Personal Income Tax is imposed in Gibraltar on income that is accrued in or derived from Gibraltar. In this regard, the accrued and derived in principle does not fully apply to individuals that have carried out economic activities in Gibraltar for a period of less than 30 days. In the case where they stay for a period of less than 30 days, the individuals are subsequently reimbursed for the taxes that are paid on income from activities in Gibraltar.
However, for residents, the principle of income accrued or derived in Gibraltar does not hold true. They are taxed on their worldwide income.
Personal Income Tax Rates in Gibraltar
Tax residents in Gibraltar have an option to either choose Allowance Based System, or Gross Income Based System. The description for both are mentioned below:
Allowance Based System
Under the Allowance Based System, the individuals are taxed on their income after accounting for all deductions and allowances. In this system, the following tax rates are applicable:
- For the first 4000 GBP: A tax rate of 14% is applicable.
- For the next 12,000 GBP: A tax rate of 17% is applicable.
- For the amount over and above: A tax rate of 39% is applicable.
In the same manner, it must be noted that all individuals that have a taxable income less than GBP 11,450, are exempted from Personal Income Tax altogether.
Moreover, a tapering relief is also implemented for individuals that have a taxable income between the threshold between GBP 11,451 and GBP 19,500.
Gross Based System
Under the Gross Based System, there are different rates for both, income up to GBP 25,000 and income over and above GBP 25,000. As far as income under GBP 25,000 is concerned, the following tax rates and income bands are in place:
- For the first 10,000 GBP: A tax rate of 6% is applicable.
- For the next 7,000 GBP: A tax rate of 20% is applicable.
- For the amount over and above: A tax rate of 28% is applicable.
On the other hand, for income over and above GBP 25,000 is concerned, the following tax rates are applicable:
- For the first 17,000 GBP: A tax rate of 16% is applicable.
- For the next 8,000 GBP: A tax rate of 19% is applicable.
- For the next 15,000 GBP: A tax rate of 25% is applicable.
- For the next 65,000 GBP: A tax rate of 28% is applicable.
- For the next 395,000 GBP: A tax rate of 25% is applicable.
- For the next 200,000 GBP: A tax rate of 18% is applicable.
- For the amount over and above: A tax rate of 5% is applicable.
Other than Personal Income Taxes, it is important to note that there are no consumption tax levied in Gibraltar. Similarly, there are no wealth taxes, estate duties, as well as other gift taxes that are levied on personal income in Gibraltar.
Corporate Taxation in Gibraltar
The standard corporate income tax rate in Gibraltar is 10%. However, for utility and energy providers, the applicable tax rate is 20%. In the same manner, telecommunication companies also pay a corporate income tax of 10%, and this rate is applied to gains and profits that arise from their other miscellaneous business and activities.
Other than corporate income taxes, there are several other taxes that are levied in Gibraltar. They are given below:
- Import Duties: Import Duties are levied in Gibraltar at various different rates across various categories. However, most of the goods and services have a fixed imposition of import duties. The rates fall between 2% and 35%.
- Property Taxes: General property taxes are also levied in Gibraltar on an annual basis. The amount, however, varies depending on property type (residential vs commercial) and other several factors.
- Stamp Duty: A stamp duty is also payable on the transfer or sale of property in Gibraltar. The following rate of stamp duties are applicable:
- Transaction value between 0 GBP and 200,000 GBP: A stamp duty of 0% is applicable.
- Transaction value between 200,001 GBP and 350,000 GBP: A stamp duty of 2% is applicable on the first 250,000 GBP and a rate of 5.5% is applicable on the next 250,000 GBP.
- Transaction value over 350,000 GBP: A stamp duty of 3% is applicable on the first 350,000 GBP and 3.5% is payable on the balance amount.
- Social Insurance Contribution: Social Insurance Contribution is also payable by every employer with every employee on their payroll. Employer contributions amount to 20% of gross earnings. However, this is subject to a minimum of GBP 18.15 per week, and a maximum of GBP 40.15 per week.
- Exit Tax: An exit tax of 10% is also imposed on the difference between the market value of the transferred assets (that would generate an assessable income under the Income Tax Act 2010) and their value for tax purposes.
- Gaming Duty: Gaming Duty is also levied at a rate of 0.15% on gross profits of a bookkeeper.
- Capital Duty: A capital duty of GBP 10 is levied on the initial authorization of share capital. This is also applied on any increase thereto.
There are also a couple of other tax credits and incentives that are available to individuals. They can claim foreign tax credit, and development aid. Foreign tax credit applies to individuals who are liable to pay tax under the Income Tax Act with respect to profits or gains that are derived from sources in Gibraltar.
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