In recent years Gibraltar’s international reputation has been enhanced after signing 18 Tax Exchange Information Agreements (also known as TEIA’s) which resulted in the OECD white listing the territory. This completes a long journey from offshore tax haven to mainstream leading European financial services centre.
Today Gibraltar is considered a major international financial player within the European Union which complies with best international practices and adheres to all EU Directives and regulations making it an ideal location to passport services into the EU and for cross border trade given it remains VAT Free (value added tax) Zone.
Furthermore it offers compelling tax and estate planning benefits for wealthy private individuals considering a new country of residence. Whether this is for personal tax restructuring, estate planning or simply to change lifestyle there are significant benefits to be gained from becoming a Gibraltar resident.
Firms looking to relocate staff for their Gibraltar operation are able to include the very generous personal tax regime as part of an attractive benefits package. Employees earning up to £20,000 would pay an effective rate of less than 15% and those earning up to £40,000 would pay less than 20% whilst everyone whose earnings do not exceed £300,000 pay a maximum effective rate of tax of 24.99%. There is also no wealth, capital gains or gift tax nor is there VAT or taxation on interest savings for that matter.
The territory has replaced the tax exempt regime for offshore companies with an internationally competitive tax model whereby all firms pay a standard rate of tax across the board. With effect 1st January 2011 the standard rate of corporation tax is 10% save in the case of utilities and companies enjoying a dominant market position which are subject to 20% tax.
Entrepreneurs looking to relocate their business may think it is all about reducing corporate taxation to 10% which attractive as it may be only tells half a story. In Gibraltar there is no such thing as surtax, capital duty, payroll tax, real property tax, VAT, capital gains tax nor is there transfer tax. And of course there is no tax on royalties, interest income nor dividend if paid to another local entity or non resident company or person whilst stamp duty is capped at a fixed rate of £10 for initial creation and subsequent increase to share capital as well as to immovable property in Gibraltar. If that wasn’t enough employers social security contributions are currently capped at £32.92 per week. This makes Gibraltar a very attractive jurisdiction to relocate or establish a new subsidiary to trade within the European Union.
It is possible for a wealthy private individual to obtain Gibraltar residency status by fulfilling the criteria for a Category 2 individual. This requires the person is of a sound financial standing with net worth in excess of £2m, preferably owning (although could potentially rent) an approved property in Gibraltar to be used for their exclusive use and large enough to house their direct family. There are other conditions which need to be satisfied to obtain such a residency status for further details visit www.gibraltarresidency.co.uk
This residency status would suit individuals looking to protect trading or earned income from higher rates of taxation in the country of residence or where they declare their income. For such individuals the tax liability would be capped at £80,000 income with a minimum tax of £22,000 and a maximum of £29,880. And then of course there is no inheritance, wealth, capital gains nor gift tax with interest income also being tax free as well as dividend income arising from companies quoted on a recognised stock exchange.
You may also qualify as a Gibraltar resident on self sufficiency grounds if you have no earned income and rely purely on investment income in which case there is no income tax to pay either. There is also a special employment status HEPSS to encourage the relocation of high earning executives with specialist skills that will promote and sustain economic activity of particular economic value to Gibraltar. This special tax status which caps employment income is a cost saving incentive for corporate entities looking to recruit senior management positions.
Our firm provides a complete tax led wealth management service to individuals and businesses looking to relocate to Gibraltar. As a financial advisory practice we can take care of all your Gibraltar residency requirements through a single point of contact.
At a time when governments around the world are increasing personal and indirect taxes to increase revenues, Gibraltar offers a refreshing and significantly less painful alternative.
If you are looking for a new place of residency then Gibraltar could well be the right “address” for you or for your business. For further information please visit our website www.gibraltarresidency.co.uk or telephone us on +350 200 50982.