Taxation in Gibraltar

Last updated

Taxation in Gibraltar is determined by the law of Gibraltar which is based on English law, but is separate from the UK legal system. [1] Companies and non residents do not pay income tax unless the source of this income is or is deemed to be Gibraltar. Individuals pay tax on a worldwide basis on income from employment or self employment if they are ordinarily resident in Gibraltar. There is no tax on capital income. [2]

Contents

In Gibraltar there is no capital gains tax, wealth tax, sales tax or value added tax. Import duty is payable on all items at 10%. The main tax for companies is Corporation Tax, and Social insurance contributions. There are also stamp duties on certain transactions, and property taxes ('rates'). Gibraltar benefits from an extensive shipping trade, offshore banking, and its position as an international conference center. It is a well known and regulated international finance centre and has been a popular jurisdiction for European offshore companies. The financial sector, tourism, shipping services fees, and duties on consumer goods generate revenue. [3] Non-resident companies can take advantage of a number of offshore regimes in order to reduce taxation, although in line with the elimination of unfair tax practices this is being phased out. Individuals pay quite high taxes on their income in Gibraltar unless they are able to take advantage of high-net-worth individual status or gain exemption as an expatriate executive. Import duties are quite high on some items.

Assessment and collection of tax is administered by the Commissioner of Income Tax; the tax year runs from 1 July to the following 30 June.

The information in this article is taken from the publication "Gibraltar Tax facts". [4] It may be incorrect or out of date. For the latest data see the Government of Gibraltar website listed in external links.

Value added tax

Gibraltar is a VAT free jurisdiction.

Gaming tax (Online gaming)

Levied at the rate of 1% of relevant income (gaming yield for online casinos and bets placed for online bookmakers), capped at £425,000 with a minimum payable of £85,000.

Import duties

Import duties are levied on goods imported into Gibraltar, mostly at rates of 0% - 12%. As of 1 July 2010, import duty on pedal cycles, electric cars, solar paneling and related equipment has been reduced to 0%. Import duty on hybrid cars has similarly been reduced, though it has increased for petrol and diesel powered vehicles.

Excise duties

Levied mainly on spirits, wines, tobacco and mineral oils.

Social insurance, 2009

ClassRateMinimumMaximum
Employee (under 60)10% earnings£5.00£25.16
Employee (Aged 60 & Over)0% earnings£0.00£0.00
Employer20% earnings£15.00£32.97
Self Employed20% earnings£10.00£30.17

Minimums and maxima shown are per week. No contributions are payable if the person is not in receipt of earnings. Income earned by a student on holiday is exempt.

Corporation tax

Before 2009, the rate of corporation tax was 22%. With effect from 1 July 2009, regarding any new businesses, a start up rate of 10% will apply to any business established in Gibraltar after 1 July 2009. Tax will be assessed on an actual year basis. With effect from 1 January 2011, a new rate of 10% will apply to all companies except energy and utility providers, which will pay a 10% surcharge and thus incur a rate of 20%. These will include electricity, fuel, telephone service and water providers.

As an anti-avoidance provision, it will not apply in respect of any commercial activity being carried out before 25 June 2009 and that is reorganized by the taxpayer in the name of a different entity for the purpose of benefiting from the scheme.

Withholding tax

ClassRate
dividends0%
In interest paid to resident individuals0%
On interest paid to resident companies22%
On interest paid to non-residents0%

In addition, no tax is payable on dividends between Gibraltar companies

Capital taxation

Income tax rates

Gibraltar has two tax systems, one based on gross income which does not provide any allowances, and another with different rates which does. The choice of which system to apply is made by the taxable person.

Gross Income Based System

1. Persons on gross income up to £16,000

IncomeRatePayable
0 - £10,0008%£800
£10,001 - £16,00020%£1200

2. Persons on gross income £16,000 to £25,000

IncomeOn firstRateBalance at 20%Payable
£16,001 - £17,000£60000%£10,001 - £11,000£2,000 - £2,200
£17,001 - £18,000£5,0000%£12,001 - £13,000£2,400 - £2,600
£18,001 - £19,000£40000%£14,001 - £15,000£2,800 - £3,000
£19,001 - £20,000£30000%£16,001 - £17,000£3,200 - £3,400
£20,001 - £25,000£20000%£18,001 - £23,000£3,600 - £4,600

3. Persons on gross income between £25,001 and £35,000

A rate of 20% applies less tapering relief on gross income between £25,001 and £26,000. With the tapering relief on gross income of £25,000, there is a tax-free amount of £2000 that reduces by £2 for every £1 increase in gross income.

4. Persons on gross income between £35,001 and £100,000

The effective (average) tax rate is reduced by 0.5% from the previous year using a complex formula to give a maximum effective tax rate of 26.25% on gross income of £100,000. The tax liability is arrived at by first calculating using the previous year's tax band (i.e. 20% for tax bands of £0 - £25,000 and 29% for £25,001 - £100,000), then reducing it by 0.5% and finally applying the resulting rate of taxable income (gross income less tapering relief). With the tapering relief on gross income of £35,001, there is a tax-free amount of £3284 that reduces by £2 for every £1 increase in gross income.

5. Persons on gross income between £100,001 and £353,000

A rate of 20% on the first £25,000 of gross income applies, with the balance taxed at 29%. With the tapering relief on gross income of £100,001, there is a tax-free amount of £1722 that reduces by £2 for every £1 increase in gross income.

6. Individuals on Gross Income over £353,000

Taxed As FollowsTax Rate
First £25,00120%
£25,001 - £353,00029%
£353,001 - £704,80020%
£704,801 - £1,000,00010%
Excess over £1,000,0005%

Allowance Based Scheme

BandsTax RateTax on band
0 - 4,00017% (reduced rate)£680
4,001 - 16,00030% (standard rate)£3,600
Over - 16,00040%

A wide range of allowances apply for children, single parents, mortgage relief etc. (Below)

Main Income Tax Allowances & Reliefs
Personal Allowance£2812
Spouse Allowance£2632
Nursery School Allowance (per child)£1023
Child Relief in respect of first child only£997
Child Relief in respect of each child educated abroad£1105
Disabled Person£2724
Dependent Relatives (maximum for Resident)£190
Dependent Relatives (maximum for Non-resident)£139
Blind person£627
Apprentice£380
Single parent£2632
Home Purchase Allowance (deduction)£11,500
Home Purchase (Special - £1000 maximum p.a.)£4000
Social Insurance (Employee)£335
Social Insurance (Self-employed)£432

Stamp duty

Stamp Duty is only payable on real estate and capital transactions at the following rates:

On purchase of Real Estate:

Other allowances & reliefs

Agreement with Spain

In 2019, the International Agreement on Taxation and Protection of Financial Interests between Spain and the United Kingdom on Gibraltar was signed by all three countries. This agreement covers such issues as tax co-operation between the authorities in Gibraltar and Spain, the criteria for tax residence of individuals and companies and procedures for administrative cooperation. [5]

Related Research Articles

A capital gains tax (CGT) is the tax on profits realized on the sale of a non-inventory asset. The most common capital gains are realized from the sale of stocks, bonds, precious metals, real estate, and property.

<span class="mw-page-title-main">Taxation in the United Kingdom</span> United Kingdom tax codes

In the United Kingdom, taxation may involve payments to at least three different levels of government: central government, devolved governments and local government. Central government revenues come primarily from income tax, National Insurance contributions, value added tax, corporation tax and fuel duty. Local government revenues come primarily from grants from central government funds, business rates in England, Council Tax and increasingly from fees and charges such as those for on-street parking. In the fiscal year 2014–15, total government revenue was forecast to be £648 billion, or 37.7 per cent of GDP, with net taxes and National Insurance contributions standing at £606 billion.

<span class="mw-page-title-main">Taxation in the Republic of Ireland</span> Irish tax code

Taxation in Ireland in 2017 came from Personal Income taxes, and Consumption taxes, being VAT and Excise and Customs duties. Corporation taxes represents most of the balance, but Ireland's Corporate Tax System (CT) is a central part of Ireland's economic model. Ireland summarises its taxation policy using the OECD's Hierarchy of Taxes pyramid, which emphasises high corporate tax rates as the most harmful types of taxes where economic growth is the objective. The balance of Ireland's taxes are Property taxes and Capital taxes.

In France, taxation is determined by the yearly budget vote by the French Parliament, which determines which kinds of taxes can be levied and which rates can be applied.

For households and individuals, gross income is the sum of all wages, salaries, profits, interest payments, rents, and other forms of earnings, before any deductions or taxes. It is opposed to net income, defined as the gross income minus taxes and other deductions.

A personal pension scheme (PPS), sometimes called a personal pension plan (PPP), is a UK tax-privileged individual investment vehicle, with the primary purpose of building a capital sum to provide retirement benefits, although it will usually also provide death benefits.

Superannuation in Australia is taxed by the Australian taxation system at three points: on contributions received by a superannuation fund, on investment income earned by the fund, and on benefits paid by the fund.

This is a list of the maximum potential tax rates around Europe for certain income brackets. It is focused on three types of taxes: corporate, individual, and value added taxes (VAT). It is not intended to represent the true tax burden to either the corporation or the individual in the listed country.

Taxes in Switzerland are levied by the Swiss Confederation, the cantons and the municipalities.

A qualifying recognised overseas pension scheme, or QROPS is an overseas pension scheme that meets certain requirements set by HM Revenue and Customs (HMRC). A QROPS can receive transfers of British pension benefits. The QROPS programme was part of British legislation launched on 6 April 2006 as a direct result of EU human rights requirements of the freedom of capital movement.

In Austria, taxes are levied by the state and the tax revenue in Austria was 42.7% of GDP in 2016 according to the World Bank The most important revenue source for the government is the income tax, corporate tax, social security contributions, value added tax and tax on goods and services. Another important taxes are municipal tax, real-estate tax, vehicle insurance tax, property tax, tobacco tax. There exists no property tax. The gift tax and inheritance tax were cancelled in 2008. Furthermore, self-employed persons can use a tax allowance of €3,900 per year. The tax period is set for a calendar year. However, there is a possibility of having an exception but a permission of the tax authority must be received. The Financial Secrecy Index ranks Austria as the 35th safest tax haven in the world.

Taxation in Norway is levied by the central government, the county municipality and the municipality. In 2012 the total tax revenue was 42.2% of the gross domestic product (GDP). Many direct and indirect taxes exist. The most important taxes – in terms of revenue – are VAT, income tax in the petroleum sector, employers' social security contributions and tax on "ordinary income" for persons. Most direct taxes are collected by the Norwegian Tax Administration and most indirect taxes are collected by the Norwegian Customs and Excise Authorities.

Taxes in Germany are levied at various government levels: the federal government, the 16 states (Länder), and numerous municipalities (Städte/Gemeinden). The structured tax system has evolved significantly, since the reunification of Germany in 1990 and the integration within the European Union, which has influenced tax policies. Today, income tax and Value-Added Tax (VAT) are the primary sources of tax revenue. These taxes reflect Germany's commitment to a balanced approach between direct and indirect taxation, essential for funding extensive social welfare programs and public infrastructure. The modern German tax system accentuate on fairness and efficiency, adapting to global economic trends and domestic fiscal needs.

<span class="mw-page-title-main">Taxation in South Africa</span>

Taxation may involve payments to a minimum of two different levels of government: central government through SARS or to local government. Prior to 2001 the South African tax system was "source-based", where in income is taxed in the country where it originates. Since January 2001, the tax system was changed to "residence-based" wherein taxpayers residing in South Africa are taxed on their income irrespective of its source. Non residents are only subject to domestic taxes.

<span class="mw-page-title-main">Taxation in Spain</span>

Taxes in Spain are levied by national (central), regional and local governments. Tax revenue in Spain stood at 36.3% of GDP in 2013. A wide range of taxes are levied on different sources, the most important ones being income tax, social security contributions, corporate tax, value added tax; some of them are applied at national level and others at national and regional levels. Most national and regional taxes are collected by the Agencia Estatal de Administración Tributaria which is the bureau responsible for collecting taxes at the national level. Other minor taxes like property transfer tax (regional), real estate property tax (local), road tax (local) are collected directly by regional or local administrations. Four historical territories or foral provinces collect all national and regional taxes themselves and subsequently transfer the portion due to the central Government after two negotiations called Concierto and the Convenio. The tax year in Spain follows the calendar year. The tax collection method depends on the tax; some of them are collected by self-assessment, but others follow a system of pay-as-you-earn tax with monthly withholdings that follow a self-assessment at the end of the term.

Taxes in Bulgaria are collected on both state and local levels. The most important taxes are collected on state level, these taxes include income tax, social security, corporate taxes and value added tax. On the local level, property taxes as well as various fees are collected. All income earned in Bulgaria is taxed on a flat rate of 10%. Employment income earned in Bulgaria is also subject to various social security insurance contributions. In total the employee pays 12.9% and the employer contributes what corresponds to 17.9%. Corporate income tax is also a flat 10%. Value-Added Tax applies at a flat rate of 20% on virtually all goods and services. A lower rate of 9% applies on only hotel services.

Taxation in Malta is levied by the State and it is administered by the Commissioner for Tax and Customs. The total tax revenues in 2014 amounted to €2.747 Billion, which represents 34.6% of the Maltese GDP. The main sources of tax revenue were value-added tax, income tax, and social security contributions.

Compared to other liberal democracies, Ireland's pension policies have average coverage, which includes 78 percent of the workforce as of 2014, and it offers different types of pensions for employees to choose from. The Irish pension system is designed as a pay-as-you-go program and is based on both public and private pension programs.

The organization responsible for tax policy in Ukraine is the State Fiscal Service, operating under the Ministry of Finance of Ukraine. Taxation is legally regulated by the Taxation Code of Ukraine. The calendar year serves as a fiscal year in Ukraine. The most important sources of tax revenue in Ukraine are unified social security contributions, value added tax, individual income tax. In 2017 taxes collected formed 23% of GDP at ₴969.654 billion.

<span class="mw-page-title-main">Capital gains tax in the United Kingdom</span> UK tax on the gains on capital assets by British individuals

Capital gains tax in the United Kingdom is a tax levied on capital gains, the profit realised on the sale of a non-inventory asset by an individual or trust in the United Kingdom. The most common capital gains are realised from the sale of shares, bonds, precious metals, real estate, and property, so the tax principally targets business owners, investors and employee share scheme participants.

References

  1. Gibraltar Laws
  2. Gibraltar Offshore
  3. Gibraltar as a finance centre
  4. Gibraltar Tax facts [ permanent dead link ]
  5. "New tax agreement between Spain and Gibraltar". 29 April 2021.