Gibraltar operates residency progammes featuring generous tax incentives that are designed to attract high net worth individuals (Category 2) and executives possessing particular skills (HEPSS). These make Gibraltar a very attractive base for suitably qualified individuals and their dependants or for retirees or entrepreneurs that wish to live in a tax competitive jurisdiction.
Sovereign can manage the entire application process as well as providing introductions to professional service providers, such as legal, real estate and relocation firms. In addition, Sovereign can assist in ensuring that an applicant’s tax planning is compliant from an international perspective, ensuring that deemed tax residency is not triggered in another jurisdiction.
Through Gibraltar-based Sovereign Insurance Services (SIS), we can further assist with private medical insurance. Each applicant will have to satisfy the authorities that he or she holds private medical insurance that will cover the applicants and any dependents in the event of illness in Gibraltar. Under no circumstances can a Category 2 or HEPPS certificate holders obtain free healthcare from the Gibraltar Health Authority.
Qualifying (Category 2) Individuals Rules
The Qualifying (Category 2) Individuals Rules 2004 provide for a well-established regime that limits income tax for high net worth individuals (HNWIs) wishing to reside in Gibraltar. To apply for a certificate, an individual is required to verify that he or she has a minimum net worth of £2 million and is of good character.
The holder of a Category 2 certificate is taxed in Gibraltar on the basis of the normal rates applicable under the gross income-based system, but only on the first £80,000 of assessable income. Any income in excess of £80,000 is not subject to income tax in Gibraltar, irrespective of whether the income is remitted to Gibraltar. At current tax rates, the minimum annual tax liability is £22,000 and the maximum annual tax liability is £27,560.
The individual is also required to either purchase or rent suitable accommodation in Gibraltar and have it available for his or her exclusive use throughout the year. There is no specific legal requirement as regards the length of stay in any particular year and the spouse or children of a Category 2 certificate holder may elect to benefit from the terms of the same certificate.
Only individuals who have not been resident In Gibraltar during the previous five years of assessment are eligible to apply. As a general rule, Category 2 individuals are now permitted to invest in or do business in Gibraltar provided that any assessable income is subject to taxation. However, the specifics of the business activities must be brought to the attention of the Finance Centre Director prior to application.
High Executive Possessing Specialist Skills (HEPSS)
The Gibraltar government has also introduced a further category of tax residency to encourage the relocation of high earning executives with specialist skills that will promote and sustain economic activity of particular economic value to Gibraltar.
The basic requirements in respect of applicants under the High Executive Possessing Specialist Skills (HEPSS) Rules 2008 Individual are:
- Basic salary of over £120,000 per year
- The specialist skills must not be available in Gibraltar
- Availability of suitable residential accommodation (either rented or purchased) in Gibraltar for his or her exclusive use throughout the year
- He or she must not have been resident in Gibraltar within the previous 36 months.
A HEPSS certificate holder is only taxed under the gross income-based system on the first £120,000 of assessable income such that, at current tax rates, the tax payable from qualifying employment income is capped at £29,940.
An employer must satisfy the Finance Centre Director that the appointment of a HEPSS applicant will promote and sustain economic activity of particular economic value to Gibraltar and that he or she will earn more than £120,000.