Gibraltar

Corporate - Significant developments

Last reviewed - 10 March 2026

Budget 2025

In June 2025, the Chief Minister and the Minister for Taxation delivered their budget speeches, which included the below announcements.

Social insurance contributions

The cap on both employer and employee social insurance contributions has increased by 5%.

Introduction of a transaction tax

Given the political agreement with the European Union (EU) on Gibraltar gaining access to the Schengen Area, a new transaction tax will be introduced and replace import duties. However, it is not the Gibraltar government's intention to change or replace the rates of duties until the EU Treaty has been ratified and enacted into Gibraltar law.

Once enacted, the transaction tax would be phased in, starting at 15% in the first year, rising to 16% in the second year, and rising to 17% in the third year. A monitoring mechanism will be implemented to assess market distortions relative to Spain, allowing for future rate adjustments. Essential goods, such as food, water, medicines, books, and electricity, will benefit from a 0% super-reduced rate, while items like children's clothing and bicycles will fall under a 5% reduced rate. Certain sectors, including bunkering, aviation, and bonded goods, will be exempted.

Excise duties aligned with EU minimum rates will apply to tobacco, alcohol, and fuel, with fuel benefiting from a three-year transition period. Tobacco pricing control will also be introduced to eliminate illicit trade.

Employer-provided accommodation exemption

On 19 June 2025, the Gibraltar government published the Income Tax (Amendment No.2) Act 2025, introducing significant changes to the tax exemption for employer-provided accommodation. Aimed at attracting international talent while tightening compliance, the exemption now applies only to ’specific employees‘ whose skills are either scarce or vital to Gibraltar's economic development, as determined by the Commissioner. Employers must formally apply for approval and report any changes to the accommodation. The exemption period is reduced from seven years to four years and can only be used once per employee. Directors are no longer excluded, and all benefits must be declared in annual returns, with non-compliance constituting an offence. Existing beneficiaries may retain the seen-year exemption unless their circumstances change.

The amendment has yet to be passed and enacted into law by the Gibraltar Parliament.

New General Anti-Avoidance Rule (GAAR)

On 10 April 2025, the Gibraltar government published the Income Tax (Amendment) Act 2025 Bill, aimed at revising section 40 of the Income Tax Act 2010. This update introduces a GAAR, replacing the old anti-avoidance measures and empowering the Commissioner of Income Tax to tackle tax avoidance by dismissing or modifying the effects of such arrangements. It incorporates definitions for ’tax avoidance arrangement‘ and ’tax advantage‘ and employs a substance-over-form approach.

The legislation further specifies measures to counteract tax avoidance linked to Pillar Two tax elections, profit accumulation followed by voluntary liquidation, and excessive remuneration from occasional presence. The Bill also gives the Commissioner of Income Tax powers to report professionals involved in promoting or facilitating tax avoidance schemes, or displaying conflicts of interest, to their regulatory bodies.

The Bill was formally passed and enacted into law by the Gibraltar Parliament in July 2025.

Pillar 2 Compliance Requirements

Gibraltar has implemented the Global Minimum Tax Act 2024, introducing the Domestic Minimum Top‑up Tax for fiscal years ending on or after 31 December 2024 and the Income Inclusion Rule for fiscal years ending on or after 31 December 2025. In December 2025, the Gibraltar Government issued guidance on both registrations, annual notifications and filing requirements for in‑scope multinational enterprise (MNE) groups.

Registration is required for Gibraltar‑headed groups, foreign‑headed groups with Gibraltar constituent entities, and qualifying wholly domestic groups, provided the consolidated revenue threshold of €750 million is met in at least two of the previous four years. The initial registration deadline for groups with fiscal years ending between 31 December 2024 and 31 August 2025 is 28 February 2026, after which groups must register within six months of the end of their first in‑scope fiscal year.

Information required during registration includes details of the Ultimate Parent Entity, the Designated Local Entity, and each Gibraltar constituent entity. Any changes following registration would be reflected in the annual notification submitted in accordance with section 28(1)(b) or section 28(2)(b) of the Global Minimum Tax Act 2024. This would include any changes to the Designated Local Entity or Gibraltar Constituent Entities which no longer form part of the MNE Group.

The Government has also issued guidance on the annual notification obligations. An MNE group must notify the Commissioner of Income Tax each year if its GloBE Information Return will be filed in a jurisdiction with a Qualifying Competent Authority Agreement in place with Gibraltar. Depending on the rule being applied, the notification may be submitted by the Ultimate Parent Entity, the Designated Local Entity, or other relevant domestic entities, although the Designated Local Entity is preferred for administrative consistency.

Notifications must be filed three months before the GloBE Information Return due date. For example, the notification for the fiscal year ending 31 December 2024 is due by 31 March 2026, and the notification for the following year is due by 31 December 2026. Information to be provided includes details of the group, each Gibraltar constituent entity, the Designated Local Entity, and the filing jurisdiction for the GloBE Information Return, consistent with the standard OECD template.

Finally, some groups will also be required to file a Gibraltar Top‑up Tax Return (Form GMTA1) where Gibraltar top‑up tax is due. This return functions primarily as a reconciliation mechanism to match top‑up tax payments with the eventual GloBE Information Return shared by the filing jurisdiction under the QCAA framework. The return is simplified, requiring only basic identification information and the Gibraltar top‑up tax liability for the year. The filing deadline matches that of the GloBE Information Return, 15 months after the fiscal year end, or 18 months in the group’s first year of Pillar Two application. Groups filing the GloBE Information Return directly in Gibraltar are not required to file the GMTA1.