Gibraltar

Basic taxes (briefly)

Personal tax 30%
Corporate tax (in detail) The rate for companies is 10%; utility companies and companies that abuse a dominant position are subject to taxation at 20%.
Capital gains tax. Details
VAT. Details
Other taxes
Government fee £75 annually
Stamp duty £10

International tax agreement

   


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TAXES

Territorial basis of taxation

Only income derived and accrued in Gibraltar is to be taxable (with the exception of dividends, interest, pensions or emoluments of office).

New Income Tax Act (2011)

The new Income Tax Act became effective as from 1 January 2011. The new legislation introduced a 10% rate of corporate tax for all entities and the end of the exempt tax regime.
The Act deletes distinctions between onshore and offshore business in Gibraltar. The changes, according to the government, complete “14-year transition from tax haven to mainstream European financial services center” that is in “compliance with E.U. financial services regulation.”

Personal tax

Individuals are taxed on income accrued in or derived from Gibraltar and, if the individual is ordinarily resident, also on non-trading worldwide income (except rental income from foreign property). Individuals who are present in Gibraltar for less than 30 days per year are exempt.
Taxable income – All trade and employment income accrued in or derived from Gibraltar is taxable and, in the case of an ordinarily resident individual, worldwide income also is taxable. Interest income, royalty income and income from foreign property is not subject to taxation. Expenses incurred on the production of taxable income may be deducted for tax purposes.
Personal allowances are available to the taxpayer and his/her spouse. There also are allowances for children, dependent relatives, marriage, nursery school, life insurance and medical insurance. Gibraltar offers mortgage interest relief and a home purchase allowance.
Gibraltar has a dual tax system, under which a taxpayer is free to elect between an allowance-based system and a gross income-based system.
Rates under the gross income-based system are divided into rates for income under 25,000 GIP and income exceeding 25,000 GIP.
Individuals with gross assessable income not exceeding £25,000:
Income, GIP Tax Rate
the first 10,000 6%
the next 7,000 20%
balance 28%


Individuals with gross assessable income exceeding £25,000:
Income, GIP Tax Rate
the first 17,000 16%
the next 8,000 19%
the next 15,000 25%
the next 65,000 28%
the next 395,000 25%
the next 200,000 18%
the next 300,000 10%
balance 5%


The allowance-based system has a reduced rate of 15%, a standard rate of 30% and a rate of 40% for taxable income exceeding GIP 16,000.
Self-assessment is made on an annual basis, the year of assessment being the period of 12 months commencing 1 July and ending 30 June the following year.
Tax on employment income is withheld by the employer under the PAYE system and remitted to the tax authorities. Payments are due by 30 June and 31 December. The final payment is due by 30 November, together with the filing of the tax return.
There are surcharges for the late payment of tax and penalties for the late filing of tax returns and errors or omissions in the tax return/payment.

Corporate tax

Resident companies are taxed on income that is accrued in or derived from Gibraltar. Branches are taxed in the same manner as companies. Nonresident companies are subject to tax on Gibraltar-source income.
Corporation tax is imposed on a company's profits, which consist of business/trading income accrued in and derived from Gibraltar. Interest income (except for banks) and royalty income is not subject to taxation. Expenses incurred wholly and exclusively in the production of income may be deducted in computing taxable income.
The rate for companies is 10%; however, utility companies and companies that abuse a dominant position are subject to taxation at 20%.

Tax year

The tax year is 1 July to 30 June. Companies are subject to tax in their accounting period; if the accounting period exceeds 12 months, it will be divided into two periods.

Capital gains tax

There is no capital gains tax in Gibraltar.

Losses

Trading losses may be carried forward indefinitely provided there is no change of ownership in the company and no major change in the nature or conduct of trade within a period of three years.

Dividends

Dividends are not subject to taxation.

Alternative minimum tax

There is no Alternative minimum tax in Gibraltar.

VAT

There is no Value Added Tax in Gibratar.

Withholding tax

In Gibraltar dividends, interest, royalties, technical service fees are not subject to withholding tax.

Other taxes and duties

There is no Real property tax, Transfer tax, Inheritance or estate tax in Gibraltar. There is only Social security contribution. Employer contributions are payable on a weekly basis up to a maximum of GIP 32.97 per week. Employee contributions are payable on a weekly basis, up to a maximum of GIP 25.16 per week.

Stamp duty

Stamp duty is charged at a fixed rate of GIP 10 and applies on the initial creation of share capital or subsequent increase and on immovable property located in Gibraltar.
Stamp duty applies to purchases of Gibraltar real estate, as follows:
Property Cost, GIP Rate
Under 200,000 0%
200,000 – 350,000 2% on the first 250,000 and 5.5% on the next 100,000
over 350,000 3% on the first 350,000 and 3.5% on the excess

Government fee

The annual license fee payable by a Gibraltar Non-Resident Company is GBP£55 plus GBP£20 for lodging an annual return and accounts.

Foreign exchange control

There are no exchange controls in Gibraltar. Residents and nonresidents may maintain accounts denominated in foreign currencies.

Double Tax Agreements

Gibraltar has 26 tax information exchange agreements (TEIA): Australia, Austria, Belgium, Denmark, Faroe Islands, Finland, France, Germany, Greenland, Guernsey, Iceland, India, Ireland, Italy, Malta, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, South Africa, Sweden, Turkey, United Kingdom, United States.

Anti-avoidance rules

Anti-avoidance rules are as follows:
Transfer pricing: There are no specific transfer pricing rules, but the tax authorities can apply a general anti-avoidance provision if an arrangement is deemed to be artificial or designed to reduce tax. Under a clause for connected parties, where a transaction is deemed not to be at arm’s length, allowable deductions are restricted to the lower of the amount of the expense, 5% of gross turnover or 75% of net profits (pre-expense). Where interest is paid at a non-commercial rate, the excess is disallowed for tax purposes.
Thin capitalization: Interest paid is deemed to be a dividend where the debt-to- equity ratio exceeds 5:1 and the interest is paid to a connected party that is not a company, or interest is paid to an arm’s length party where the loan is secured by assets belonging to a connected party that is not a company.
Controlled foreign companies: no
Other: Where an individual transfers assets abroad and this gives rise to income to a nonresident person that can be, now or in the future, enjoyed by an ordinarily resident taxpayer, the income of the nonresident will be taxed on the ordinarily resident taxpayer unless it is a bona fide commercial transaction and the purpose is not to avoid tax. The general anti-avoidance provisions also may apply.
Disclosure requirements: There is a duty to notify the tax authorities about arrangements that reduce tax.

ACCOUNTS

Filing of accounts

All limited companies (except those which are non-profit making) are required to file accounts at Companies House in respect of each financial year. This requirement follows the provisions of the EU fourth and seventh company law directives. There are, however, significant exemptions afforded to both small and medium sized companies.
If the company qualifies as a “small company” an abridged balance sheet is permissible and there is no requirement for an audit or profit and loss accounts. To qualify as a small company two of the following three requirements should be met:
  • Net Annual Turnover below £4.8 million
  • Total Balance Sheet value below £2.4 million
  • The number of employees should not exceed 50

A medium sized company is required to file a Profit and Loss, Balance Sheet and an Auditors report, to qualify as “medium company” two of the following three requirements should be met:
  • Net Annual Turnover must not exceed £19.2 million
  • Total Balance Sheet value below £9.6 million
  • The number of employees should not exceed 250

A large company must file Profit and Loss Statements, Balance Sheet and an Auditors Report.
The accounts are publicly accessible.

Filing due dates

The accounts must be filed within 13 months of the financial year end in the case of a private company and 10 month of the financial year in the case of a public company. If the financial year-end is the company’s first then the period allowed is the greater of 18 months from the first anniversary of the incorporation of the company or 13 months from the end of that financial year. If the filing requirements are not complied with the company is liable to pay a fixed penalty.

Annual Return

Each company is required to submit an annual return to the Registrar of Companies which contains details of the shareholders, directors and the capital of the company.
The annual return should be submitted on the anniversary date, if submitted after the 31st of that year a penalty will be imposed.
The law allows the Registrar to strike from the register of companies any company, which has not filed annual returns in the previous three calendar years.

Tax returns

A tax return must be submitted within six months from the accounting year end. Advance payments of tax based on 50% of the previous year’s tax must be made by 28 February and 31 August. The final payment (or refund request) is due when submitting the tax return, i.e. within six months of the accounting year end.
There are surcharges for the late payment of tax and penalties for the late filing of tax returns and for errors or omissions in the tax return/payment.

    Taxes of Gibraltar

    Min. rate for corporate tax 10%
    Capital gains tax No
    VAT No
    Withholding tax No
    Exchange control No
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