Paying Taxes in Gibraltar
Gibraltar has a low tax policy and the country offers many advantages from a taxation point of view to foreign investors who open a company here. Resident companies in Gibraltar are subject to the corporate tax and so is the income derived by individuals, either in the form of employment income, trade, rent, director’s fees or other forms of income.
Below, our company registration consultants in Gibraltar explain how the taxation system works here.
What are the taxed levied in Gibraltar?
Gibraltar is a very attractive jurisdiction from a taxation point of view, however there a few taxes which apply to individuals and companies. There are also various exemptions from taxation. Overall, the Gibraltar taxation system looks like this:
- - the personal income tax is applied individuals residing in Gibraltar;
- - the corporate income tax is applied to local and foreign companies with operations in Gibraltar;
- - Gibraltar imposes a gaming tax, given its status as a major gaming hub in Europe;
- - there are stamp duties and excise taxes which must be paid in Gibraltar;
- - employers and employees are subject to social contributions in Gibraltar;
- - Gibraltar does not impose the value added tax, being the only European jurisdiction without such levy;
- - there are no capital gains or withholding taxes on interests, royalties and dividend payment.
Another important fact is that Gibraltar does not impose any estate tax.
Corporate taxation in Gibraltar
Companies in Gibraltar are taxed based on residency. A legal entity is considered a resident in the country if it is managed and controlled from here. The basis for taxation is income produced in or derived from the country. The taxation principles for branches in Gibraltar are the same as for all other companies. Non-resident corporations are only taxed on their income produced in the country.
Corporate tax is imposed on the profits made by that company in the country. Business and trading income produced or derived from Gibraltar are subject to tax. Income from listed securities is not subject to tax for regular individuals (it is taxable for banks).
Royalty income is subject to a 10% tax rate. Interest received from inter-company loans is also subject to a 10% tax, however, the tax does not apply if it is less than 100,000 GIP per year.
The standard tax rate for corporate taxation is 10%. Utilities companies and those who abuse a dominant position are taxed at a higher rate of 20%. No surtax applies and no alternative minimum tax.
There is no withholding tax on dividends, royalties and interest no capital gains tax in Gibraltar. There are no payroll taxes, no transfer tax and no real property taxes.
Social security is payable both by the company and the employee. The employer’s contributions are paid weekly, up to a certain amount.
Personal taxation in Gibraltar
The Income Tax Act regulates the manner in which individuals are taxed in Gibraltar. Like in the case of companies, taxation for individuals is based on their residency status.
The income tax is levied at progressive rates on the total income produced by the individual in the country or derived from here. Individuals who are not ordinarily residing in the country are still subject to the income they produce here, for example income from employment. Individuals who are less than 30 days per year in the country are exempt. Business people who travel often to Gibraltar can be liable to tax on income on their work days in the country. For tax minimization purposes you can request the help of our experts.
There are two types of tax systems in Gibraltar applicable to individuals: the allowance-based system and the gross income-based system. The choice between the two will be based on the lower tax liability.
The rates for the gross income-based system are progressive, according to the income produced by the individual: if the gross income is under 25,000 GIP the tax rate is 6% on the first 10,000 GIP, 20% between 10,001 and 17,000 GIP and 28% for the rest. The tax rates for gross income larger than 25,000 are between 16% and 28%.
The allowance-based system allows for a reduced tax rate of 14%, a standard rate of 17% and a maximum rate of 39% for income exceeding 16,000 GIP.
Tax compliance in Gibraltar
The tax year for corporate taxation is calculated from July 1 to June 30 the next year. If a company’s accounting period is larger than 12 months, it is divided into two periods. Companies must submit the tax return, together with the audited accounts or an accountant’s report within nine months from the end of the tax year. Advance payments are possible.
Individuals must make a self-assessment on income each year. The period is the same as in the case of companies, starting on July 1. The tax on employment income is collected through a special system and remitted to the Gibraltar tax authorities. Penalties and surcharges apply for the late payment of tax and the late filing of tax returns.
Does Gibraltar have double tax treaties?
No, Gibraltar does not have double taxation agreements, however it has signed conventions related to the exchange of tax information in order to adhere to international regulations.
Are there any reliefs against taxes paid in other countries in Gibraltar?
Even if it has no double tax treaties, Gibraltar offers tax reliefs to resident individuals and companies which have paid taxes in another country. They must submit proof of the payment of such taxes with the Gibraltar Tax Office in order to benefit from these reliefs.
Gibraltar is considered by many investors a tax haven. If you want to know more about tax compliance in the country or want to open a company, you can contact our company registration agents in Gibraltar.