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Gibraltar: Offshore Legal and Tax Regimes

High Net-Worth Individuals

The Gibraltar government, wanting to encourage wealthy individuals to establish residences there, introduced a special taxation regime for 'High Net-Worth Individuals' (HNWI) conforming to the following guidelines (they are not all statutory):

  • The person must not have been a resident of Gibraltar in the 5 years preceding an application to be an HNWI;
  • The person must have a residence available for his exclusive use for at least 7 months during the tax year for which he wishes to be treated as an HNWI;
  • The person and his family must have adequate medical insurance;
  • The person must have sufficient means to maintain himself and his family; however, a declaration of world-wide wealth is not required;
  • The person must not engage in a trade, business or employment in Gibraltar other than duties which are incidental to any trade, business or employment based outside Gibraltar or duties as a director of a Qualifying or Exempt Company.

An individual with HNWI status has traditionally paid tax according to the following table (however, see above for changes to these rates introduced in 2007):

Taxable Income Band, GIP
Tax Payable, %
0 - 7,000
30
7,001 - 12,500
35
12,501 - 15,500
40
15,501 - 19,000
45
19,001 - 45,000
50

There is no capital gains tax in Gibraltar, and an HNWI is also exempt from Estate Duty.

An application for HNWI status is made to the Financial and Development Secretary under the Qualifying (High Net Worth Individual) Rules of the Income Tax Ordinance. There is a GIP500 non-refundable application fee (GBP1,000 as from July, 2004), and the application must be accompanied by two references, one from a banker.

Tax status certificates, which previously had no expiry date, are now issued for a period of three years. However, there is no need to reapply as a fresh certificate will be issued once the authorities receive a declaration from the individual that they are compliant with the tax rules.

 

 

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