Who would benefit from becoming a tax resident if Gibraltar?

The tax resident status in a national state implies that the person or corporate entity is liable to taxes levied in this particular state. Tax residency is defined differently in different states but it usually entails the obligation to pay taxes on any income derived within the geographical borders of the country or outside of them. Some countries try to attract taxpayers from other national states by offering foreigners certain benefits in terms of taxation. Gibraltar is one of such jurisdictions.   

It is not so easy to become a tax resident in Gibraltar as you have to meet specific requirements and some of them are quite strict. However, if you succeed in obtaining the status, you will thus gain several weighty advantages. Who would benefit from becoming a tax resident of Gibraltar most of all?  

Why acquire tax residency in Gibraltar?

Gibraltar is a small jurisdiction that is Great Britain’s overseas territory but it is self-governed at the same time. Mild Mediterranean climate, high living standards, good educational system, reliable medical care, loyal taxation system – all these features attract foreign investors to Gibraltar.

In addition to that, many foreigners consider acquiring legal residency in Gibraltar a step towards obtaining UK citizenship. Besides, some people who actually reside in Spain, which is the only country bordering Gibraltar, seek to acquire tax residency in Gibraltar in order to avoid the need to pay high Spanish taxes. Entrepreneurs who obtain profits from offshore companies have to reveal their tax residency to the banks when they want to use their services. Tax residency of Gibraltar is an optimum solution of this task. The jurisdiction is reputable enough and you can submit to the bank your Gibraltar tax declaration, tax number, and proof of residential address, if necessary.  

It would be wrong, however, to think of Gibraltar as a zero-tax jurisdiction. Rather, it is a low-tax jurisdiction. It is true that there is no inheritance tax in Gibraltar, nor capital gains tax, nor dividend tax, nor VAT. But the income tax can be as high as 40% in some cases. So, why is Gibraltar tax residency still popular?

Tax residency in Gibraltar: who would benefit most?

Entrepreneurs and fortune holders who can be regarded as High Net Worth Individuals (HNWIs) should be especially interested in acquiring tax residency in the jurisdiction. They will be able to appreciate the tax regime to be found in Gibraltar and the opportunity to actually live in the country with their families.

Tax residents of Gibraltar are liable to paying minimum 22,000 pounds sterling a year in taxes. It does not matter if their profits have been obtained in Gibraltar or they have been obtained abroad and then transferred to Gibraltar. At the same time, the maximum tax that a HNWI has to pay in the country is 29,880 pounds per year even if he or she has acquired income from within the geographical borders of Gibraltar. If you are already interested in this opportunity, please get in touch with us and we will give you professional advice on the matter.

There are many countries in the world where High Net Worth Individuals have to pay high taxes. Thus, if your annual income exceeds 100,000 pounds, acquiring Gibraltar tax residency is worth considering.  

Please also remember that you can use the tax benefits that this jurisdiction offers such as lack of inheritance tax, dividend tax, capital gains tax, interest tax if the interest is obtained from foreign jurisdiction, and so on. Whatever profits you make, you will have to pay maximum 29,880 pounds in taxes.

How to become a tax resident of Gibraltar

You will be eligible to apply for tax residency of Gibraltar if your total net worth exceeds two million British pounds. In addition to that, you have to buy or rent a piece of real property in the country. The property has to be approved by the Financial Center officers and you cannot let anyone else use it. That is to say, you have to use the property as your residential accommodations and you are not allowed to lease it to other people.  

Foreign tax residents in Gibraltar are not allowed to engage into business on the territory of the jurisdiction. An exception from this rule would be taking the position of a Gibraltar-registered company director if the company does not do any business in Gibraltar. Finally, you have to acquire a local medical insurance policy.

Advantages of Gibraltar tax residence

We have already mentioned the main advantage of acquiring tax residency in Gibraltar: even if your income becomes extremely high, you will not have to pay more in taxes than the maximum set rate.

Additional advantages include the following ones:

  • Unlike in some other jurisdictions, there are no requirements in Gibraltar as to the mandatory physical presence of the tax resident on the territory of the country.
  • You can add your spouse and children’s incomes to the total income that you declare.

If you are a HNWI, you can not only enjoy all the benefits that the tax resident status brings but also acquire a legal residence permit in the country. If you physically reside in Gibraltar for a long time, you can become a full citizen of the overseas territory and eventually acquire citizenship of the United Kingdom.  

The process of acquiring tax residency in Gibraltar

Thus, if you are a wealthy person, you can manage your tax burden more efficiently and fulfil some other of your financial plans by becoming a tax resident in Gibraltar. But first you will have to prove that you are a wealthy individual indeed!

Let us remind you that your total net worth must be more than two million pounds. You can supply bank statements or letters from the accountant to confirm having the money. If you are bringing shares or property ownership certificates, their market price has to be assessed by a surveyor or professional assessor.  

Other required application documents include the following ones:

  • A notarized copy of the passport;
  • A document certifying the legality of the sources of income;
  • Personal recommendations from a professional such as an accountant, a banker, or a lawyer;
  • A completed application form;
  • A medical insurance policy.

The terms of acquiring tax residency in Gibraltar

We will be happy to assist you in acquiring tax residency in Gibraltar. Our managers will make the process smooth and simple for you.

When you have collected and submitted all the required documents, the application processing will start and it normally lasts for about fourteen days. When applying for Gibraltar tax residency, you have to determine what piece of real property you are going to buy or rent. Please be aware that the choice of property is limited in Gibraltar as the country is rather small. Usually, you will have to choose from two or three pieces on offer. If you would like to rent residential accommodations rather than buy them, you should know that the rental price starts at 1,600 British pounds per month.

Besides, you have to buy a medical insurance policy. Thus, sorting out these two issues is going to take two more weeks, on average. Only when you have collected all the necessary documents, you can make an official application for tax residency of Gibraltar.

Additional costs of maintaining Gibraltar tax residency

Please bear in mind that you can use the real property in Gibraltar only for living there (with your family, if you wish). You cannot sublet the property to anyone else if you are renting it, nor can you resell it if you have purchased it. (Well, you can, of course, but you will lose your tax resident status then.)

A tax resident of Gibraltar is eligible to set up bank accounts both with Gibraltar banks and in other countries of the world. At the same time, the Gibraltar residence card does not allow travelling around Europe – you will have to obtain a Schengen visa for that.

In addition, you have to take into account other costs that you will have to incur when you become a tax resident in Gibraltar. Besides the tax, you will have to pay for the following:

  • If you rent residential accommodations, please mind that the average rent price in Gibraltar is around 25,000 pounds per year.
  • The utilities are also going to cost you something. How big the utility bill is will depend upon the size of your property but the average amount comes to 1,500 pounds per year.
  • If you are not living permanently in your accommodations in Gibraltar, another 600 pounds are required to cover the maintenance costs.

Probably, you will also want to hire an accountant to take care of the bills and the taxes for you. Accounting services will cost you around 1,000 British pounds per year.

If you have questions about acquiring tax residency of Gibraltar, we will be happy to answer them. You should know that Gibraltar has not made any treaties on avoidance of double taxation and for this reason, the issue of applying for tax residency of the country should be handled with care. This means that you do need some professional advice.

What benefits does a tax resident of Gibraltar obtain?

A tax resident of Gibraltar does not have to pay more than 29,880 pounds sterling in taxes regardless of the total amount of his or her income. Some taxes found in other jurisdictions are absent in Gibraltar. Tax residency in the country can lead to legal residency and citizenship of Gibraltar can ultimately lead to citizenship of the United Kingdom of Great Britain and Northern Ireland. 

What documents have to be supplied when applying for tax residency in Gibraltar?

Most importantly, you have to supply the documents that confirm the possession of 2,000,000-pound worth of assets. In addition, you will have to submit a copy of your passport, letters of recommendation, and fill out the application form.

What categories of people would benefit from acquiring Gibraltar tax residency?

First, this solution would be beneficial for wealthy individuals who have to pay high taxes in their home countries. Second, entrepreneurs engaged in offshore business would find communication with the banks much smoother if they can show their Gibraltar tax ID to the bankers.

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