Gibraltar is a well-established European jurisdiction and popular with wealthy British expats due to the fact that it is very British and relatively easy to move to. Gibraltar is now autonomous, but still subject to the regulations of the UK.
Gibraltar is a “low tax” jurisdiction instead of being a zero-tax area. In Gibraltar there is no capital gains tax, inheritance tax or VAT. However, there is income tax and it can be quite high with a top rate of 40 percent.
Advantages of Gibraltar:
- 10 percent corporate tax
- No VAT
- No capital extraction tax or wealth tax
- No inheritance tax
Gibraltar has no double taxation agreement, but waivers are available for taxes paid in other countries. Characterised non-residents generating overseas revenues are exempt from income tax in Gibraltar. In regard to the exchange of information provisions, Gibraltar has implemented the OECD Exchange of Information Treaty and is on the OECD white list.
Special tax regime for High Net Worth Individuals (HNWI)
You are a resident in Gibraltar if you stay there for more than 183 days a year, thus making you subject to the Gibraltar income tax. But if you move to Gibraltar to take advantage of the tax savings, you should look for ways to achieve the High Net Worth Individual status (HNWI).
A HNWI is allowed to stay with their spouses and children in Gibraltar and enjoy a certain tax regime. HNWIs are required to pay an income tax of at least £22,000, even if they have no income in Gibraltar or income transferred to Gibraltar. If the income is transferred to Gibraltar or stems from Gibraltar, only the first £80,000 are taxable.
In order to keep your annual tax payment closer to £22,000 than £29,080, you need to assign as little income as possible to Gibraltar. HNWI status will mainly appeal to those with very high taxable income. This means that Gibraltar is advantageous for those who pay more than £22,000 or £29,080 in British income tax a year. In other words, you need to earn more than approx. £80,000 or £100,000 annually.
However, it is also worth noting that your spouse’s income may be included in your income. In other words, there will only be a maximum tax of £29,080 per family.
HNWIs can also enjoy other tax advantages, including:
- No inheritance tax
- No capital gains tax
- No interest tax on overseas bank accounts
- No tax on dividends
- No tax on corporate pension
Brief information about Gibraltar
Gibraltar has a pleasant Mediterranean climate and the crime rate is very low. The downside is that it is very densely populated (less than six square kilometres with a population of over 30,000 people).
Read more about Gibraltar on Wikipedia.