CATEGORY 2 INDIVIDUALS
CATEGORY 2 INDIVIDUALS AND RESIDENCY
There has been a continuous increase in the demand for Category 2 status, introduced in February 1992 by the Government of Gibraltar through the introduction of low tax limits for high net worth individuals, in order to encourage wealthy individuals to establish a residence in Gibraltar. These rules, forming part of the Income Tax Act, have been reviewed and promulgated several times resulting in the current Qualifying (Category 2) Individuals Rules 2004 (as amended).
BENEFITS
The benefits of the Category 2 status and residency in Gibraltar are attractive for individuals from countries where levels of personal income tax are particularly high, such as Britain, Germany, Canada, Switzerland and France.
A Category 2 Individual will have their Gibraltar tax capped to the maximum calculated on the first £105,000 of assessable income, with a minimum tax payable per annum of £32,000.
ASSESSABLE INCOME
| Maximum tax payable | |
| The first £4,000 taxable income at the rate of 14% | £560 |
| The next £12,000 taxable income at the rate of 17% | £2,040 |
| The next £89,000 taxable income at the rate of 39% | £34,710 |
Please note the maximum assessable income is capped at £105,000 with maximum tax payable £37,310.
There are no allowances or deductions.
Tax is payable only up to the maximum assessable income of £105,000.
Any income in excess of £105,000 is not subject to tax in Gibraltar.
REQUIREMENT FOR APPLICATION
An application for Category 2 status is made to the Finance Centre Director and if successful a Qualifying (Category 2) Individual Certificate under the Qualifying (Category 2) Individuals Rules 2004 of the Income Tax Act will be issued. In order for an individual to qualify for Category 2 status he will be required pursuant to the current Rules to have available for his exclusive use approved residential accommodation in Gibraltar for the whole of the year of assessment (July to June).
In addition, an applicant must submit a Curriculum Vitae detailing his qualifications, source of wealth and income, work experience and two references to vouch for his good financial standing and repute. One must be from a bank confirming the individual's good character and financial status is in excess of £2,000,000.
A copy of the applicant's passport must be included together with evidence of the ownership or rental of the approved property.
There are particular property developments within Gibraltar which have been identified by the Finance Centre Director as being suitable for these purposes. A non-refundable application fee of £1,000 is payable on submitting an application.
RESIDENCY
Residency can be obtained once the Category 2 status has been granted. The process for obtaining residency differs depending on whether the Category 2 Individual is an EU National or a non-EU National. Applications are made to the Governor of Gibraltar. The Governor issues a permit to any person who in his opinion is of good character and it is in the interests of Gibraltar that he be issued with such a permit. A permit is valid for such period as the Governor may specify. Generally, a permit of residence is valid for a period of one year but may be renewed subject to the continuation of the Category 2 status certificate, which certificate remains effective as long as the Finance Centre Director is satisfied, on each three-year anniversary of the issue of the certificate, that the requirements are still met.
REQUIREMENTS FOR GRANT OF CATEGORY 2 STATUS & RESIDENCY
Each applicant will have to satisfy the authorities that he holds private medical insurance which would cover him and his family in the event of illness in Gibraltar. The individual and his family must not look to the Government of Gibraltar for medical treatment. They must be self-sufficient in this respect. The property he holds must also be large enough to house his family.
Whilst the holding of a permit does not automatically entitle a person to claim citizenship or any social benefit or social security in Gibraltar, children of the family may attend local schools.
INTEREST AND DIVIDENDS
Regardless, of an individual's tax category, interest arising from a licensed bank or building society or dividends arising from companies quoted on a recognised stock exchange are not taxable in Gibraltar.
OTHER FINANCIAL INCOME
The Category 2 Individual pays a minimum annual tax of £32,000 which equates to the tax on income of £65,744 after which only further amounts remitted to Gibraltar suffer further taxation but the maximum tax payable in the year is capped at £37,310.
WEALTH TAX, CAPITAL GAINS TAX, DONATION AND SUCCESSION TAX
There is no Wealth Tax, Capital Gains Tax, Gift Tax or Estate Duty in Gibraltar.
RECEIPT OF FOREIGN CAPITAL
There is no tax on the remittance of capital to Gibraltar
