Tax rates 2013/2014
A company “ordinarily resident” in Gibraltar is defined as a company whose management and control is in Gibraltar or where the management and control is exercised outside Gibraltar by persons who are ordinarily resident in Gibraltar.
A flat rate tax of 10% applies to trading income “accrued in or derived from” Gibraltar.
Utility and fuel supply companies and companies abusing a dominant market position pay a higher rate of 20%.
Expenses incurred “wholly and exclusively” in the production of taxable income are deductible from income to arrive at taxable profits, subject to some specific exceptions. Capital allowances are available for qualifying assets utilised in generating taxable income.
The following sources of income are not assessable to corporate taxation in Gibraltar:
- Non-trading interest income – so, for example banks’ interest income would generally be taxable. Also, intercompany interest income where this exceeds £100k per annum from a company is taxable (Connected party interest income is aggregated when assessing whether this threshold has been met);
- Income from property abroad;
- Capital gains.
The tax year runs from 1 July to 30 June.
An individual is considered “ordinarily resident” in Gibraltar, when the individual is present in Gibraltar for:
- a period of at least 183 days in any year of assessment; or
- is present in Gibraltar in any year of assessment which is one of three consecutive years in which the total number of days presence in Gibraltar exceeds 300 days.
For the purpose of this definition, a day is defined as being present in Gibraltar for any part of a 24 hour period commencing at midnight, hence an overnight stay is not required.
Gibraltar resident individuals are subject to taxation on their worldwide income, whereas non-residents are subject to taxation on Gibraltar sourced income only. Note that the following sources of income are not subject to taxation in Gibraltar:
- savings income such as interest income, income from Government debentures or dividends from investments quoted on a recognised stock exchange;
- royalty income;
- rental income from real estate property located outside Gibraltar;
There is also no capital gains tax in Gibraltar, no inheritance tax, estate duty, gift tax nor wealth tax.
A dual system is available and taxpayers are free to elect between the Allowance Based System and the Gross Income Based System (“GIBS”). Anti-avoidance measures are in place to prevent family members exploiting a mixture of the two systems.
Allowance based system ("ABS")
|Taxable income bands||Tax rate|
|£0 - £4,000||15%|
|£4,000 - £16,000||24%|
A tax credit of £300 or 2% of the annual tax liability, whichever is the greater, is available under the allowance based system.
Personal allowances are available to offset against assessable income in order to arrive at the taxable income of the individual as appropriate. Main allowances include:
There are other allowances available such as child allowance, mortgage interest allowance, first time home buyers allowance; life insurance contributions allowance, medical insurance allowance, pension contribution allowance etc.
Note that there is also a “topping up” of tax allowance to a minimum total tax allowance of £3,888 per annum; in the case of elderly persons the top is up to £11,443 per annum.
Gross income based system ("GIBS")
|Gross income < £25,000 p.a.||Tax rate|
|£10,001 - £17,000||20%|
|Gross income > £25,000 p.a.||Tax rate|
|£17,001 - £25,000||19%|
|£25,001 - £40,000||25%|
|£40,001 - £105,000||28%|
|£105,001 - £500,000||25%|
|£500,001 - £700,000||18%|
|£700,001 - £1,000,000||10%|
There are only a few deductions available under GIBS in order to arrive at taxable income:
- Mortgage Interest – up to £1,000 p.a. relating to Gibraltar property homeowners
- Employee Contributions to approved Pension Scheme – up to £1,000 p.a.
- Purchase of first-time home – up to £5,000 in respect of approved expenditure towards the purchase of their home.
- Approved expenditure on enhancing premises – up to £5,000
- Employer contributions to an approved company for the purpose of providing health insurance for that employee (whether or not including spouse and dependent children) is exempt from taxation – up to £2,000 p.a.
Special Status for Individuals
Only the first £80,000 of assessable income remitted to Gibraltar is taxable subject to a minimum tax payable of £22,000 per annum, and an effective maximum of circa £29k.
High Executive Possessing Specialist Skills (“HEPSS”)
HEPSS status created for persons with specialist skills of exceptional economic value to Gibraltar earning more than £100,000 per annum.
Taxation only applies to first £120,000 of income under the Gross Income Based System, resulting in the individual paying a max of circa £30k per annum.
Social Insurance Contributions
Standard rate employee’s contribution
10% of gross earnings subject to a maximum contribution of £1,308.32 p.a. for the year ending 30 June 2014.
Contributions are payable on a weekly basis subject to a minimum of £5 per week and a maximum of £25.16 per week.
Standard rate employer’s contribution
20% of gross earnings subject to a maximum contribution of £1,714.44 p.a. for the year ending 30 June 2014. Contributions are payable on a weekly basis subject to a minimum of £15 per week and a maximum of £32.97 per week.
20% of gross earnings subject to a maximum contribution of £1,568.84 p.a. for the year ending 30 June 2014. Contributions are payable on a weekly basis subject to a minimum of £10 per week and a maximum of £30.17 per week.
There is no VAT levied in Gibraltar.
Gaming tax is levied at the following rates:
- 1% of turnover for fixed-odds licences and betting exchanges
- 1% of gaming yield or gross profit for internet casino licences.
There is a cap of £425,000 and a minimum of £85,000 payable per licence, per annum.
Stamp duty on the initial creation of share capital or subsequent increase is charged at a fixed amount of £10. Real estate property transactions are charged as follows:
|Up to £250,000 nil||nil|
|Between £250,000 and £350,000||2% on the 1st £250,000 & 5.5% on the next £100,000|
|In excess of £350,000||3% on the 1st £350,000 and 3.5% on the balance|