GibraltarTax Obligations Detailed

Employers in Gibraltar have various tax obligations, including income tax, social insurance contributions, and annual filing requirements.

Income Tax

• PAYE (Pay As You Earn): Employers must deduct income tax from employees' salaries based on their assigned tax codes and remit it to the Income Tax Office by the 15th of each month. If no tax code is available, 20% is deducted. The tax year runs from July 1st to June 30th.
• Tax Rates (Gross Income Based System for 2023/2024): The Gross Income Based system applies specific rates to income brackets:
  • First £17,000: 16%
  • Next £8,000: 19%
  • Next £15,000: 25%
  • Next £65,000: 28%
  • Remaining balance: 25%
• Tax Returns: Employers must file an annual return (Form P8 - Employer's Annual Statement Declaration and Certificate) for each employee and an aggregate report by July 31st.

Social Insurance Contributions

• Employee Contributions: Calculated at 10% of gross earnings, subject to a minimum of £13.65 per week (£59.15 per month) and a maximum of £38.85 per week (£168.35 per month) as of 2024-09-25. These limits may be subject to change.
• Employer Contributions: Calculated at 18% of gross earnings, subject to a minimum of £30.45 per week (£131.95 per month) and a maximum of £53.55 per week (£232.05 per month) as of 2024-09-25. These limits may be subject to change.
• Payment: Both employee and employer contributions are remitted to the Income Tax Office alongside PAYE deductions by the 15th of each month.

Other Employer Obligations

• Registration: Employers must register with the Employment Service and the Income Tax Office.
• P7 Form: Upon an employee's termination, employers must provide a completed P7 (Certificate of Employment) form.
• Benefit in Kind Declarations: Employers are required to declare and potentially pay tax on benefits provided to employees (Forms P10/P10A).
• Pension Scheme Contributions: Information on contributions must be submitted (Form P12).
• Construction Subcontractors: Employers are required to withhold 25% tax on payments to subcontractors unless an exemption certificate is provided. This applies to the labor and profit elements of the contract.

Penalties and Deadlines

• P8 Deadline: Failure to submit the P8 form by July 31st incurs penalties, which vary depending on company size.
• Late Payments: Surcharges apply for late payment of income tax and social insurance contributions.

Please note that this information is current as of February 5, 2025, and may be subject to change. It's always recommended to consult with a tax advisor for the most up-to-date information.

Employee tax deductions in Gibraltar are determined by two systems: the Allowance Based System (ABS) and the Gross Income Based System (GIBS). Both systems feature a standard tax rate of 20% but differ in how allowances and deductions are applied. This information is current as of February 5, 2025, and might change.

Income Tax

• Standard Rate: 20% for both ABS and GIBS.
• Tax Year: July 1st to June 30th.
• Tax Return Deadline: November 30th following the end of the tax year.

Allowance Based System (ABS)

• Personal Allowance: £3,455 per year.
• Child Allowance: £1,190 per year.
• Additional Allowances: Available based on marital status, dependents, childcare costs, etc.
• Deductions: Mortgage interest, pension contributions, first-time home purchases, and medical insurance premiums.
• Residency Impact: Allowances are generally reduced proportionally for months not residing in Gibraltar.

Gross Income Based System (GIBS)

• Limited Deductions: Fewer deductions are available compared to ABS.
• Specific Deductions: Similar deductions to ABS may be present, including those for mortgages, pensions, and medical insurance. Consult current regulations for specific GIBS deductions.

Social Security Contributions

• Employee Contributions: 10% of gross earnings, subject to a minimum of £13.65 per week and a maximum of £37.00 per week.
• Employer Contributions: 18% of the employee's gross earnings, subject to a minimum of £30.45 per week and a maximum of £51.00 per week.
• Payment: Employers withhold both income tax and social security contributions and remit them to the Gibraltar Income Tax Office by the 15th of each month.

Other Deductions and Allowances

• Pension Contributions: Deduction of up to £1,500 per annum for employee contributions to approved pension schemes. Employer contributions are not taxable.
• Private Medical Insurance: Deduction of £3,000 per annum for premiums paid.
• Benefits in Kind: Taxable, but those under £250 per year are exempt. Employers can opt to pay the tax.
• Tax Credits: Available under specific circumstances, such as for individuals over 60 or full-time students.

Employer Reporting

Employers are required to submit annual returns for each employee and an aggregate report for all employees detailing emoluments, benefits, and deducted taxes.

Tax Rate Changes (2024-2025 Budget)

For individuals with gross assessable income:

• Less than £100,000: 1% reduction across all tax bands under both ABS and GIBS.
• More than £100,000: 2% reduction across all tax bands under both ABS and GIBS.

Additional Taxes

• No Capital Gains Tax: Profits from selling assets are not taxed.
• No Inheritance Tax: Transfer of assets upon death is not taxed.
• Import Duty: Varies depending on the goods.
• Stamp Duty: Applies to certain transactions. No details provided.

Gibraltar does not have a Value Added Tax (VAT) system. Instead, the jurisdiction relies primarily on import duties, stamp duties, and gaming duties as its main forms of indirect taxation. Specific goods like fuel, tobacco, and alcohol are subject to fixed import duties regardless of their value. Motor vehicles have variable import duty rates from 2% to 35%, determined by engine type, size, and whether the import is for private or dealer use. Stamp duty applies to real estate transactions and shares in companies owning Gibraltar real estate. Rates vary based on the property's market value. Additionally, Gibraltar levies a gaming duty at 1% of relevant income for online gaming operators, capped at £425,000 with a minimum of £85,000.

Gibraltar's tax system offers various incentives for both businesses and individuals.

Business Incentives

• Capital Allowances: Newly established businesses can claim 100% of eligible capital allowances in their first year.
• Social Insurance Contributions Credit: Businesses with ten or fewer employees receive a £100 credit per employee. New businesses in their first year receive this credit for up to 20 employees.
• Architectural and Planning Fees Credit: A tax credit for the lower of 200% or £5,000 of these fees is available for the first three years of operation.
• Qualifying Training Costs: Employers can deduct 150% of qualifying training costs from taxable profits.
• Start-Up Incentive Scheme (Expired): For businesses established between July 5, 2016, and June 30, 2017, a tax credit equal to the tax due (up to £50,000 annually) was available over the first three years. This required employing at least five people and was for new businesses only. (Note: This incentive is no longer applicable).
• Development Aid: Incentives such as tax relief, import duty relief, and rates relief may be available for approved development projects that benefit Gibraltar's economy. Eligibility criteria include job creation, tourism development, housing provision, and infrastructure improvement. Applications are made to the Minister for Trade.

Individual Incentives

• Category 2 Residency: Individuals with a minimum net worth of £2 million and approved Gibraltar residential property pay tax only on the first £118,000 of their worldwide income. A minimum tax of £37,000 applies. Applicants must not have been resident in Gibraltar during the preceding five years.
• High Executive Possessing Specialist Skills (HEPSS): Individuals with specialist skills not available in Gibraltar may be eligible to pay tax on only the first £160,000 of their income under the Gross Income Based System. This results in a tax liability of £39,940 on income of £160,000. They should not have been residents for three years or registered as Category 3 individuals previously.
• Tax Credits/Allowances for Ordinarily Residents: These include credits for gym memberships/personal trainers (10% of verified costs), private school tuition in Gibraltar (10%), and LSRA fees for single-practitioner lawyers (75%). Separate applications are required for the gym/trainer and tuition credits.
• Renewable Energy Installation: A deduction of up to £6,000 over two years is available against assessable income for installing renewable energy systems (water heaters, photovoltaic panels, or wind turbines).
• Electric Vehicle Charging Installation: A £2,000 deduction (from income tax liability) applies for installing electric vehicle charging facilities at home or owned parking areas, subject to approval.
• Energy Efficiency Improvements: Deductions of up to 100% are available against assessable income for upgrades to a property's Energy Performance Certificate (EPC) rating.
• Age Allowance: An allowance of up to £9,190 for single individuals and £5,685 for married individuals is available for those of state pension age with taxable income.
• Student Earnings Exemption: Full-time students' earnings are tax-exempt up to £11,450 per annum. Taper relief is available up to £19,950, then earnings above this threshold will be fully taxed.
• Pension Income Tax Exemption: Gibraltar pension income from statutory schemes received by those aged 60 or over (55 for some essential service officers) is tax-free. This does not affect the taxation of other income.
• Tax Rate Reductions (Applicable from 2024/2025): Tax rates for all bands under both Allowance Based and Gross Income Based Systems will be reduced by 1% for incomes below £100,000 and 2% for incomes above £100,000.
• Residential Property Tax (Effective from 01 January, 2025): Profits from selling Gibraltar residential properties are taxed if the owner (directly or indirectly) owns five or more such properties, excluding their primary residence and other exempt properties.

It's important to consult official sources and seek professional advice for specific details and up-to-date information on tax regulations and incentives in Gibraltar. This information is current as of February 5, 2025, and might change.