|
Globe-Trotting
Sportsman Or Entertainer: Gibraltar
A
Gibraltar resident with extensive, international,
multi-sourced income is not in a particularly
good tax situation unless he or she can
establish non-residence or can take advantage
of qualifying status, since full, world-wide
taxation of income will apply.
Nationals
of EU member states have the right to enter,
live and work in Gibraltar. Initially a
six-month visa is given, and then a 5-year
renewable residence permit, provided that
they have found suitable employment or have
started a business. Work permits cannot
be denied to EU citizens.
Other
nationals have to apply for residency under
the Immigration Control Ordinance and permission
is issued by the Governor. Government guidelines
indicate that an applicant for residency
must be ready and able to purchase a property
of sufficient size to accommodate himself
and his family, must be in good health,
and must have adequate financial resources.
The Government looks more favourably on
those applicants who purchase luxury property
in Gibraltar.
The
holder of a residence permit need not live
in Gibraltar and is not automatically entitled
to social security or citizenship. However,
the resident's children may attend local
schools and are entitled to the same benefits
as other local residents.
Unless Qualifying Individual status is applied
for (see below), an individual may be liable
for taxation on his worldwide income if
he resides in Gibraltar for more than 183
days a year.
As
from 2008, every taxpayer is able to choose
for each tax year between two systems to
pay tax, and to choose the one that results
in the lower tax payment, either of which
can be paid through the PAYE system. The
first system is the pre-existing Allowance
Based System; the alternative system is
a new Gross Income Based system, in which
the taxpayer receives no allowances, but
pays tax on gross income at the following
rates: 20% on the first GBP25,000; 30% on
the next GBP75,000; 40% above GBP100,000.
Under
the Allowance Based System, the first GBP7,500
of income is free of tax; rates of 10% and
20% apply to the next two tranches of taxable
income; a standard rate of 30% applies to
income between GBP4,000 and GBP16,000, and
a higher rate of 38% applies above that
level.
Qualifying
Individuals
This
regime sets limits on the tax that has to
be paid by particular types of individuals.
Qualifying (Category Two) Individuals are
High Net Worth Individuals; Qualifying (Category
3) and (Category 4) Individuals are expatriate
employees of Exempt or Qualifying companies.
Qualifying (Category Two) Individuals
must have available for their exclusive
use approved residential accommodation in
Gibraltar. The Government would also be
looking to ensure that the individual has
sufficient means to maintain himself and
his family. They will therefore be looking
for evidence of wealth although it is not
necessary for the individual to declare
his worldwide wealth or earnings. The Government
would also be looking to ensure that the
individual has private medical insurance
to cover both him and his family whilst
residing in Gibraltar. Income over GBP60,000
is not taxed; therefore the maximum tax
payable by an HNWI is GBP27,000. There is
no capital gains tax in Gibraltar, and an
HNWI is also exempt from Estate Duty. The
minimum amount of tax payable by an HNWI
is GBP18,000.
NB:
Gibraltar tax rules are considerably more
complicated than the above simplified summary,
and professional advice on the situation
of any particular individual is advisable.
These
rules are unlikely to apply to visting sportsmen
and entertainers. Generally, revenues they
receive from professional activity in Gibraltar
are not subject to withholding tax.
Gibraltar
is famed for its expertise in the formation
of companies for holding, investment and
trading purposes. As a result, there are
a great many variations on the theme. However,
the most suitable vehicle for a non-resident
sportsman or entertainer to hold assets
might be the International Trust: trust
income is exempt from tax under the Income
Tax (Allowances, Deductions and Exemptions)
Rules 1992 if:
- the
trust is created by or on behalf of
a non-resident person; and
- the
income either accrues or is derived
outside Gibraltar, or in the case of
income received by a trust would, if
it had been received directly by the
beneficiary, not be liable to tax under
the Income Tax Ordinance; and
- except
in the case of a trust created before
1/7/83, the terms of the trust expressly
exclude residents of Gibraltar (as beneficiaries).
NB:
Interest income received from a Gibraltar
bank is normally exempt from taxation.
American
citizens, and nationals of the very few
other countries that tax world-wide income
on the basis of citizenship, won't be able
to take advantage of the low-tax environment
in Gibraltar, but for all other nationals,
it is available.
www.lowtax.net
contains details of the corporate and individual
tax regimes for 50 offshore jurisdictions.
NB: The suggestions given above do not
constitute investment advice. They are intended
only to assist individuals in finding appropriate
professional advice, which is essential
for anyone planning offshore investment.
|
13/07 
