Gibraltar

Budget 2023: New tax credits announced

In his Budget Speech on 11 July 2023, the Chief Minister announced that the following new tax credits will be introduced:

• 10% of the verified costs for individuals who are enrolled in a gym or who contract a personal trainer who is registered with the Income Tax Office.
• 10% of the cost of private school tuition in Gibraltar.
• 75% of the LSRA fees for lawyers who are single practitioners.

Allowances Based System tax credits

Under the Allowances Based System, there is a tax credit equal to the higher of GBP 300 or 2% of the tax bill.

Individuals over the age of 60 who are not in receipt of pension or annuity income exceeding GBP 6,000 are eligible for a tax credit of GBP 4,000.

Category 2 tax incentives

A Category 2 individual shall only be liable to income tax on the first GBP 118,000 of income per annum under the Allowances Based System (on income of GBP 105,000, this equates to a total tax charge of GBP 44,740). The minimum amount of tax payable in any tax year is GBP 37,000.

In order to be issued with a Category 2 certificate, an individual must:

• not have been resident in Gibraltar for the previous five years
• have a minimum of GBP 2 million in net assets, and
• have approved residential accommodation in Gibraltar available for one's exclusive use.

High executive possessing specialist skills (HEPSS) tax incentives

A HEPSS individual shall only be liable to income tax on the first GBP 160,000 of income per annum under the Gross Income Based System (on income of GBP 160,000, this equates to a total tax charge of GBP 39,940).

In order to be issued with a HEPSS certificate, an individual must:

• not have been resident in Gibraltar for the previous three years (or have previously registered as a Category 3 individual)
• possess skills not available in Gibraltar that are necessary to promote and sustain economic activity of particular economic value to Gibraltar, and
• have approved residential accommodation in Gibraltar available for one's exclusive use.

The HEPSS threshold increased from GBP 120,000 to GBP 160,000 with effect from 1 August 2021. Transitional rules apply until 31 July 2023 for existing HEPSS individuals with income between GBP 120,000 and GBP 160,000.

Green incentives

A one-off tax deduction is introduced against assessable income (with the percentage to be verified and subject to the discretion of the Commissioner of Income Tax) on the investment made by an individual, company, or business that makes a significant improvement to the Energy Performance Certificate (EPC) rating of the premises.

Property investment incentive

A tax-free property investment incentive is available for owners of property constructed in Gibraltar in the next 30 months from 1 July 2016 and rented for residential purposes. These owners will receive a tax credit equal to the tax payable on the profits earned on the first 24 months of rent occurring in the first five years after the completion of construction of that property. This tax credit is non-refundable and can be offset against the tax payable to extinguish any liability to tax.