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Ministry for Sports,  Culture, Heritage and Youth

Ministry for Education, Financial Services. Gaming, Telecommunications and Justice

Ministry for Tourism, Public Transport and the Port

Ministry for Equality, Social Services and the Elderly

Ministry for Traffic, Housing and Technical Services

Ministry of Enterprise, Training and Employment

Ministry for Health and Environment

Ministy for Housing and the Elderly

 

Taxation Print E-mail

The assessment and collection of income tax is currently governed by the Income Tax Act 2010, Rules and Regulations. That Act was enacted in 2010 and came into effect on 1 January 2011.

Tax is charged on income accruing in or derived from Gibraltar on the profits or gains of a company or trust from any trade, business, profession or vocation.

Tax is charged on the income accruing in, derived from or received in Gibraltar (or in any other place) by an individual ordinarily resident in Gibraltar from employment or the exercise of any self employment activities in connection with a trade, business, profession or vocation. Dividends, pensions and emoluments of office accruing in, derived from or received in any place other than Gibraltar by an ordinarily resident individual are also taxable in Gibraltar. Generally, when taxed in the country of accrual and not received in Gibraltar such income is not taxable in Gibraltar.

Tax is charged on income of all individuals and companies in respect of any rents, premiums and any other interest in real property located in Gibraltar.

Income arising outside Gibraltar, which although not actually received or transferred, is obtained in Gibraltar by an individual in the form of an equivalent benefit, is treated as having been received in Gibraltar.

Computation of Taxable Income

Income tax is charged for the year of assessment - running from the 1 July in one calendar year to 30 June in the next - on the actual basis of the income for that year. The taxpayer's aggregate income, other than non chargeable income, is the "assessable income", and the "taxable income" is the assessable income as reduced where appropriate in the case of an individual by the allowances described hereafter.

Standard Rate of Tax

The standard rate of tax for individuals and trusts is 30%.

Deductions for Personal Relief

The allowances and deductions are:

Personal Allowance

£3,000 pa

Child Allowance

£997 pa

Spouse Allowance

£3,000 pa

Child educated abroad

£1,105 pa

Dependent Relative
Allowance

£190 pa max

Disabled Individuals Allowance

£3,000 pa

Home Purchase Allowance

£11,500

Single Parent Allowance

£3,000 pa

Home Purchase Allowance
(Special Deduction) £1,000 max pa

£4,000

Nursery School Allowance

£3,000 pa

Medical Insurance

£2,000 pa max

Life Assurance, etc.

This deduction is given in respect of amounts payable by the taxpayer or his spouse during the year of assessment for insurance premiums on his life or that of his spouse and for contributions to a pension scheme approved by the Commissioner of Income Tax. The deduction allowable in respect of premiums payable under a policy of assurance shall be granted by way of relief at the rate of 17%. No deduction shall, for any year of assessment exceed;

  • one-seventh of the total assessable income in respect of life assurance premiums;
  • the lesser of 20% of the earned assessable income or £35,000,in respect of contributions to a Personal Pension Scheme or a Retirement Annuity Contract;
  • one-sixth of the total assessable income in respect of life assurance premiums and contributions to an Occupational Pension Scheme; and
  • 7% of the capital sum excluding bonuses, etc, in the case of a policy securing a capital sum on death.

Health Insurance

This deduction is given in respect of amounts payable by the taxpayer, during the year of assessment, towards an approved insurance policy, for premiums paid for the purpose of providing health insurance for himself, his spouse or his dependant children. This deduction is limited to £2,000 in aggregate.

Special Deduction for Senior Citizens

Individuals of state pensionable age (ie men aged 65 or over and women aged 60 or over) are entitled to an additional personal allowance as follows:

Unmarried individuals:    £8,075 pa
Married individuals:          £5,443 pa

The deduction is reduced by one twelfth for each complete calendar month during the year of assessment that the individual is not resident in Gibraltar.

Mortgage Interest Relief

A deduction is given in respect of the amount of interest paid on a mortgage or loan taken out by an individual for the purchase or improvement of a house or flat in Gibraltar for his own residential occupation. The deduction shall be limited to the interest paid on the principal sum of a loan limited to a maximum not exceeding £350,000.

Pensions

A pension from any statutory pension scheme or provident or other fund approved by the Commissioner and received by an individual who is -

  • aged 60 or over; or
  • compulsorily retired at age 55 by operation of section 8 (2) of the Pensions Act, shall not form part of the assessable income of the individual and shall be taxed at 0%

Charge to Tax

Individuals may choose to pay tax under the Allowance Based System (ABS) or the Gross Income Based System (GIBS).

Under the GIBS, individuals receive no allowances.  However, taxpayers who have purchased property in Gibraltar will benefit from a deduction from their assessable income of their mortgage interest payments up to a maximum of £1,000 pa. 
Further deductions applicable under GIBS are as follows:

  1. Up to £5,000 pa for approved expenditure incurred towards the purchase of your home;
  2. Up to £1,000 pa for contributions to approved pension schemes

Taxpayers under the GIBS will pay tax on their assessable income at the following rate:

Individuals with gross assessable income not exceeding £25,000:

  • the first £10,000 of assessable income – 6%
  • the next £7,000 – 20%
  • balance - 28%

Individuals with gross assessable income exceeding £25,000:

  • the first £17,000 of assessable income – 16%
  • the next £8,000 – 19%
  • the next £15,000 – 25%
  • the next £65,000 – 28%
  • the next £395,000 – 25%
  • the next £200,000 – 18%
  • the next £300,000 – 10%
  • balance - 5%

To calculate the tax liability click on the Gross Income Based Tax Calculator 2013/14 icon above and follow instructions, alternatively you can check your tax liability by clicking on the Tax Tables.

Individuals who have opted to be taxed under the Allowances Based System are charged to tax on their taxable income which is arrived at by deducting personal and other allowances from the assessable income at the following rates:

For every pound of;

  • the first £4,000 of taxable income – 15%
  • the next £12,000 of taxable income - 24%
  • the remainder of the taxable income - 40%

A tax credit being the greater of £300 or 2% of the annual tax liability shall be given to all taxpayers under the Allowance Based System.

You can check your tax liability, under the Allowances Based System, click in Tax Tables Part 1..

Low Income Earner’s Tax Allowance

An individual whose assessable income is:

£10,000 or less, shall be entitled to claim for that year of assessment an allowance in the amount of £6,112.

More than £10,000 and up to £17,500 shall be entitled to claim for that year of assessment an allowance in the amount of £1,300.

More than £17,500 and up to £18,500 shall be entitled to claim for that year of assessment an allowance in the amount of £920.

More than £18,500 and up to £19,500 shall be entitled to claim for that year of assessment an allowance in the amount of £500.

Special allowance for individuals with total allowances amounting to less than £3,888

An individual who, during a year of assessment, has total deductions amounting to less than £3,888 shall be entitled to claim a special allowance from the amount of his assessable income equal to the difference between £3,888 and the total of all other deductions.

Tax credit for individuals aged 60 years and over

A tax credit of £4,000 by way of a reduction to his tax liability shall be given to an individual who is aged 60 or over and is in receipt of earned income.

This tax credit does not apply to an individual who:

Has income exceeding £2,000 from an occupational pension or annual amount of an annuity, or

Is entitled to receive income exceeding £2,000 in respect of the capital sum in excess of 25 per cent of the capital value of a pension or annuity to be paid on his retirement or

Has commuted his occupational pension or annuity entitlement payable to him and the capital sum in excess of 25 per cent of the capital value of the pension or annuity would provide a pension or annuity in excess of £2,000 or

Has elected to be chargeable to tax under the Gross Income Based System.

Residence

Ordinarily resident when applied to an individual means an individual who irrespective of whether such individual is domiciled in Gibraltar or otherwise, in any year of assessment is present in Gibraltar for a period of at least 183 days in aggregate or is present in Gibraltar in excess of 300 days in three consecutive years.

Non-resident means any person other than a person ordinarily resident

Qualifying (Category 2) Individual

A Qualifying (Category 2) Individual is an individual who for the year of assessment:

(1) has available to him for his exclusive use approved residential accommodation in Gibraltar for the whole of the year of assessment.

(2) is not resident in Gibraltar and has not been in the previous five years;

(3) has applied to the Finance Centre Director and has been issued with a certificate qualifying him as a Category 2 individual.

(4) an individual who has been issued with a Category 2 Individual certificate shall be liable to income tax on the first £ 80,000 of assessable income only and the amount of tax due and payable in any year of assessment shall be not less than £ 22,000.

High Executive Possessing Specialist Skills Individual

A High Executive Possessing Specialist Skills Individual shall be charged to tax limited to the first  £120,000 of his assessable income, under the Gross Income Based System.

An employer must satisfy the Finance Centre Director that the appointment of a High Executive Possessing Specialist Skills Individual will promote and sustain economic activity of particular economic value to Gibraltar and that he will earn more than £ 120,000.

Conditions on residential accommodation and previous non-residency apply.

Corporation Tax

The rate of corporation tax is 10%

With effect from 1 January 2011 the rate of 10%  applies to all companies, except utility companies and companies enjoying and abusing a dominant market position, who will pay a higher rate of 20%. These will include electricity, fuel, telephone service and water providers.

Interest and Dividends

Interest is not chargeable to tax under the Income Tax Act 2010 unless:

  1. It is in the course of licensed money lending activities or deposit taking activities as defined in the Financial Services (Banking) Act; or
  2. It is interest on loans by a company to another company in excess of £100,000.

Dividends paid by a company which is ordinarily resident in Gibraltar are liable to tax in Gibraltar when paid to a shareholder who is an individual ordinarily resident in Gibraltar. A tax credit at the rate of tax paid by the company on the profits out of which the dividend is being paid shall be available for set off against any tax that may be charged on that income.

Gift Aid

If you pay tax in Gibraltar on your income, gains or profits and then make a Gift Aid donation, locally registered charities (including ecclesiastical institutions and trusts) can claim back standard rate tax relating to that donation directly from the Income Tax Office.

Any person (including a company or a body of persons) is eligible to make a Gift Aid donation, if:

• It is made on or after 1st July 2006.
• It takes the form of a payment of a sum of money.
• The aggregate sum gifted shall at present not exceed £5,000 in any year of assessment.
• It is not subject to a condition as to repayment.
• Neither the donor nor any person connected with the donor receives a benefit in consequence of making the gift.
• At the time the gift is made, the donor is in receipt of income chargeable to tax in Gibraltar.
• The donor gives an appropriate declaration to the charity.

In order for the gift to qualify as a Gift Aid donation, a declaration must be made to the charity that:

• The donor wants the gift to be treated as a Gift Aid donation; and
• The donor has paid sufficient tax in Gibraltar for the year of assessment the donation is made to cover the standard rate tax the charity will reclaim from the Income Tax Office.

Capital Gains Tax

There is no Capital Gains tax in Gibraltar.

Estate Duty

With effect from 1 April 1997, Estate Duty was abolished in Gibraltar.

Double Taxation Arrangements

A Gibraltar resident who is in receipt of income which is liable to tax in Gibraltar that is derived from and has already suffered tax in any other jurisdiction, shall be entitled to double taxation relief in Gibraltar in respect of that income, of an amount equal to the tax already deducted or the Gibraltar tax, whichever is the lesser.

For further information please contact Commissioner of Income Tax: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 
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