The Gibraltar Government has recently revised the legislation relating to "High Net Worth Individuals" establishing tax residency on The Rock. Originally introduced in 1992 and revised in recent legislation known as the Qualifying (Category 2) Individuals Rules 1999.
What is High Net Worth Status
This status was introduced by the Gibraltar Government in 1992 through the introduction of low tax limits for wealthy individuals who wish to establish a residence in Gibraltar.
Who can mainly benefit?
Any wealthy individual especially those who are currently residents of high tax jurisdictions such as United Kingdom, Germany, Switzerland, Ireland and France.
What are the advantages of becoming a High Net Worth Individual (HNWI)?
Only income remitted to Gibraltar is taxable.
In essence tax will only be paid on the first £45,000 of assessable income.
Minimum tax payable per annum is £10,000.
An option can be exercised before the termination of the year of assessment whereby the HNWI advises the Commissioner of Income Tax that he/she shall be deemed to have taxable income in Gibraltar of £45,000 even if the income remitted is less than that amount. The advantage of this option is that no tax return will need to be made to the Gibraltar Tax Authorities and as a consequence the tax payable will be £19,750.
It is in certain circumstances possible for a HNWI to transfer their pension scheme to Gibraltar and as a result make considerable tax savings.
Full use can be made of Gibraltar’s Offshore Financial Centre.
No Capital Gains Tax or Estate Duty is payable.
No minimum residential requirement in Gibraltar in any year of assessment.
How can residence be established?
An application for the status of High Net Worth Individual (HNWI) is made to the Finance Centre Licensing Department.
To qualify the applicant must:
Have available to him/her the exclusive use of approved residential accommodation in Gibraltar for the whole of the year of assessment (July to June) and produce evidence to this effect. The property can be leased or purchased.
Submit Curriculum Vitae detailing his/her qualifications and work experience.
Two references, one of which must be from a Bank confirming that he/she has assets available to him of at least £1m. The Government will look to ensure that the individual has sufficient means to maintain himself/herself and family. Evidence of wealth is therefore important although it is not necessary for an individual to declare world-wide wealth or earnings.
Copy of Passport.
Produce evidence that private medical insurance is in place, which would cover the applicant and family in the event of illness in Gibraltar. No medical assistance must be sought from the Gibraltar Government.
Pay a non-refundable fee of £500.
Does the granting of High Net Worth Status automatically entitle the applicant to residency?
No. However residency is easily obtained once the status of HNWI is granted. An application is made under the Immigration Control Ordinance and differs depending on whether the applicant is an EU National or a non-EU National. The Governor issues the permit to an individual who in his opinion is of good character and the issue of such permit is in the interests of Gibraltar. Normally the residential permits are issued for one year but are easily renewable thereafter.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.