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Everything You Need to Know About Gibraltar Permanent Residency

Gibraltar has four different pathways to permanent residency. Paul Correa explores those options and what else Gibraltar has to offer.

Paul Correa
Gibraltar

Gibraltar, a British Overseas Territory, is often overlooked within investment migration, but it is an exciting destination that can benefit high net-worth individuals (HNWIs).

For those targeting relocation, Gibraltar offers several residency pathways that cater to different needs and circumstances.

This comprehensive guide will explore these options, the benefits of living in Gibraltar, and the various taxes in Gibraltar that could impact your decision, especially considering Gibraltar’s unique position regarding the European Union post-Brexit.

An overview of Gibraltar

Gibraltar’s cultural tapestry uniquely blends British and Mediterranean influences. English is the official language, and the legal system is based on English law, making integration into the territory straightforward.

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Gibraltar’s immigration framework

Gibraltar offers several pathways to permanent residency. The Gibraltar Immigration, Asylum, and Refugee Act governs its immigration policies.

This Act is the cornerstone of all residency applications, ensuring they comply with local and international regulations. Under this Act, British nationals with no material connection with Gibraltar are treated similarly to EU nationals when applying for residency.

For example, while British citizens enjoy some privileges due to Gibraltar’s status as a British Overseas Territory, they must still meet specific criteria to establish Gibraltar residency.

All residency applications under the Gibraltar Immigration, Asylum, and Refugee Act require applicants to qualify as a “qualified person.” The practical implications of this Act are that you may only take up residency in Gibraltar if you are a:

  • UK Pensioner
  • Self Sufficient on an Employed or Self-Employed basis
  • Category 2 Individual
  • High Executive Possessing Specialist Skills (HEPSS)
A satellite image of the Strait of Gibraltar, which separates the European mainland from North Africa

Understanding the pathways to permanent residency in Gibraltar.

Here, we break down Gibraltar’s residency programs:

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Category 2 Individual Status (Cat 2)

The government designed the Cat 2 Gibraltar status for HNWIs who want to obtain permanent residency in Gibraltar and utilize the country’s specialized tax regime.

Eligibility criteria:

  • The applicant must have a minimum net worth of £2 million.
  • The applicant must not have been a resident of Gibraltar during the five years preceding the application.
  • The applicant must own or rent approved property in Gibraltar, which must be their principal residence.

Conditions:

  • The tax liability on worldwide income is capped at a maximum of £44,740 per annum.
  • The minimum annual tax payable under this status is £37,000.
  • Individuals with Cat 2 Gibraltar status are not permitted to engage in local trade, business, or employment unless they obtain specific approval from the Gibraltar government.

High Executive Possessing Specialist Skills (HEPSS)

The HEPSS program aims to attract top-tier professionals who possess specialist skills in demand in Gibraltar. This status offers significant tax advantages and is suitable for senior executives and specialists in key industries.

Eligibility criteria:

  • The applicant must hold a senior executive position of substantial economic value to Gibraltar.
  • The annual salary for the role must be at least £160,000.
  • The applicant must have specific skills that are not readily available in Gibraltar.
  • The applicant must own or rent approved property in Gibraltar, which must be their principal residence.

Conditions:

  • The tax on the first £160,000 of salary is capped at £39,940.
  • Income exceeding £160,000 is not taxed.
  • HEPSS individuals must not engage in local trade or business activities outside the scope of their executive role.

Self-Sufficiency via Self-Employment

Gibraltar offers the option to establish residency through self-sufficiency via self-employment. This pathway is suitable for entrepreneurs, freelancers, and small business owners.

Eligibility Criteria:

  • The applicant must establish a legitimate business in Gibraltar.
  • The business must demonstrate financial viability and the ability to support the applicant’s livelihood.
  • The applicant must own or rent property in Gibraltar, which must be their principal residence.

Conditions:

  • The applicant must comply with all local business regulations, including obtaining the necessary licenses and permits.
  • The business must be actively trading and contributing to the local economy.
  • The applicant must maintain sufficient financial resources to avoid becoming a burden on the Gibraltar government.

This pathway allows individuals to enjoy the benefits of living in Gibraltar while actively participating in the local economy. It is a popular choice for entrepreneurs looking to establish a presence in a low-tax jurisdiction.

UK Pensioners Through the Transfer of UK Medical Rights

UK pensioners who wish to retire in Gibraltar can establish residency by transferring their UK medical rights to Gibraltar.

Eligibility Criteria:

  • The applicant must be in receipt of a UK state pension.
  • The applicant must transfer their UK medical rights to Gibraltar, which allows them to access healthcare services under the Gibraltar Health Authority.
  • The applicant must own or rent property in Gibraltar, which must be their principal residence.

Conditions:

  • The applicant must intend to make Gibraltar their permanent home.
  • The applicant must not engage in full-time employment, although part-time or voluntary work may be permitted.
  • The applicant must maintain sufficient financial resources to support their lifestyle in Gibraltar.
Eastern Beach, one of Gibraltar’s most touristic destinations

Taxation in Gibraltar: A detailed overview

Gibraltar’s tax system is one of the key reasons why many individuals and businesses choose to relocate to this territory. Understanding the various taxes in Gibraltar and applicable exemptions is crucial for effective financial planning.

Income tax in Gibraltar

Income tax in Gibraltar is levied on a territorial basis, meaning only income derived from Gibraltar or remitted to Gibraltar is taxable.

Employers must register with the Income Tax Office to comply with local employment laws. The tax rates are progressive, with lower rates for lower-income brackets. The maximum income tax rate is 25%, depending on income levels. Foreign income is not taxed unless remitted to Gibraltar.

Gibraltar corporate Tax

The Gibraltar Corporate Tax Rate is 12.5%, one of the lowest in Europe. This rate applies to profits derived from business activities conducted in Gibraltar.

Pension tax in Gibraltar

Gibraltar has a favorable tax regime for pensioners, particularly those who transfer their UK pensions into a Gibraltar-based Qualifying Recognized Overseas Pension Scheme (QROPS) or establish a Qualifying Non-UK Pension Scheme (QNUPS).

  • Pension income is generally taxed at a flat rate of 2.5%, significantly lower than in many other jurisdictions.
  • Lump-sum withdrawals from a QROPS can be taken tax-free, up to 30% of the pension fund.
  • There is no inheritance tax on pension funds, allowing beneficiaries to inherit pension assets tax-free.

Capital Gains Tax and Wealth Tax

Gibraltar does not impose capital gains tax or wealth tax. This means that profits from the sale of assets, such as property or investments, are not subject to capital gains tax.

Inheritance tax in Gibraltar

Gibraltar does not levy inheritance tax, allowing residents to pass on their estate to their heirs without a substantial tax burden.

However, UK nationals who are UK-domiciled should be aware that they may still be subject to UK inheritance tax. Proper estate planning with a qualified advisor is essential to navigate the complexities of cross-jurisdictional taxation.

Practical considerations for moving to Gibraltar

When moving to Gibraltar, there are several practical aspects to consider, from understanding the territory’s living costs to navigating the healthcare and education systems.

Property in Gibraltar

There is plenty of choice when it comes to buying property in Gibraltar, as the property market is diverse, offering a range of options from luxury apartments to family homes.

Property in Gibraltar is generally more expensive than in some parts of the UK, with an average property price of around £860,000. However, the benefits of living in a tax-efficient jurisdiction often outweigh the higher property costs.

Healthcare and education

The Gibraltar Health Authority strives to provide high-quality healthcare. It has modeled its service after the UK’s NHS but with hardly any waiting times for operations.

Gibraltar’s education systems follow the UK’s National Curriculum. UK citizens can receive emergency healthcare for free by presenting their passports. For expats, having private medical insurance is often a requirement for obtaining Category 2 status.

Main Street, which dates back to the 14th century, is the heart of Gibraltar’s shopping district

Visiting Gibraltar

Before deciding to move to Gibraltar, it is essential to visit and experience the territory first-hand. Gibraltar’s Airport offers convenient connections to various international hubs, making it easy to travel to and from Gibraltar.

Experiencing Gibraltar first-hand will help you understand the local customs, social norms, and overall atmosphere, which is crucial in determining if Gibraltar is the right fit for you.

Path to citizenship

While Gibraltar does not offer a direct path to citizenship, long-term residents can explore naturalization options through the UK. Those who naturalize as British Overseas Territories Citizens in Gibraltar can apply to become British citizens.

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