Main idea:

  • Ideal solution for those with NET assets over £2million who need Tax residency in the country where you do not need to reside full time – Gibraltar. You get tax residency/number, identity card, utility bills, purchased or rented property, and pay fixed annual tax of £22,000 per annum + rental and insurance expenses (aprx £23,000 per annum). Perfect for those with international lifestyle (reside in various countries for less than 183 days each) and International banking asking for TIN.

Who is eligible for Category 2 Individual Status?

  • The Category 2 individual must be of substantial and sound financial standing and have a minimum net worth of £2 million.
  • Category 2 Individual Status is available to all non-Gibraltarian individuals who establish a residential address in Gibraltar, have not been ordinarily resident in Gibraltar during the preceding 5 years, and do not derive any income from Gibraltar sources other than from Gibraltar Tax Exempt Status companies.
  • The Category 2 resident must either own or rent approved residential accommodation in Gibraltar. The accommodation must be approved by the Gibraltar Finance Centre and be used exclusively by the Category 2 individual and his direct family. His direct family includes his spouse, children, brother, sister, parents and his spouse’s parents. Therefore, the Category 2 individual cannot rent the property and is limited to occasionally allowing others to stay there, otherwise he will not be deemed to have “exclusive use” and would consequently lose his status.
  •  There is no minimum stay in Gibraltar for a Category 2 resident individual, therefore as long as the individual fulfills all of the above conditions he will retain his Gibraltar residency without the need to spend any time in Gibraltar.
  •  The minimum costs of an apartment for this purpose will normally range from £300,000 to £500,000 and will have to be classified as an approved property for this purpose. In case of rent, minimal price would start from GBP1600 per month.

What are the advantages of Category 2 Individual Status?

  • Income tax is only payable on earned or remitted income in Gibraltar such as employment income (including benefits in kind), trading income (rental income, consultancy) and dividends from private companies;
  • Rental income from a foreign source is not taxable in Gibraltar;
  • No Inheritance Tax; No Wealth Tax; No Capital Gains Tax; No Gift Tax; No VAT;
  • No taxation on savings interest/ investment income (paid by banks & building societies);
  • No taxation on dividend income arising from companies quoted on a recognised stock exchange; and
  • No taxation on pension income from an approved occupational scheme for individuals aged 60 or over.
  • Category 2 Individual Status is obtained by application to the Financial & Development Secretary of Gibraltar, and once granted allows the individual to elect the level of taxation which he wishes to pay in Gibraltar while being guaranteed that his total tax bill will not exceed GBP £27,560 per annum. The minimum amount of tax payable in Gibraltar under this status is £22,000 per annum with the provision that the tax is only levied on the first £80,000 of assessable income. So if you don’t have any income in Gibraltar, you just pay £22,000 per annum.
  • Category 2 Individual Status, therefore, can be particularly useful for those persons who may wish to show a tax authority in another jurisdiction that they are subject to taxation in Gibraltar with a view to persuading them that they should only be expected to pay a nominal amount of tax in their home jurisdiction, at the same time as they keep their taxation level in Gibraltar to an absolute minimum.
  • It should be noted, however, that simply because a Category 2 Individual pays tax in Gibraltar, this does not automatically mean that they will not be taxed by one or more other foreign jurisdictions. It would obviously be up to the individual himself to ensure that this does not happen and that his tax affairs are arranged competently to accommodate an annual tax minimum commitment of £22,000 in Gibraltar (assuming that this represents a substantial saving to his tax bill in the country where he is currently tax resident).
  • Category 2 Individuals are only taxed on income remitted to Gibraltar.
  • Additionally, in each year of assessment the Category 2 Individual will have to make a return to the Commissioner of Income Tax. The individual can exercise an option before the termination of the year of assessment and advise the Commissioner that he shall be deemed to have a taxable income in Gibraltar in that year of assessment of £80,000 notwithstanding that the income remitted to Gibraltar is less than that amount. The advantage of this is that no tax return will need to be made to the Gibraltar Authorities.

 Documentation to be presented before The Financial & Development Secretary together with the 
individual’s initial application

  • 1 Curriculum Vitae pertaining to the individual seeking Category 2 Individual Status in Gibraltar.
  • 2 Written references regarding the good character and financial standing of the individual in question from a lawyer, banker or accountant.
  • Evidence that he and his family enjoy private medical insurance cover to include Gibraltar.
  • A written undertaking from the individual’s representative in Gibraltar confirming that his client will abide by the Category 2 Individual Status conditions.
  • A declaration from an accountant as to the estimated total net worth of the individual applicant which should stipulate a net worth in excess of GBP£2 Million
  • A fee of GBP £1000. (This is not an annual fee, and is exclusive of any future tax payments made by the individual to the Gibraltar tax authorities).

Further documentation to be presented to the Gibraltar Immigration Department for the issuance of a Gibraltar identity card.

The following documentation would be required to be presented by the applying individual after a period of about 2 to 3 working weeks from the time of the initial application:

  • 2 passport sized photographs
  • Evidence of Private Medical Insurance with cover to explicitly include Gibraltar
  • 1 copy of the individual’s passport
  • Copy of rental or property purchase agreement in Gibraltar with utilities connected in applicant’s name
  • A fee of GBP £25

What a successful applicant can hope to receive from The Finance Centre in Gibraltar:

  • A Certificate stating that he is registered as a Category 2 Individual.
  • A Gibraltar identity card which is, essentially indistinguishable from a Gibraltar residency card and which is valid for a period of 1 year, but thereafter may be renewed via a relatively simple process which requires the applicant to be present in person.
  • A receipt/certificate from the Gibraltar Tax Department upon receipt of the first payment of tax.

Annual Responsibilities of the Category 2 Individual

  • To be present in person once in 3 years for the renewal of his Gibraltar identity card.
  • To submit a statement of accounts in June of each year to the Gibraltar Tax Department testifying to the amount of worldwide income earned so that tax at the agreed rate may be properly assessed. There is no requirement for a full set of accounts to be presented, nor for the details contained therein to be audited. (we provide this service)

Costs

Our full costs for applying for category 2 status (inclusive of the GBP £1000 application fee payable to the government of Gibraltar), is from GBP £8000.