Gibraltar is widely considered tax-friendly as there is no VAT, capital gains tax or sales tax. There is also low corporation tax, duty free on certain goods and income tax is thought of as quite reasonable in Gibraltar.
Tax must be paid on income that is earned in Gibraltar. So, if you reside in Spain but work in Gibraltar you must pay income tax in Gibraltar. Vice versa, a person residing in Gibraltar will only pay tax on income that has been earned there.
There are two different types of income tax systems in Gibraltar:
- Most people will fall under the Gross Income Based System (GIBS) which assesses gross income as a whole. Income up to £25,000 is taxed at 20 per cent, the next £75,000 at 29 per cent and anything above £100,000 at 35 per cent.
- Under the Allowances Based System an individual will be taxed on their income less allowances. Personal allowances are £3,215 per annum, and allowances include single parents, nursery schools, children educated abroad and spouses.
Individuals earning less than £11,000 annually are exempt from income tax. For those earning between £11,000 and £19,500 a tapering relief is available.
Mortgage Interest Relief is available in Gibraltar on residential properties occupied by the taxpayer. First time buyers in Gibraltar are also eligible to claim tax relief on property. This can be taken over one to ten years, but is not available on investment purchases.
For specific information and to calculate your income tax in Gibraltar, please visit the Gibraltar government website.