Gibraltar

*Updated July 2020*

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• Legal system
• Inheritance and succession
• Estate planning
• Taxation
• Residence and domicile
• Other relevant information

Legal system

The law of Gibraltar is based on that of England and Wales and the common law and rules of equity apply.

Gibraltar has its own parliament that passes statute law in the form of acts, many of which are based on English statutes. Several English statutes have been incorporated directly into Gibraltar law by the English Law (Application) Act.

Currently, as a member of the EU, Gibraltar is subject to European law, and nationals of Member States can rely on that law within Gibraltar. Directives are implemented by local legislation. Gibraltar is a member of the EU, through the UK’s membership, and therefore following the Brexit result of the UK’s EU referendum on 23 June 2016 its future position is currently uncertain.

The following is a list of legislation that is applicable to the Gibraltar anti-money laundering / counter-financing of terrorism regime (as amended from time to time): 

• The Proceeds of Crime Act 2015 (External Investigations Ancillary to a Criminal Investigation or Proceeding) Order 2019
• The Proceeds of Crime Act 2015 (External Investigations in a Civil Context) Order 2019
• The Proceeds of Crime Act 2015 (External Requests and Orders) Order 2019)
• Drug Trafficking Offences Act (part V of which was repealed)
• Proceeds of Crime Act 2015
• Sanctions Act 2019
• Terrorism Act 2018
• The Terrorism (United Nations Measures) (Overseas Territories) Order 2001
• The Al-Qaida and Taliban (United Nations Measures) (Overseas Territories) Order 2002
• Orders made under the Export Control Act 2005

Applicable UN Security Council Resolutions:

• The EU implements all UN Security Council Resolutions.

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Inheritance and succession

Succession

Gibraltar succession law is essentially the same as English law, with no forced-heirship regime.

Family law and defined inheritance rules

The rights of married women to own property are set out in the Married Women and Civil Partners Act 1977. The Inheritance (Provision for Family and Dependants) Act 1975 gives the courts power to make appropriate provision for dependants on death. The statutory rules for intestate succession are set out in the Administration of Estates Act of 1933, and broadly provide that chattels pass to the surviving spouse with a statutory legacy and a settled moiety in favour of the spouse with the remaining half of residue passing absolutely to children. There are no forced heirship rules.

Probate process

Executors usually require a grant of probate issued by the Supreme Court (following application) to deal with assets in Gibraltar.

Right of survivorship applies to Gibraltar assets held in joint tenancy, without requiring grant of probate. Other assets not requiring probate include assets held in trust, certain pension policies and bank accounts with low balances. 

Mental capacity

The Disability Act 2017, passed by Parliament in July 2017 and the majority of the provisions came into effect on 13 June 2018.

The Lasting Powers of Attorney and Capacity Act 2018 introduced the ability for a person to create a power of attorney, which will be available should the donor of the power no longer have mental capacity.

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Estate planning

Use of trusts in estate planning

Gibraltar has comprehensive trust legislation, principally the Trustees Act.

Trusts are used for estate planning in a number of ways, most notably asset protection, succession, excluded property trusts, purpose trusts, trusts for minors, employee benefit trusts, charitable trusts etc.

Gibraltar has measures to provide a secure environment in which local trusts are protected by foreign laws and courts, via the Trusts (Private International Law) Act 2015. This law sets out the conditions under which Gibraltar courts will have jurisdiction over local trusts and, further, the extent to which foreign law will have an impact on such trusts.

Use of foundations in estate planning

From April 2017, the Private Foundations Act 2017 provides a framework for the establishment of foundations in Gibraltar.  A foundation has separate legal personality and is able to hold property in its own name, as absolute legal and beneficial owner, for the specific purposes that are detailed in the Foundation Charter. The purposes of the foundation can be very wide. A foundation is resident in Gibraltar, unless persons ordinarily resident in Gibraltar and the issue of such persons have been irrevocably excluded from benefit. A foundation can be used for the protection of family property. The use of foundations is common in civil law jurisdictions. Overseas foundations can also be registered in Gibraltar.

Types of entities

Trusts that may be settled include:

• Discretionary trusts and interest in possession trusts. These are the most commonly used trusts in Gibraltar.
• Asset protection trusts. The Insolvency Act 2011, in defined circumstances, allows settlors to protect assets from claims by future creditors by creating such trusts.
• Purpose trusts. The Purpose Trusts Act 2015 provides for the creation and enforcement of trusts whereby the trustees hold property on trust to carry out a specific purpose, which is not of a charitable nature. Under this Act, a purpose trust must be established for purposes that are capable of being carried out and are sufficiently certain to be capable of being carried out. It is also a requirement that at least one trustee of a purpose trust must be a licensed trustee and there are certain powers that a trustee will need.

Companies that may be incorporated include:

• Private company limited by shares.
• Public limited company.
• Company limited by guarantee and having a share capital.
• Company limited by guarantee and not having a share capital. Unlimited company.
• Private trust company (PTC). The Private Trust Company Act 2015 sets out a specific legislative framework within which a PTC is formally recognised and can operate. A PTC can provide many benefits, in particular in respect to family offices. A voluntary system of registration as a PTC exists, so providing the option of establishing and operating within the framework of the Act, while at the same time providing flexibility for those seeking to opt out of it. In order to register as a PTC there are specific requirements which must be met. The office of the Registrar of Private Trust Companies is held by the Registrar of Companies.
• Limited partnerships and LLPs may be registered in Gibraltar. An LLP has unrestricted capacity, and may enter into contracts on its own account.  An LLP is not legally a partnership: it is a corporate body with a continuing legal existence independent of its members, formed where two or more persons come together for the purposes of carrying on a lawful business, with a view to profit. It has an open-ended and indefinite existence, and will continue until it is wound up.
• European Economic Interest Groupings may be established under EU rules.
• Protected cell companies may establish themselves in Gibraltar under Gibraltar protected cell company legislation.
• Qualifying recognised overseas pension schemes (QROPS) and qualifying non-UK pension schemes (QNUPS) can obtain local tax approval and establish in Gibraltar.

Foundations: The Private Foundations Act 2017 provides a framework for the establishment of foundations in Gibraltar. A foundation has separate legal personality and is able to hold property in its own name, as absolute legal and beneficial owner, for the specific purposes that are detailed in the Foundation Charter. The purposes of the Foundation can be very wide. A Foundation is resident in Gibraltar, unless persons ordinarily resident in Gibraltar and the issue of such persons have been irrevocably excluded from benefit.

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Taxation

Income tax system

The principal tax statute is the Income Tax Act 2010 (ITA), which became effective on 1 January 2011.  Various amendments have been made, most recently under the Income Tax 2010 (Amendment) Regulations 2020. There is no capital gains tax, inheritance tax, wealth tax or value-added tax.

The ITA amends and consolidates the previous Act while maintaining the source base of taxation in a more defined form. It introduces a standard low rate of corporate tax of 10 per cent and ends the tax-exempt company regime.

Persons are subject to income tax in Gibraltar on income accruing in or derived from Gibraltar. An ordinarily resident individual is also generally liable to income tax on certain types of income from non-Gibraltar sources. Nonetheless, many exemptions from tax apply, for example, bank and building society interest, dividends from quoted companies, dividends paid by one company to another, dividends paid to non-residents etc.

From October 2018, an Income Tax Ruling procedure is in place in order for the Commissioner of Income Tax to give rulings at the request of actual or potential taxpayers.

Trusts

As from 1 January 2011, a trust is resident in Gibraltar if one or more of the beneficiaries are ordinarily resident in Gibraltar (excluding Category 2 individuals, see below) or the class of potential beneficiaries may include an ordinarily resident person.

A resident trust is taxed on its worldwide assessable income. A non-resident trust may be liable to tax on income accrued in or derived from Gibraltar. The standard rate of tax for a resident trust is 10 per cent. Distributions to resident beneficiaries may be liable to income tax.

Foundations

A resident foundation is charged to tax on its worldwide assessable income. A non-resident foundation may suffer tax on income accrued in or derived from Gibraltar. The rate of tax for foundations is 10 per cent. 

Anti-avoidance

There are income tax anti-avoidance measures that enable the Commissioner of Income Tax to disregard part or all of any arrangements that are deemed to be artificial and/or fictitious and whose purpose is to reduce or eliminate the tax payable in Gibraltar. There are also specific anti-avoidance provisions targeting such areas as transfer of assets abroad, thin capitalisation, transactions with connected persons etc.

Gibraltar transposed the EU's Anti-Tax Avoidance Directive (ATAD) into Gibraltar law on 20 December 2018. These regulations came into effect on 1 January 2019. This includes introducing controlled foreign company legislation in Gibraltar, along with an interest limitation rule and a hybrid mismatch rule.

Personal income tax rates

For individuals, there is a choice of two income tax systems:

• An allowance-based system (ABS) under which various deductions and personal allowances are allowed against assessable income.
• A flat rate gross-income-based system (GIBS) under which only a certain allowances are available.

Married couples can elect for either system but restrictions apply for ABS.

ABS

Band of taxable income (GBP)	Tax rate (%)
0-4,000	14
4,001-16,000	17
Over 16,001	39

GIBS

The income bands and tax rates for persons with income up to GBP25,000 is as follows: 

Band of taxable income (GBP)	Tax rate (%)
0-10,000	6
10,001-17,000	20
Balance at	28

The income bands and tax rates for persons with income above GBP25,000 is as follows:

Band of taxable income (GBP)	Tax rate (%)
0–17,000	16
17,001–25,000	19
25,001–40,000	25
40,001–105,000	28
105,001–500,000	25
500,001–700,000	18
Balance	5

Pension income

Generally, pension income from a statutory pension scheme, provident or other approved scheme received by a member aged 60 or over forms part of assessable income, but is taxed at 0 per cent (age 55 for police or firemen if compulsorily retired).

From 1 July 2011, pension income from approved occupational schemes, received by a member aged 60 or over, who is in employment, is tax exempt and such income is not taken into account in establishing tax due on earned income.

Income derived from an ‘imported pension’ (e.g. UK pension transfer to a Gibraltar QROPS) or from a Gibraltar QNUPS forms part of assessable income and is taxed at 2.5 per cent.

Corporate income tax rates

A standard 10 per cent rate of company income tax applies to almost all companies. Utility and fuel supply, and companies abusing a dominant market position, are taxed at a higher rate of 20 per cent. For telecommunication companies, the 20 per cent rate applies to profits and gains arising from their telecommunication activities only (10 per cent rate for other profits).

Companies are taxed generally on income that accrues in or derives from Gibraltar. For companiesOn 2 July 2018 it was announced that changes will be introduced to allow companies to transfer losses on group restructures, so long as there is no change of ultimate ownership and no change in the nature of the business within a period of 3 years. The changes will allow tax losses to be carried forward against a business even if the business is transferred to another company under the same ultimate ownership.

From November 2018, non-trading rental income arising from movable property located outside of Gibraltar received or receivable by a company registered in Gibraltar is deemed to accrue in and derive from Gibraltar and hence is taxable. licensed and regulated in Gibraltar, profits are deemed to accrue in and derive from Gibraltar, except for activities carried on outside Gibraltar by a branch or permanent establishment.

From 1 January 2014, royalty income received by a Gibraltar company is deemed to accrue and derive in Gibraltar and thus be subject to company income tax. This amendment to the ITA was at the request of the European Commission and brings Gibraltar in line with EU law.

From 1 July 2013, where a Gibraltar registered company receives interest on a loan from another company(ies), in excess of GBP100,000 per annum, it is deemed to be in receipt of income taxable in Gibraltar.

Capital gains tax

NOT APPLICABLE

Non-residents

Income accruing in or derived from Gibraltar, subject to exemptions. 

Withholding tax rate (non-treaty)

NOT APPLICABLE

Withholding tax rate (treaty)

NOT APPLICABLE

Taxation at death

NOT APPLICABLE

Other taxes

• Stamp duty is charged on transfer of Gibraltar real property (abolished between spouses).
• Capital duty (flat rate GBP10) is charged on creation and issue of share capital and issue of loan capital.
• Gaming tax is levied at the rate of 1 per cent of relevant income, tax capped at GBP425,000 and with a minimum tax payable of GBP85,000 per licence.
• Import and excise duties are levied. 

Tax treaties

• A tax agreement between the UK and Spain, regarding Gibraltar, was signed on 4 March 2019. It is not yet in force. It focuses on co-operation on tax matters, helping resolve disputes over tax residency, and increasing transparency and cooperation against tax fraud. The residency rules contained in the agreement, for all except Spanish nationals, will come into effect for the taxable periods beginning after the ratification of the agreement by the two parties. The earliest Spanish tax period this can apply is from 1 January 2021.
• A double taxation agreement between the UK and Gibraltar was signed on 15 October 2019. It entered into force on 24 March 2020.  The agreement takes effect in the UK from 1 May 2020 for taxes withheld at source, 6 April 2020 for income tax and capital gains tax and 1 April 2020 for corporation tax. The agreement takes effect in Gibraltar from 1 May 2020 for taxes withheld at source, 1 July 2020 for income tax and corporation tax. This is Gibraltar’s first OECD model agreement. It is hoped that more will be entered into by Gibraltar in the next five years.

Exchange of information

These mechanisms for exchange of information apply:

• Gibraltar has signed bilateral Tax Information Exchange Agreements with the following 27 countries; Australia, Austria, Belgium, Denmark, the Faroe Islands, Finland, France, Germany, Greece, Greenland, Guernsey, Iceland, India, Ireland, Italy, Malta, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, South Africa, Sweden, Turkey, the UK and the US.
• By virtue of transposing Directive 2011/16/EU on administrative cooperation in the field of taxation, Gibraltar has established a mechanism for exchange of information with all EU Member States. Automatic exchange is effective from 1 January 2015.
• Gibraltar has signed intergovernmental agreements with the UK and the US for Foreign Account Tax Compliance Act (FATCA) purposes.
• The Convention on Mutual Administrative Assistance in Tax Matters, with effect from 1 March 2014, was extended to cover Gibraltar. The OECD Common Reporting Standard (CRS) has been implemented into local law. The first date on which information was exchanged was 30 September 2017 for the period ended 31 December 2016. Details of reportable jurisdictions can be found at www.aeoi.gov.gi/help/Reportable_Jurisdictions.pdf
• Under the tax agreement with Spain, Gibraltar will continue to provide information to the Spanish tax authorities. This includes:
• direct and free access to the records of the Registrar of Companies in Gibraltar as well as to the Gibraltar Land Registry,
• direct access to beneficial ownership information as is public or, on request to the Commissioner of Income Tax in Gibraltar on companies, any body corporate, partnerships and foundations; and
• direct access to information as is public or otherwise available to the Commissioner of Income Tax in Gibraltar on the settlors, trustees, beneficiaries, assets of all types of trusts, as well as to other legal structures or arrangements established or managed in Gibraltar, or governed by its legislation, when the settlors, trustees, protectors, beneficiaries, are tax resident in Spain or the assets held by all types of trusts are located in Spain.

• Gibraltar transposed the EU Directive on Administrative Cooperation in Direct Taxes (DAC6) into local law. DAC6 will require intermediaries, and in some instances taxpayers, to disclose specified cross-border tax arrangements to the tax authorities of their home Member State. It applies to any person that:
• designs, markets, organises or makes available for implementation or manages the implementation of a reportable cross-border arrangement; or
• provides, directly or by means of other persons, aid, assistance or advice with respect to designing, marketing, organising, making available for implementation or managing the implementation of a reportable cross-border arrangement.

It refers to them as an intermediary, and they can be either an individual or a company (i.e. accountants, advisers, lawyers, banks etc).

On 8 May 2021, the European Commission proposed a three-month extension to the DAC6 deadlines for filing and for tax authorities to exchange information.

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Residence and domicile

Special rules on becoming resident

Individual persons are ordinarily resident in Gibraltar if they visit Gibraltar for either 183 days or more in a tax year, or more than 300 days in three consecutive tax years. Any part of a 24-hour period commencing at midnight shall be counted as a day of presence whether or not any accommodation is used in Gibraltar.

Also special personal residency regimes exist, namely Qualifying (Category 2) individuals and High Executives Possessing Specialist Skills (HEPSS).

Qualifying (category 2) individuals:

• An individual who satisfies certain criteria may be granted qualifying (Category 2) individual status.
• The applicant must have a net wealth exceeding GBP2 million in order to satisfy the financial requirements. Approved residential accommodation in Gibraltar (bought or rented) must be available to the applicant for personal use for the whole of the year of assessment (or for the remaining part of the year of application). There is no minimum physical presence requirement. The individual must not have been resident in Gibraltar or engaged in any trade, business or employment in Gibraltar in any of the previous five tax years. Certain duties are excepted. 
• While Category 2 resident, the individual must not generally engage in any trade, business or employment in Gibraltar. There are, however, exceptions to this as the government recognises the growing trend of entrepreneurial high-net-worth individuals who wish to establish themselves in Gibraltar and yet still carry out important economic activity.
• Category 2 residents pay tax by reference to the allowance-based system in Gibraltar, with their tax generally capped at a taxable income level of GBP80,000. Annual tax liability is between a maximum of GBP27,560 and a minimum of GBP22,000 (2019/2020). In the first and last years of assessment, the minimum tax payable is pro-rated for each month for which the certificate is in force.
• Income from certain local activities (e.g. local rental profits received by the Category 2 resident directly) are taxed separate to, and in addition to, the Category 2 tax, at the marginal rate of tax for Category 2 residents (i.e. 39 per cent 2019/2020).

HEPSS:

• This status is for people with specialist skills of exceptional economic value to Gibraltar, earning more than GBP120,000 per annum. Their income is capped at GBP120,000 with tax payable in accordance with GIBS resulting in a maximum tax of GBP29,940 per annum.
• Similar to the Category 2 status, an HEPSS individual must retain suitable approved accommodation in Gibraltar (either bought or rented) and similar previous non-residence rules apply.

For companies, a company is ordinarily resident if:

• the management and control is in Gibraltar; 
• the management and control is exercised outside of Gibraltar by persons who are ordinarily resident in Gibraltar; or
• in addition to the above, for an investment company, if control is exercised by persons ordinarily resident. For this purpose, ‘control’ is defined as the ability to secure that the affairs of the company are conducted in accordance with the wishes of that ordinarily resident person(s). This can be by means of holding shares, possession of voting power, directly or indirectly, or by reason of anything in the articles of association or any other document regarding the company.

The Gibraltar-Spain tax agreement (signed but not yet in force) has provisions to help resolve disputes over tax residency.

Under these provisions, individuals shall be tax resident in Gibraltar or Spain according to their domestic law. However, where there is a tax residency conflict, new rules will apply. The new rules will treat individuals as only resident in Spain in certain circumstances.

Under this agreement, Category 2 and HEPSS status shall not of itself constitute proof of tax residency in Gibraltar for the purposes of the agreement. Therefore for such residents, for the purposes of the agreement, they will need to satisfy the normal Gibraltar tax residency rules i.e. present in Gibraltar 183 days or more in a Gibraltar tax year, or more than 300 days in total in three consecutive years (the latter test may not be sufficient in some cases, where 183 days and permanent home available in Gibraltar for exclusive use will be required for agreement purposes).

Furthermore, where individuals move from Spain to Gibraltar they may, in certain circumstances, continue to be treated as tax resident in Spain.

Under this agreement, companies, partnerships, trusts and foundations, shall be considered to have residency only in Spain in certain circumstances, e.g. when the majority of the assets, whether directly or indirectly owned, are located in Spain or consist of rights that may or must be exercised in Spain. There is relief for entities incorporated before 16 November 2018.

Special rules on ceasing residence

If one do not satisfy the above residency tests. 

Domicile concept for gifts and inheritance

Not applicable.

Taxation of holdings by non-residents on death and of gifts

• Gifts: not applicable.
• Death: not applicable.

Reporting/auditing requirements

The Gibraltar income tax year runs from 1 July to 30 June each year.

The concept of self-assessment applies so that individuals and companies are required to make returns of their taxable income and calculate their own tax liability for each year.

For persons other than companies, they are required to submit the tax return by 30 November each year and accounts must be drawn up on the actual basis i.e. to 30 June each year.

Companies will be taxed by reference to their accounting period on a current-year basis and are required to submit accounts and tax returns within nine months of the year-end. For accounting periods ending on or after 1 January 2016, all companies that are registered in Gibraltar, irrespective of whether or not they are in receipt of assessable income, are obliged to file a Gibraltar tax return and accounts. Previously if a company had no Gibraltar-assessable income it had no tax return filing requirement.

Companies with assessable income of more than GBP1.25 million are required to file audited accounts together with the tax return.

Companies (including a branch of a company situated in Gibraltar) with assessable income of less than GBP1.25 million are required to file accounts accompanied by an independent accountant’s report with the tax return.

For companies with no assessable income, the type of accounts to be filed depends on the size of the company as determined by the Companies Act. Audited accounts are required except where the company qualifies as ‘small’. Where the company is ‘small’ and it has no assessable income, only an abridged balance sheet must be filed.

For accounting periods ending on or after 1 January 2016, all companies incorporated in Gibraltar (except those whose shares are listed on a recognised stock exchange) that declare a dividend are required to file a return of dividends.

Any balancing payment of tax is required at the same time the tax return is submitted. This balancing payment is any tax due after the payments made through the payment on account system. This system applies for companies and individuals (although it does not apply for those individuals whose only income is employment income, which is subject to PAYE).

For companies, payments on account are due on 28 February and the other on 30 September. For individuals, payments on account are due on 31 January and 30 June. Each payment is equal to 50 per cent of the tax payable for the previous accounting period. A range of penalties and surcharges can be imposed for non-compliance (for example late payment of tax, late or incomplete returns, failure to report notifiable arrangements etc.).

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Other relevant information

Asset protection laws

Yes, under certain conditions, asset-protection trusts may be created in Gibraltar. 

Foreign currency restrictions

Not applicable.

Foreign ownership restrictions

Not applicable.

AML / due diligence for the following purposes

• To establish a trust/foundation.
• For incorporation of a company.
• To open a bank account.

The specific AML/due-diligence requirements are in line with the EU AML Directives and Gibraltar legislation (as amended from time to time) including, but not limited to, the following:

For an individual:

• Any one current, clear, document certified as a true copy, evidencing identity.
• One document certified as a true copy of the original, evidencing residential address.
• Source of wealth: activities that have generated total net worth.
• Source of funds: source of the funds to be utilised.
• One original reference.

For a corporate body:

Where the owner of the Trust/company is a corporate body, the following documentation is required, together with items above:

• Certificate of incorporation and any certificate on change of name.
• Details of the registered office and place of incorporation.
• Memorandum and articles of association.
• List of directors, shareholders and beneficial owners.
• Copy of the latest accounts.

For a trust/settlement/foundation:

Where the owner of a company is a trust, settlement or foundation, the following documentation is required together with items for an individual above:

• Trust/settlement/foundation deed showing names of the trustees, date of and signature pages.
• In relation to all trustees, the information/documentation listed above.
• In relation to the settlor, the information/documentation above.
• In relation to the protector, if any, the information/documentation above.
• Confirmation that there are no anonymous principals.
• Nature and purpose of the trust, and level of activity.
• Copy of the latest accounts, if any.

Other points of interest

Under the Financial Services (Experienced Investor Funds) Regulations 2005, Gibraltar implemented a framework for the fast-tracking of funds for more sophisticated investors. An Experienced Investor Fund can be set up quickly. Funds may also be established as protected cell companies. Since the introduction of such funds, the fund industry has been one of the fastest-growing sectors in Gibraltar.

Key resources for further information

Publications

• The Gibraltar Financial Services Handbook, (Financial Services Handbook (Gibraltar) Limited), published annually.
• Gibraltar: International Financial Centre, (5^th edition).

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STEP branches in Gibraltar

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• STEP Gibraltar

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