If you are one of the many thousands of Britons considering moving to a more favourable tax regime to escape the increasingly higher burden of taxes falling on employees, business owners and those able to live off their invested wealth then you might well want to take a look at the benefits of moving to Gibraltar.
Gibraltar provides a unique offering for high net worth individuals seeking to establish residency. Enjoying a Mediterranean climate and situated at the most southerly point of the Iberian Peninsula this self governing British overseas territory has a robust and diversified economy and has emerged as a leading international financial centre within the European Union, complying with all EU directives and Regulations. Gibraltar has replaced its former tax exempt regime with an internationally competitive tax model and with its new fiscal regime it is fast becoming a favoured jurisdiction for businesses and ‘fiscal nomads’ looking for legitimate ways to lower their tax bill in a properly regulated environment. Having signed eighteen TIEAS and been white listed by the OECD Gibraltar has clearly made the transition from offshore tax haven to mainstream European financial centre over the last few years.
So what are the benefits of becoming a Gibraltar tax resident?
For businesses Gibraltar has a 10% flat rate corporation tax from 1st January 2011 and there is no VAT. For individuals there are two potential options for residency namely Category 2 (formerly HNWI) and Self Sufficiency.
|
UK
Highest Rate ofTax 50% |
Category 2
Min Tax:£22,000Max tax:£29,880 |
SelfSufficiency
NO Tax onqualifyingincome |
|
| InheritanceTax 40% onassets over £325,000 | NO IHT | NO IHT | |
| Capital GainsTax 28% | NO CGT | NO CGT | |
| VAT 20% | NO VAT | NO VAT | |
| Pensionstaxed athighest rate | NO TAX onOccupationalPension Income | NO TAX onOccupationalPensionIncome | |
| MostSavingstaxed athighestrate | NO TAX on
Savings/Dividend Income |
NO TAX onSavings orQualifyingDividendIncome |
Category 2 Status
Category 2 status is suitable for individuals earning in excess of £110,000 and who can demonstrate a net worth of at least £2 million. Income tax payable, on worldwide income, is capped at £29,880 (tax year 2011) with a minimum tax payment due of £22,000. There is no Inheritance Tax, Capital Gains, Wealth Tax or Gift Tax and no taxation on the remittance of foreign capital. Furthermore there is no taxation on savings interest or dividends received from a recognized stock exchange nor income received from an occupational pension scheme. Once established there is no minimum physical presence required in Gibraltar to maintain category 2 status.
The £2M wealth requirement may take various forms although a key factor in a successful application is to demonstrate that the applicant has sufficient wealth to maintain himself and, if appropriate, his family. An approved residential property, which may be purchased or rented (although renting may raise a query over the permanancy of residence), must be maintained throughout the residency period and be available exclusively for the applicant’s use.
In addition to restrictions relating to prior residency in Gibraltar, Category 2 applicants will not, ordinarily, be permitted to undertake economic activity in Gibraltar that would compete against locally based businesses. Private medicalinsurance is also required as well as professional references and curriculum vitae which form part of the application process. All applications are subject to the approval of the Director of the Finance Centre, part of the Ministry of Finance.
Self Sufficiency
For individuals who do not have earned income then there is an alternative route known as self sufficiency status where there is no income tax payable on qualifying income. There isnorequirement tobuyan approved property, buying or renting any accommodation in Gibraltar will suffice and the benefits already outlined for category 2 applicants will apply. A successful application for self sufficiency status requires the approval of the Director of the Finance Centre and whereas it is possible toswitch from category 2 to self sufficiency status it is not possible to switch the other way.
So if you are looking to reduce your current tax burden Gibraltar could be the ideal solution.
At Fiduciary Wealth we offer a complete service to ensure that your change of residence will be as smooth as possible. As well as dealing with the formal process and liaising with otherprofessionals, such as tax advisers and lawyers where appropriate, we are able to offer a propertysourcing service both for properties to purchase and rent in Gibraltar and for those looking to acquire a second home in Spain. This facil- ity includes mortgage broking for clients requiring finance and arranging buildings and contents insurance where required. In addition we deal with all of the other financial issues a change of residency will require including the provision of suitable private medical cover to satisfy residency requirements and rearranging life and protection policies where necessary to ensure that these will be appropriate to meet your new circumstances.
One area where our expertise will certainly be required will be in assessing your pension provision and advising on the most tax efficient retirement options available to you as a Gibraltar resident as well as reviewing your investments to ensure that you make best use of the favourable tax regime.
If you are considering Gibraltar residency contact us now to see how we can help or if you wish to explore the potentialadvantages that a changeof residency can make to your current financial position we will gladly meet with you to help you assess your options. On the other hand if you are already enjoying Gibraltar residency status and you want an independent review of your savings, investments and pensions please give us a call.
To find out more and arrange a meeting at one of our offices contact us on one of the numbers below or email wealth@fiduciarygroup.com
