How does Gibraltar's territorial tax system benefit High Net Worth Individuals (HNWIs)?
Short answer
Gibraltar taxes income that accrues in or derives from Gibraltar, so much income earned and held elsewhere falls outside its charge, and there is no capital gains, inheritance or wealth tax. Individuals who are ordinarily resident are also taxed on certain categories of income arising outside Gibraltar, so the detail of each income stream matters.
Detailed answer
The basic rule Gibraltar charges income tax on income accruing in or derived from Gibraltar. For an individual, this means Gibraltar employment and business income, and rents from Gibraltar property, are taxed, while much investment income arising abroad is outside the charge, subject to conditions. Gibraltar has no capital gains tax, inheritance tax or wealth tax. The resident exception Individuals who are ordinarily resident in Gibraltar are also taxed on certain income accruing in, derived from or received outside Gibraltar. Whether a particular foreign income stream is taxable depends on its type, so take advice on your own position. Who is ordinarily resident Under the Income Tax Act 2010 you are ordinarily resident if you are present in Gibraltar for at least 183 days in a tax year (1 July to 30 June) or more than 300 days over three consecutive tax years. The Income Tax Office decides applications for tax residence certificates on the totality of the evidence, giving most weight to primary evidence such as a Gibraltar identity card or permanent residence certificate, a Gibraltar Health Authority card, utility bills in your name, and card spending in Gibraltar. Why this matters for HNWIs The territorial basis helps only if other countries accept that you have left them. A former home country may still claim you as resident, so evidence of genuine presence and ties in Gibraltar is as important as the Gibraltar rules themselves. HNWIs can also apply for Category 2 status, which caps assessable income at £118,000 and annual tax at £42,380.