How Do I Pay My Taxes If I Work in Gibraltar?

This is a question that arises a lot!

When you’ve found the place of your dreams to live, and will soon be starting work in Gibraltar, you may find it useful to know about how taxes are paid in Gibraltar.

If you’re going to be living and working in Gibraltar, you’ll find the amount of tax paid to the Gibraltar Government, is considerably lower than the tax paid when living and working in the UK.

This is what makes ‘working in Gibraltar’ such a favourable place for many to live and work. It’s attracted new employees, new startups and established businesses for many decades to move to Gibraltar because the tax rates are much lower!

The National Insurance rates in Gibraltar are also a flat-rate, but if you wish to pay into a UK National Insurance, you also have the option to do that.

Let’s take a look at how Tax works in Gibraltar and how it’s worked out.

Tax in Gibraltar

Everyone who works in Gibraltar has to pay tax, even if they don’t live there.

In Gibraltar, the tax year runs from July 1st to June 30th of the following year. Tax returns are submitted for the previous year, by the deadline of November 30th.

It’s highly advised to get your returns submitted before this date to avoid the late penalty fee of £50, increases further after 3 months and 6 months. Tax returns can be returned to the Gibraltar Tax Office, which is located on Main Street and open Monday to Friday.

Gibraltar has two tax systems: the Gross Income Based System (GIBS) based on gross income and the Allowance Based System (ABS), which is a slightly higher rate, than the GIBS, but enables you to receive discount allowances.

Next, let’s take a look at how tax is paid if you live in Spain and commute to Gibraltar for work each day.

Paying Tax When You Live in Spain, But Work in Gibraltar?

You’re not the only one that needs answers to this question, so rest assured, because the majority of people who work in Gibraltar, just like you, also commute from Spain.

The simple answer is that your taxes are balanced out over both governments, so you don’t have to pay double taxes, phew!

The Spanish government will see you’re already paying taxes to Gibraltar and will just charge you the difference. There are certain factors that reduce the amount of Spanish tax paid. For example, if you are married or have children, or pay into a pension plan, you will pay less tax.

Also, you only need to pay tax to the Spanish Government, if you:

• Reside in Spain at least 183 days each year.

• Earn more than €22,000 per year.

A Spanish accountant or assessor (as they are called in Spain) can help you fill in your tax returns and give you more advise on the tax paying process to ensure you don’t pay any more than you should.

In Spain, the tax year runs from January 1st to December 31st and tax returns for the previous year are submitted by the deadline of 30th of June.

If you still have any further questions on paying tax whilst working in Gibraltar, get in touch with our team at SRGEurope on +350 200 69999.