Introduction

The Qualifying (High Net Worth) Individuals Rules published in February 1992 but with effect from July 1991 were introduced with the purpose of encouraging “high net worth individuals” to acquire residential property on the Rock and thereby to obtain the status and benefits of a High Net Worth Individual under the Rules.

The Benefits

Once a Qualifying (High Net Worth) Individual’s Certificate has been issued the qualifying individual’s worldwide income is assessed in accordance with the normal general tax rules applicable in Gibraltar with the following exceptions:-

• Tax will be levied only on the first
• £ 50,000 of assessable income (as described below)
  The minimum amount of tax payable must not be less than £14,000
• A qualifying individual may in respect of any year of assessment opt to declare a taxable income of £50,000 despite remitting less than this amount to Gibraltar in that year. The difference between the amount of tax actually paid and £14,000 may be carried forward to offset any liability to tax in a subsequent year of assessment.

The Rules enable qualifying individuals to be resident in Gibraltar for tax purposes and therefore assist them in claiming not to be resident for tax purposes elsewhere. Whilst Gibraltar is not a party to any double taxation treaties and does not exchange information with any other tax authorities the office of the Financial and Development Secretary has indicated that the Gibraltar Income Tax Commissioner will at the request of a qualifying individual confirm that individual’s tax resident status to any foreign tax authority.

Assessable Income

A qualifying individual’s taxable income is assessed in accordance with the normal general tax rules applicable in Gibraltar. Under these rules tax is assessed on the income of any person which accrues in, derives from or is received in Gibraltar. Income which is does not accrue in or derive from Gibraltar is not assessable to tax in Gibraltar unless remitted to Gibraltar.

Qualifying individuals are not entitled to claim any reliefs, exemptions or allowances whether personal or otherwise in calculating their taxable income. However, certain payments which would otherwise be classed as income are excluded when calculating a qualifying individual’s taxable income unless received in or remitted to Gibraltar. These payments are as follows:-

• dividends, interest or emoluments of office, accruing in, derived from or received in any place other than Gibraltar. Income from deposits with qualifying or exempt companies i is included in this category
• capital sums received on retirement from certain funds approved by the Income Tax Commissioner
• interest received in respect of deposits in Gibraltar in any bank or building society
• interest received in respect of loan stock issued by certain companies, the proceeds of which must be applied solely for approved development purposes in Gibraltar.

Rate of Tax

Under current rates of tax a qualifying individual will pay a maximum of £19,750 tax in Gibraltar for a full year of assessment. A return of income must be made to the Commissioner of Income Tax not later than six months after the end of any year of assessment.In Gibraltar the year of assessment ends on 30th June.

In addition to income taxes high net worth Individuals will of course be concerned with Capital taxes. Gibraltar has no capital gains Tax.

The estates of high net worth individuals (excluding the individual’s approved residential accommodation) are excluded from all Gibraltar Estate Duties (excluding the individual’s approved residential accommodation) are excluded from all Gibraltar Estate Duties.

The Requirements

In order to be certified as a qualifying individual the Rules provide that an individual must in any year of assessment :

• have approved residential accommodation in Gibraltar available to him for his exclusive use throughout the year of assessment.
• not otherwise have been resident in Gibraltar in any of the previous five not otherwise have been resident in Gibraltar in any of the previous five years of assessment (although this requirement may be waived)

The Procedure

An application for certification as a qualifying individual is made on a brief application form submitted to the Financial and Development Secretary with a non-refundable fee of £1000. The Financial and Development Secretary may in individual cases require an applicant to submit further information and accordingly it is advisable to include with the application form some background information, for instance are sume, regarding the applicant. An applicant must also submit two references at least one of which is from a banker. The references should be specific to the applicant and not be in a standard form.

The office of the Financial and Development Secretary has indicated that applications will be dealt with within two to three days. Once granted the certificate will remain in effect indefinitely unless the qualifying requirements are no longer met.

Whilst the office of the Financial and Development Secretary will administer continuing compliance with the requirements of the Rules it is unlikely given their objective that the level of supervision will be particularly strict. It may well be that a qualifying individual will come to the attention of the Financial and Development Secretary only if he/she fails to submit a tax return within the required time.

The Regulator

The office charged with the issue of qualifying certificates and with the continued supervision of qualifying individuals is that of the Financial and Development Secretary. The Financial and Development Secretary is a Government appointee whose role is to encourage and promote the development of Gibraltar and in particular Gibraltar’s development as an international financial centre. The office of the The Financial and Development Secretary is characterised by a practical approach to the tasks assigned to it

Further Information

Further information regarding the Rules, Gibraltar generally and the services offered by Moore Stephens may be obtained from Bernard Hazell or Cindy Glasby in Gibraltar.

GIBRALTAR
Telephone +350 200 74518
Fax +350 200 70189
Email: enquiries@moorestephens.gi