High net worth residency on the Rock – 25th Anniversary
Gibraltar’s High net worth residency product, limiting taxation on world-wide income to a maximum of circa £30,000 pounds is celebrating its 25th anniversary.
Category 2 status, by its formal name was first introduced in 1992. Gibraltar is an obvious place for anyone looking for tax efficiency in their personal or family tax affairs.
So why is Gibraltar so attractive for High Net worth Individuals?
Gibraltar is a British Overseas Territory with its own self-financing parliamentary democracy. Parliamentary elections are held every 4 years. The legal system is based on English common law. A great deal of Gibraltar’s legislation follows English law practice and procedure with various changes, if needed, to suit local conditions. Gibraltar’s court system is in line with that of the UK. Gibraltar has its own Supreme Court for both civil and criminal jurisdiction and also a Magistrates Court. Appeals in Gibraltar are heard by the Gibraltar Court of Appeal which is composed of three English judges who regularly sit in Gibraltar. The UK Government is responsible for defence, internal security and external affairs. It is the only British Overseas Territory within the EU. It is physically part of Europe located at the southern tip of Spain.
In terms of Brexit, the priorities for Gibraltar revolve around three separate relationships: our relationship with the EU, our relationship with the UK and with the rest of the world. Gibraltar became part of the EU with the UK's accession in 1973. Our departure with the UK will come after the transition period that is agreed is over. Our existing relationship with the EU will continue for the period of transition that is agreed between the UK and the EU. In terms of the new relationship with Europe, Gibraltar will be part of any agreements that the UK negotiates for itself.
Its modern airport has direct flights to Gibraltar from Heathrow, Gatwick, Manchester and Bristol. It enjoys Mediterranean weather with over 300 days of sunshine and an outdoor life style to match.
Gibraltar is also prosperous having the fourth highest per capita income of some $94,000 in the world with very low unemployment which is currently sub 50 individuals.
Its currency is the Gibraltar pound which is on par with UK Sterling.
Gibraltar offers a special tax status to High Net Worth Individuals by virtue of the Category 2 status for qualifying individuals who wish to establish residency in Gibraltar. To qualify for this special tax status the individual must have net assets in excess of £2m and must have not have been a Gibraltar resident five years prior to an application being made. Property in Gibraltar can be either rented or purchased. An individual who has obtained a Category 2 individual certificate is assessable to income tax for the first £80,000 of income only. The maximum income tax payable under the scheme is £30,000 for the full year. The minimum payable under the scheme is £22,000.
When combined the fact that Gibraltar does not charge wealth tax, capital gains tax nor inheritance tax, the Gibraltar Cat 2 status offers a very good opportunity for individuals wanting tax efficiency.