profits. Losses cannot be carried back There are specific rules that apply to tax years 2009-10 and 2010-11 to transition the basis of assessment from the preceding year basis that generally applied up to 2010, to the actual basis applying from 2011 onward Capital allowances are available as described in Section 5.3.7

5.4.4 Partnerships

If a partnership carries out a trade, business or profession, it is treated as a transparent entity; individual partners are taxed on their share of the partnership’s profits as adjusted for tax purposes. A partner is not liable to the unpaid tax of another partner.