Tax residence for high net worth individuals
Spring 2013
Legislation Income Tax Act 2010: Qualifying (Category 2) Individuals Rules 2004. Available online at www.gibraltarlaws.gov.gi Minimum net asset requirement: Applicant must possess net assets to a value of at least £2 million Tax Applied to first £80,000 of taxable income only. Minimum amount of annual tax payable is £22,000, or £1,833.33 for each complete month or part month for which the certificate is in force. Maximum is circa £30,000 (or £2,500 per month or part month). Prohibited activities The individual must undertake not to engage in any trade, business or employment in Gibraltar other than duties incidental to any trade, business or employment based outside Gibraltar. However, this restriction is currently under review and may result in a legislative amendment. Doing Business in Gibraltar In the interim, as a general rule, Category 2 individuals are now permitted to invest in or do business in Gibraltar so long as any assessable income is subject to taxation. However, the specifics of the business activities need to be brought to the attention of the Finance Centre Director Prior to application The rules restrict an individual from having been a resident or employed in Gibraltar prior to application for a Category 2 status. Further, he or she must not have been engaged in a trade, business or employment in Gibraltar other than duties incidental to any trade, business or employment based outside Gibraltar. Family The spouse or child of a Category 2 individual may elect to benefit from the terms of the same certificate. Length of stay. There is no specific legal requirement as regards the length of stay in any particular year. However, the Category 2 certificate will not shield any individual from becoming tax residence in a different country. Property requirement The individual is required to either purchase or rent an apartment in Gibraltar and have it available for his or her exclusive use throughout the year. The accommodation must be of a certain standard appropriate to sustaining the lifestyle of a wealthy individual. Property approval application The applicant is required to submit a ‘Residential Accommodation Approval’ form, available online at www.gibraltar.gov.gi/finance-centre, for approval by the Finance Centre Director. At the time of application or within two months of the issue of the certificate, the individual is required to submit a copy of the deed of title or of the rental contract. References The applicant is required to submit two character references from recognised and established professionals (one of which must be from a bank and the other from a law or accountancy firm), a copy of his or her passport, a curriculum vitae and proof of his financial standing. Note: The Finance Centre Director may in individual cases require the applicant to submit further information before determining the application. The applicant is advised to seek professional advice. (Application form available online at www.gibraltar.gov.gi/finance-centre Application fee £1,000 (non-refundable)