There are many reasons why people from the UK choose to relocate to Gibraltar. The weather and lifestyle available here suit people that want a bit more sunshine (and less rain). Moreover, Gibraltar has a very friendly and safe community with only 35,000 residents and a continuing geo-political importance for the UK and its allies.

Gibraltar offers easy relocation for UK and EU citizens who do not require a Visa to work and reside here. Residence can be obtained a number of ways including by employment with a local company.

For wealthier people looking to relocate or retire there is a particularly advantageous tax regime.

The Category 2 (Cat 2) residency status in Gibraltar offers several advantages for wealthy individuals relocating from the UK and the EU (on a non-employed basis).

Read on to find out why you should consider moving to Gibraltar.

 

“O and the sea the sea crimson sometimes like fire and the glorious sunsets and the figtrees in the Alameda gardens yes and all the queer little streets and pink and blue and yellow houses and the rosegardens and the jessamine and geraniums and cactuses” (James Joyce)

Lifestyle

• Gibraltar provides a warm Mediterranean climate perfect for outdoor living, dining, sailing and water sports. 
• It is famous for its rich natural landscape (the dramatic limestone ‘Rock’, the prehistoric caves and its nature reserve) and the beautiful views across the Strait of Gibraltar to Africa.

• Its small size means everything is within easy reach, from beaches to dining and shopping, creating a relaxed, convenient pace of life.
• Gibraltar captivates history enthusiasts with its rich and diverse past, from the presence of the last Neanderthals thirty thousand years ago to its pivotal role in key historical events, and its various tunnels carved deep into the Rock evidencing its extraordinary defensive history in the Great Siege and World War II.

• The lifestyle is also family-friendly with a low crime rate and an excellent range of properties (particularly townhouses and luxury flats) including renovation opportunities for those looking to update and personalise older character properties. 
• People in Gibraltar love music festivals and concerts. There is a range of events that cater to people that like pop, classical and world music.
• Gibraltar is a British Overseas Territory, meaning that English is the official language, the currency is effectively the British pound and the legal system largely mirrors the UK’s, making the transition smoother for UK nationals. 
• As a tax-efficient jurisdiction, Gibraltar offers attractive financial benefits, including no capital gains or inheritance tax, which can enhance personal wealth.
• Situated at the gateway between Europe and Africa, it offers easy travel to Spain and Morocco while maintaining strong connections to the UK via regular flights. 

“Africa and the Strait of Gibraltar”, Peter Howitt

Favourable Tax Regime

• Ordinary Income Tax Regime: 
  • • Ordinary residents are subject to a maximum effective tax rate of 27%. 

• High Net Worth Individual (HNWI) Regime (Cat 2):

• • Gibraltar provides significant tax advantages for high-net-worth individuals (HNWIs), capping their liability for Gibraltar income taxes on worldwide income.
    • The individual must have a minimum net worth of £2 million.
    • The applicant must either own or rent an approved residential property in Gibraltar.  
    • The applicant must not have been resident in Gibraltar for five years immediately before applying. 
    • No Active Trade or Business in Gibraltar: Cat 2 individuals are not allowed to engage in a trade, business, or employment that competes with Gibraltar residents. However, they can manage businesses and investments abroad or own Gibraltar-based companies, provided they do not compete with local companies.
    • The applicant must also have private medical insurance to ensure they do not burden the state provided medical system.
  • Category 2 (Cat 2) residents are taxed only on the first £118,000 of their assessable income, with a maximum annual tax liability of £44,740 –  this means that any income earned over £118,000 is essentially tax-free in Gibraltar.
• No Inheritance Tax (IHT): Gibraltar does not impose inheritance tax, making it an attractive option for estate planning. However, note that the currently UK operates IHT on a domicile basis (see below)
• No Capital Gains Tax: There is no capital gains tax in Gibraltar, which is beneficial for individuals with significant investment portfolios.
• No Wealth Tax: Wealth tax is not applicable in Gibraltar, allowing individuals to retain more of their assets.
• No VAT/Sales Tax: The absence of VAT or sales tax can result in significant savings on purchases. However, import duty is applicable to a wide range of goods which can reduce some of these VAT savings.

“Nature Reserve”, Mike McBey  CC BY 2.0

Stable and Attractive Environment

• Political and Economic Stability: Gibraltar offers a very stable political and economic environment, which is appealing for long-term residency. It is a safe haven in an increasingly polarised world.
• High Quality of Life: Gibraltar has a warm climate with cooling sea breezes, a high standard of living, and a good range of amenities and services including high quality restaurants, bars and sporting clubs and facilities (football, rugby, tennis etc).
• Living Costs: 
  • The cost of living is generally low in respect of transport, energy, restaurants and bars. 
  • In addition, quality state-provided education and medical care is available here as it is in the UK (there are also private education options for primary and secondary school). 
  • The major high cost is in respect of accommodation which is expensive, particularly given Gibraltar’s small land area and its attractiveness to HNWI and executives at international businesses that are based here.

“Gibraltar Town”, Peter Howitt

Business and Financial Services

• Access to Financial & Professional Services: Residents have access to a wide range of financial and business services, including banking, investment management, and legal and accounting expertise.
• Investment Opportunities: The favourable tax regime and business-friendly environment make Gibraltar an attractive location for investment. The corporate tax rate for taxable income for local companies is currently 15%.

UK Tax Issues To Consider for UK Individuals Relocating to Gibraltar

While the local tax regime offers numerous benefits, there are potential tax issues for UK individuals that relocate to Gibraltar to be mindful of:

UK Inheritance Tax (Domicile)

• What is Domicile?: It is a strange concept which focuses on where you are considered to belong, which is not based on any potentially temporary tax residence.
• Domicile Status: There is an assumption of UK domicile for any person based on where your parents were domiciled when you were born (and irrespective of where you were born).
• IHT: UK inheritance tax is currently based on domicile rather than residency. If an individual continues to be domiciled in the UK, their worldwide estate is subject to UK inheritance tax, even if they are tax resident in Gibraltar (or elsewhere). 
• Deemed Domicile: Individuals who have been UK residents for 15 out of the last 20 years are deemed domiciled in the UK for inheritance tax purposes.
• Domicile of Choice: This is established by settling in another country with the intention to reside there permanently or indefinitely (and subject to the deemed domicile rules).

• Proposed Changes: The previous Conservative Government proposed changes to the current domicile system (for any person relocating to Gibraltar they would remain UK domicile for at least 10 years). The new Labour Government may proceed with those changes, scrap them or introduce a new regime. 

Capital Gains Tax on Return to the UK

• Temporary Non-Residence Rules: If an individual returns to the UK within five tax years of becoming non-resident, they will usually be liable to UK capital gains tax on gains realised during their period of non-residence. Careful planning is required to ensure that 5 full UK tax years have elapsed.
• Rebasing of Assets: Assuming you are not subject to the 5 year rule, upon return to the UK all assets may need to be rebased to their market or fair value at the date of return to calculate future capital gains tax.

Income Tax from UK Sited Assets

• UK Source Income: Income from some UK assets, such as rental income from UK properties, dividends and employment income from UK companies usually remain subject to UK income tax. In addition, IHT can be chargeable n Uk sited assets even for persons not domiciled in the UK.
• Double Taxation: While Gibraltar has a favourable tax regime, individuals must be aware of potential double taxation issues. Gibraltar has a double taxation treaty with the UK which simplifies some of the issues when dealing with cross-border taxes and allocation of tax charging powers to the UK or Gibraltar (under tie-breaker rules).

Tax Advice

• It is essential to obtain tax advice if you are considering relocating to Gibraltar or moving back to the UK from Gibraltar.
• Ramparts is able to advise on a range of Gibraltar and UK law issues however we also work with a range of tax specialists and accountancy firms, UK law firms and local estate agents to support persons relocating from the UK. 

Conclusion

Gibraltar offers significant tax advantages and a high quality of life for wealthy individuals relocating from the UK. However, careful planning is essential to mitigate potential tax issues and ensure the move is smooth. By understanding these risks and seeking professional advice, individuals can maximise the benefits of their relocation to Gibraltar. 

Get in touch with someone who has made the same decision to move to Gibraltar (nearly 20 years ago). Contact Peter Howitt for more information or support in your move to Gibraltar.

The Rock, Mike McBey  CC BY 2.0