Gibraltar

Budget 2024

In July 2024, the Chief Minister and the Minister for Taxation delivered their budget speeches, which included the below announcements.

Corporate income tax (CIT)

The rate of corporate taxation will increase from 12.5% to 15% with effect from 1 July 2024. 

Import duty

The following measures relating to import duty were announced:

• Mild hybrid electric vehicles (MHEVs) will pay import duty at the rate of 10% (previously 0%).
• Full hybrids and plug-in hybrid electric vehicles (PHEVs) will pay import duty at the rate of 5% (previously 0%).
• Pleasure crafts will pay import duty at the rate of 5% (previously 0%). The cap will be fixed at 35,000 British pounds (GBP) as it is for vehicles.
• The above duty increases will not apply to importations where the vehicle/vessel was ordered before 30 September this year, even if delivered after.

Stamp duty 

It was confirmed that the special stamp duty introduced previously in respect of sales of government affordable homes will not apply to sales after an acquisition of an affordable home on the open market.

New purchase agreements and assignments of off-plan purchases will be registrable instruments with a 0.5% special stamp duty payable on Assignment of Purchase Agreement (by the assignor). This will not include sales on subsidised estates.

Restriction on brought-forward trading losses

The government will introduce legislation to restrict the use of accumulated tax losses for companies within the financial services and gaming sectors. The measure seeks to limit the brought-forward trading losses for each accounting period but will not seek to eliminate them. The measure will take effect as from 1 July 2024.

Taxation on the profits or gains derived from property sales 

The Minister for Taxation announced a new tax measure under which any entity or person who holds an interest in three or more residential properties over five consecutive years will be subject to tax on the gain upon disposal of any of the properties. Specified properties are exempt from this measure, including properties used as the primary residence of the beneficial owners and in an estate of a deceased person. 

Anti-avoidance provisions will be implemented where any individuals undertaking professional conveyancing activities on behalf of another will have a reporting obligation to notify the Income Tax Office. 

Increase in audit threshold

Jointly with the Minister for Taxation, the Minister for Business announced that the audit threshold for companies will increase from GBP 1.5 million to GBP 1.75 million, applicable to accounting periods that end on or after 1 July 2024.

Extension of taxation of interest as a trading receipt to insurers and distributed ledger technology (DLT) firms

In February 2024, the Minister of Taxation announced an extension of taxation on interest income as a trading receipt to include insurance companies and DLT firms.

The amendment to the Income Tax Act 2010 specifies interest or ’similar amounts‘ and lists these as to include financial instruments that pay a recurring amount of income, income from virtual assets, discounts, or any other arrangement that has a purpose, or one of the main purposes, to avoid tax under paragraph 15 of the Act.

Anti-avoidance provisions prevent an individual from purposely disposing of the interest-generating asset or instrument to a connected person where the interest income would be outside the scope of taxation under paragraph 15 of the Act. Where it is found that the main purpose, or one of the main purposes, is the avoidance of taxation, the individual disposing of the asset or instrument will be assessable to taxation as if the disposal had not occurred.