Tax Benefits Available in this Tiny British Colony
A legal residency in Gibraltar can be useful to minimize taxes on global income. It offers a viable alternative to the other British territories such as The Channel Islands and The Isle of Man.
Gibraltar, a quaint British Overseas Territory nestled on Spain’s southern shoreline, has recently garnered interest as a viable residency option for those seeking to relocate abroad.
Be it a desire for a change of scenery, superior tax benefits, or an entryway into the European Union, Gibraltar presents a compelling proposition. In this exhaustive guide, we aim to navigate you through the procedures for acquiring Gibraltar residency, elaborating on the various alternatives available for both EU and non-EU citizens.
Introduction
Let’s start off with an overview of this fascinating territory. Then we can delve into the challenges of obtaining Gibraltar residency. Gibraltar is renowned for its stunning rock formations, colourful culture, and strategic location as the entry to the Mediterranean Sea. Despite being a British Overseas Territory, it has its own government and legal system.
Its proximity to Spain infuses a distinct blend of British and Spanish elements, resulting in an intriguing atmosphere. The advantages offered by Gibraltar residency make it a coveted status. Ranging from appealing tax policies to a high quality of life, individuals from diverse backgrounds are drawn to the prospects offered by this vibrant yet compact territory.
Residency Categories in Gibraltar
Category 2 – Residency in Gibraltar as an Individual
One of the most favoured paths to Gibraltar residency is through the Category 2 Individual status. This status is specifically tailored for affluent individuals aspiring to establish their residency in Gibraltar. Some notable advantages of Category 2 Individual classification include:
• Tax advantages: Category 2 individuals have a capped tax liability, which means they are taxed only on the first £80,000 of assessable income, regardless of total income received.
• Minimum residency requirement: Category 2 persons must spend at least 30 days per year in Gibraltar.
• Simple application process: The application process for Category 2 Individual status is simple and may be completed in a few months. To qualify for Category 2 Individual status, applicants must meet certain requirements, including a minimum net worth of £2 million and sufficient accommodation in Gibraltar. Furthermore, applicants should not have been Gibraltar residents in the preceding five years.
High Executive Possessing Specialist Skills (HEPSS)
Another viable option for Gibraltar residency is via the High Executive Possessing Specialist Skills (HEPSS) route. This category caters to individuals with outstanding professional skills and expertise. The HEPSS route’s key advantages include:
• Reduced tax rates: HEPSS residents incur a lower % tax rate of 15% on assessable income exceeding £120,000, compared to the standard 25% income tax rate.
• Residency flexibility: While HEPSS residents are expected to maintain a significant presence in Gibraltar, there are no rigid minimum-day requirements.
This offers flexibility for individuals who often travel for work. • Efficient application process: The HEPSS application process is streamlined, and successful applicants can anticipate a swift response. To qualify for the HEPSS route, individuals must exhibit their specialist skills, experience, and dedication to establishing their residence and contributing to Gibraltar’s economy.
Qualifying (Category 3) Certificate
The Qualifying (Category 3) Certificate represents another pathway to Gibraltar residency, specifically targeted at individuals aiming to establish their business presence in the territory. The Qualifying (Category 3) Certificate’s key benefits encompass:
• Reduced tax rates: Individuals possessing this certificate incur a maximum tax liability of £32,000 annually on their assessable income.
• Pro-business environment: Gibraltar provides a conducive business environment supported by a favourable regulatory structure, making it an appealing destination for entrepreneurs and business owners.
• Access to the European Union: Holding a Qualifying Certificate enables individuals to establish a physical presence in Gibraltar. To secure a Qualifying (Category 3) Certificate, applicants must exhibit their business acumen, submit a comprehensive business plan, and provide proof of their ability to invest and create employment opportunities in Gibraltar.
Acquiring Residency in Gibraltar as an EU Citizen
The procedure for acquiring Gibraltar residency for EU citizens has undergone substantial changes following the United Kingdom’s departure from the European Union (Brexit). Before Brexit, EU citizens had the freedom of movement and could live and work in Gibraltar unconditionally. Post-Brexit, however, EU citizens need to register and procure a residence document to continue residing in Gibraltar.
Implications of Pre-Brexit and Post-Brexit Before Brexit, EU citizens could easily establish their residence in Gibraltar by providing proof of identity and expressing their intent to reside. The process was quite straightforward, allowing EU citizens to enjoy residency benefits like tax advantages and access to the European Union.
With the enactment of Brexit, EU citizens now need to follow a different procedure to sustain their residency in Gibraltar. The Gibraltar Residency Rights of UK Nationals and their Family Members Regulations 2020 stipulates a framework for EU citizens to register and secure a residence document, thereby allowing them to continue residing in Gibraltar.
Registration Requirements Under these new regulations, EU citizens who had residency in Gibraltar before the conclusion of the Brexit transition period (December 31, 2020) had until June 30, 2021, to apply for the new residence document. This document serves as proof of their residency rights in Gibraltar. EU citizens must submit various documents when applying for registration. This must include proof of identity, proof of presence in Gibraltar before Brexit, and documentation proving their continuous stay. This can be job contracts or proof of self-employment. This will allow them to keep the rights they had prior to Brexit.
