Retired Offshore Resident: Gibraltar

Due to the availability of qualifying status, well-off retired residents of Gibraltar have a favourable tax situation and are free to make investments both in Gibraltar and in other offshore locations with very few adverse tax consequences. Less well-off people will not find the tax regime to be so helpful.

Nationals of EU member states have the right to enter, live and work in Gibraltar. Initially a six-month visa is given, and then a 5-year renewable residence permit, provided that they have found suitable employment or have started a business. Work permits cannot be denied to EU citizens.

Other nationals have to apply for residency under the Immigration Control Ordinance and permission is issued by the Governor. Government guidelines indicate that an applicant for residency must be ready and able to purchase a property of sufficient size to accommodate himself and his family, must be in good health, and must have adequate financial resources. The Government looks more favourably on those applicants who purchase luxury property in Gibraltar.

In the June 2007 budget, passport issue and renewal fees were abolished for persons aged 65 and over.

Residence And Taxation

Unless Qualifying Individual status is applied for (see below), an individual may be liable for taxation on his worldwide income if he resides in Gibraltar for more than 183 days a year.

As from 2008, every taxpayer is able to choose for each tax year between two systems to pay tax, and to choose the one that results in the lower tax payment, either of which can be paid through the PAYE system. The first system is the pre-existing Allowance Based System; the alternative system is a new Gross Income Based system, in which the taxpayer receives no allowances, but pays tax on gross income at the following rates: 20% on the first GBP25,000; 30% on the next GBP75,000; 40% above GBP100,000.

Under the Allowance Based System, the first GBP7,500 of income is free of tax; rates of 10% and 20% apply to the next two tranches of taxable income; a standard rate of 30% applies to income between GBP4,000 and GBP16,000, and a higher rate of 38% applies above that level.

For more detailed information on taxation liability in Cyprus, please visit the Lowtax Jurisdictions Guide.

Qualifying Individuals

This regime sets limits on the tax that has to be paid by particular types of individuals. Qualifying (Category Two) Individuals are High Net Worth Individuals; Qualifying (Category 3) and (Category 4) Individuals are expatriate employees of Exempt or Qualifying companies.

Qualifying (Category Two) Individuals must have available for their exclusive use approved residential accommodation in Gibraltar. The Government would also be looking to ensure that the individual has sufficient means to maintain himself and his family. They will therefore be looking for evidence of wealth although it is not necessary for the individual to declare his worldwide wealth or earnings. The Government would also be looking to ensure that the individual has private medical insurance to cover both him and his family whilst residing in Gibraltar. Income over GBP60,000 is not taxed; therefore the maximum tax payable by an HNWI is GBP27,000. There is no capital gains tax in Gibraltar, and an HNWI is also exempt from Estate Duty. The minimum amount of tax payable by an HNWI is GBP18,000.

NB: Gibraltar tax rules are considerably more complicated than the above simplified summary, and professional advice on the situation of any particular individual is advisable.

American citizens, and nationals of the very few other countries that tax world-wide income on the basis of citizenship, won't be able to take advantage of the low-tax environment in Gibraltar, but for all other nationals, it is available.

www.lowtax.net contains extensive information on the investment, tax and legal regimes in 35 of the main offshore jurisdictions. Further information is available in our Investment Information Providers Section, and the four main types of offshore investment are described in the Guide to Offshore Investment on this site.

NB: The suggestions given above do not constitute investment advice. They are intended only to assist individuals in finding appropriate professional advice, which is essential for anyone planning offshore investment.