Gibraltar

Budget summary

Below is a summary of the key taxation changes to existing legislation as a result of the Chief Minister’s and Minister for Taxation's budget speeches in July 2024.

Personal tax rates

The tax rates on all bands under both the Allowance Based System and Gross Income Based System will reduce by 1% for individuals with gross assessable income not exceeding 100,000 British pounds (GBP) per annum.

Tax rates will reduce by 2% for individuals with gross assessable income exceeding GBP 100,000 per annum.

The reduction is a reversal of tax rate increases announced in the Chief Minister’s Budget in June 2022, where he announced the rates increased temporarily by 2%.

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 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 owner and in an estate of a deceased person.

Anti-avoidance measures 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.

The measure was enacted into domestic law on 18 December 2024. The amendment increased the property threshold from three to five properties and included in the definition of exempted property the properties constructed prior to, and held by the owner since, 1 January 1988.

Home purchaser allowances 

First- and second-time home purchaser allowances are now restricted to properties under GBP 800,000.

A first-time home purchaser allowance has been introduced for those selling after the age of 65 and moving to smaller properties.

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.

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.

Statutory minimum wage

The statutory hourly minimum wage increased from GBP 8.60 to GBP 8.90 (a 3.5% increase) from 1 July 2024.

Green procurement 

A tax deduction of an additional 50% in respect of any cost or expense of achieving net zero is available. This is subject to the Commissioner of Income Tax considering the deduction reasonable and directly associated with achieving the net zero objective. The deduction will be capped at a maximum of GBP 10,000 per annum.

Living accommodation exemption

The Minister for Taxation announced a review of the accommodation exemption per Schedule 7 of the Income Tax Act 2010. The review will include changing the seven-year exemption period, the Minister noting that the average stay of employees relocating to Gibraltar is not beyond three to four years. In addition, the review will seek to implement flexibility in allowing an employee to continue using the exemption when changing the address or employment during the applicable period. 

Student exemption

A clarification was announced regarding the tax status of full-time students in part-time employment. Income received by full-time students in part-time employment will continue to be tax-exempt, albeit the Income Tax Office will apply a tax-exempt threshold of GBP 11,450. As such, employment income above the threshold will be subject to income tax.

Notwithstanding, this does not change the other criteria by which students are tax-exempt.