Sub-Contractors Application Form SC1
Sub-Contractors Tax Withheld Form SC2
Sub-Contractors Payment Form SC3
Questions & Answers
Q. I operate as a contractor in the construction industry in Gibraltar - what are my obligations in respect of my subcontractors?
A. You are required to deduct 25% of the labour element of any amount invoiced by your subcontractor and remit this payment to the Income Tax Office together with the relevant remittance advice. You should note that failure to deduct tax or to pay the tax deducted to the Income Tax Office (as required by Regulation 4 of the Income Tax (Construction Subcontractors) Regulations 1994) is an offence punishable on summary conviction.
Link to legislation:
Q. I work as a subcontractor in the construction industry in Gibraltar - what are the tax implications?
A. Your main contractor is required to deduct 25% of the labour element of any amount due to you under that contract. This amount shall be deducted at source by the contractor and remitted to the Income Tax Office, who will hold it in credit to your account. The sum of all such amounts withheld at source and paid over to the Income Tax Office shall be available for set-off against your future tax liabilities. That is to say, that you will build up a kitty' from which you will be able to settle your future tax bill(s).
Q. What is a Subcontractor's Tax Exemption Certificate?
A. If you are content to pay your total tax liability when the Income Tax Office issue your assessment as opposed to paying in advance via the deductions at source described above, you can apply for a Subcontractor's Tax Exemption Certificate. Upon sight of the original Certificate, a contractor will note that you are exempt from the requirements of the relevant Regulations and will not, therefore, be obliged to deduct at source any portion of contract payments made to you. You should note, however, that failure to settle an assessment in full within the required timeframe will generate penalties and surcharges and legal proceedings may follow.
Q. Am I eligible to apply for a Subcontractor's Tax Exemption Certificate?
A. In order to be eligible to apply for this Certificate, you must:
- Be carrying on a business that consists of or includes the carrying on of construction operations; and
- Have a permanent place of business in Gibraltar; and
- Have complied with your obligations under the Income Tax Act 2010 and with the requirements of all other legislation relevant to the business throughout the three years preceding the application; and
- Continue to comply with such requirements.
In addition, the Income Tax Office must have no reason to believe that you will not comply with your future obligations under the Income Tax Act 2010.
Q. What happens with the tax deducted at source by the main contractor?
A. The contractor must pay to the Income Tax Office any amount deducted at source from invoices paid to you by him within 30 days from the date of said deduction. The contractor must forward to you a copy of the Remittance Advice attached to each payment submitted by him to the Income Tax Office. It is in your interest to monitor these payments.
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