Tax advisory services

How Sovereign Tax Services can help

Qualified and experienced in UK and Gibraltar tax matters, Sovereign Tax Services can provide tax advisory and tax compliance services to individuals, companies, trusts and pensions schemes.

As part of the Sovereign Group, we can also utilise its international tax and structuring expertise to advise on international arrangements across multiple jurisdictions.

Moving to Gibraltar – Special Tax Regimes

Gibraltar offers special tax regimes that are specifically designed to attract HNWIs (Category 2) and High Executives Possessing Specialist Skills (HEPSS). These make Gibraltar a very attractive home for entrepreneurs, for retirees and for suitably qualified individuals and their dependants that wish to enjoy the Mediterranean climate and lifestyle while living in an international finance centre with a favourable tax regime.

Individuals applying under the ‘Category 2’ regime are required to hold private medical insurance (PMI). Through Gibraltar-based Sovereign Insurance Services (SIS), we can further assist with securing competitive PMI, as well as all types of general or life insurance to meet the individual’s insurance needs in Gibraltar.

Gibraltar Category 2 Status

About

The Qualifying (Category 2) Individuals Rules 2004 provide for a well-established regime that limits income tax for HNWIs wishing to reside in Gibraltar.

Key ‘Category 2’ Tax Benefits

Gross assessable income is generally capped at £118,000 per annum (2022-23 £118,000 per annum)
At current rates, maximum annual tax liability is 42,380
At current rates, minimum annual tax liability is £37,000
Spouse and family income may be included
Gibraltar does not levy wealth tax, capital gains tax, inheritance tax or gift tax and neither does it levy income tax on many types of investment income.

Key Tax Benefits

Following successful application to the Finance Centre Director, and receipt of a Category 2 certificate, the holder becomes a Gibraltar taxpayer, taxable in Gibraltar, but only to a limited extent. Only the first £118,000 of assessable income derived by a Category 2 Individual is generally taken into account when calculating their tax liability in Gibraltar. However, income from certain Gibraltar activities, if permitted under the Category 2 regime, for example, the receipt of Gibraltar rental income, can be taxable separate to, and in addition to, the Category 2 tax.

The maximum annual tax liability, which generally arises if £118,000 or more of assessable income is received is currently £42,380,. Category 2 status is subject to a minimum annual tax liability of £37,000, which is pro-rated in years of arrival and departure. The Gibraltar tax year runs from 1 July to 30 June.

The benefits of Category 2 status, which can be a lifetime status subject to the eligibility criteria being satisfied on an ongoing basis, can extend to the worldwide income of a spouse or civil partner and of dependent unmarried children up to 18 years or to the end of their higher education.

Category 2 status in Gibraltar is awarded on the decision of the Finance Centre Director. To become a Category 2 in Gibraltar, an applicant is required to:

- Evidence that he or she has a minimum net worth of £2 million and is of good character.
- Either rent or buy appropriate accommodation in Gibraltar for his or her exclusive use.
- Generally, not undertake business activities that compete with local entities that derive their income from within Gibraltar. Certain local activities are permitted, with the approval of the Finance Centre. Such income will be taxed separate to, and in addition to, the Category 2 tax.
- From 1st July 2022, all Category 2s are required to pay a deposit of tax for their final year of Category 2 status. This equates to the maximum Category 2 tax for the tax year (currently £42,380). New Category 2 individuals will be required to pay this amount (of currently £42,380) on Category 2 application, together with the £1,197 application fee. Any tax deposit paid in advance will be repaid to the Category 2 Individual at the time their Certificate is surrendered or relinquished. The amount repaid will be after deduction of any balance of final year tax due.

Eligibility Restrictions

Eligibility restrictions apply if the applicant has previously been resident or working in Gibraltar within the preceding five years.

There is no minimum physical presence required in Gibraltar to maintain Category 2 status. However, this status will not protect an individual from becoming tax resident elsewhere if they satisfy the residency rules of another country. If a Category 2 individual is spending time outside Gibraltar, awareness of the residency rules in that country is essential.

Other Information

Gibraltar Category 2 status is in principle conferred for an indefinite period of time, but it is required to be endorsed every three years. Upon endorsement, the Finance Centre Director considers whether all the requirements of the status have been complied with and that there are no other valid reasons to cancel the Category 2 certificate.

Summary of Benefits

No gift, succession or inheritance taxes in Gibraltar
No capital gains or wealth taxes in Gibraltar
No VAT or sales taxes in Gibraltar
Generally, maximum annual tax liability of £42,380
Good economy and infrastructure
Mediterranean climate
Vibrant housing market

Find details of the Category 2 regime summarised here:

Download Category 2 Summary

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High Executives Possessing Specialist Skills (HEPSS)

About

Gibraltar is keen to attract individuals who bring special skills not available locally. The HEPSS Rules 2008 provide a favourable tax regime for individuals who possess particular skills in key positions in a locally established business.

This HEPSS regime has played an important role diversifying and widening the skills base of the Gibraltar economy, particularly in respect of the gaming and financial services sectors. The government is also encouraging the creation of a critical mass of specialists in particular areas such as IT and Digital Ledger Technology (DLT) that will hopefully generate growth in new economic activities.

Key HEPSS tax benefits

Gross assessable income is capped at £160,000 per annum
At current rates maximum annual tax liability is £39,940

A person in possession of a HEPSS certificate is only taxable on the first £160,000 of prescribed assessable income, including any bonuses, perquisites and other benefits in kind connected with employment. At current rates, this would result in a maximum tax payment of £39,940 per annum. This tax is pro-rated in years of arrival and departure.

Other income (e.g. Gibraltar rental income) can be taxed separate to, and in addition to, the HEPSS tax.

Main Requirements for HEPSS status

HEPSS status is awarded on the decision of the Finance Centre Director. A company that is either incorporated, registered or carrying on business in Gibraltar must apply to the Finance Centre Director for a certificate to be issued designating that a role held within the organisation is to be carried out by a HEPSS individual.

Conditions Required

Qualifying individuals are required to satisfy the following conditions:

The applicant must have specialist skills that are necessary to promote and sustain economic activity of particular economic value to Gibraltar or the establishment, development or growth of which the Government is seeking to facilitate and encourage
Those skills are not available in Gibraltar and are important for the economic development and growth of Gibraltar
The applicant will occupy a high executive or senior management position
The applicant will earn more than £160,000 per annum in Gibraltar
The applicant must have exclusive use of approved HEPSS property. The property may either be bought or rented
The applicant has not previously been resident or working in Gibraltar within the three years preceding the application

Other Key Tax Benefits

In addition to prescribed assessable income under the HEPSS regime being capped at £160,000, Gibraltar does not levy wealth tax, capital gains tax, inheritance tax or gift tax and neither does it levy income tax on many types of investment income.

Find details of the HEPSS regime summarised here:

Download HEPSS Regime Summary

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HOW SOVEREIGN TAX SERVICES CAN HELP

We can assist with all matters relating to the obtaining of Category 2 and HEPSS status in Gibraltar.

We can also combine local and international tax expertise to advise on individual circumstances.

The services we provide include:

01

Preparation and submission of the Category 2 or HEPSS status application

02

Obtaining and renewing Gibraltar Civilian Registration Card, required under Gibraltar immigration law and reinforcing status

03

Preparation of Gibraltar income tax returns and other compliance matters required under these regimes with Gibraltar Government departments

04

Introductions to local estate agents, banks, and lawyers

05

Assessing the benefit of any UK pension transfer, under the UK’s Qualifying Recognised Overseas Pension Scheme (QROPS) regime

06

Creation and management of trusts, companies, pension schemes (e.g. Qualifying Non-UK Pension Scheme – QNUPS) within the Sovereign Group of Companies.

Download Sovereign Tax Services Brochure

TAX ADVISORY AND TAX COMPLIANCE SERVICES

Gibraltar Tax Services for Gibraltar Residents And/Or Non-Gibraltar Residents with Gibraltar Source Income

Individuals are subject to income tax in Gibraltar on income accruing in or derived from Gibraltar. An ordinarily resident individual is also generally liable to Gibraltar income tax on certain types of income from non-Gibraltar sources. Nonetheless, many exemptions from Gibraltar income tax apply, for example, bank and building society interest, dividends from quoted companies, dividends paid to non-residents etc.

The concept of self-assessment applies so that individuals are required to make annual returns of their assessable income.

We provide Gibraltar tax advisory and tax compliance services to Gibraltar residents, and non-Gibraltar residents in receipt of Gibraltar source income (e.g. Gibraltar rental income). As tax agents, we can manage individual tax compliance obligations, ensuring full entitlement to any relevant allowances, deductions, exemptions and reliefs is claimed and deal with the tax authorities on your behalf.

You can check your Gibraltar tax position with our 2023/24 Gibraltar Tax Rate Brochure:

Download Tax Brochure

UK TAX Services for Non-UK Residents

Generally, non-UK residents are liable to UK income tax on UK source income. However various forms of UK income may be exempted, with, for example, UK income tax on such income restricted to any UK tax withheld at source. The most common types of UK chargeable income for non-UK residents are UK rental income and profits from a trade carried on in the UK.

Generally, non-UK residents are not within the scope of UK Capital Gains Tax on gains realised. However, there are some important exceptions, which include gains realised on the direct or indirect disposal of UK property and gains realised in a period of temporary non-UK residence.

We can advise non-UK residents on the territorial limits of UK tax and how this impacts their UK tax position. Where any UK self-assessment tax reporting is required, we are registered tax agents with HMRC and can prepare and submit online annual self-assessment tax returns. Often, for many, completion of such tax returns can be a daunting prospect, we can help relieve this burden, ensuring correct reporting and calculating any liabilities and advising on payments or repayments (where appropriate).

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PROPERTY TAX SERVICES

MANAGING TAX COMPLIANCE FOR PROPERTY INVESTORS AT HOME OR ABROAD

Owners of investment property are legally required to ensure compliance with their tax obligations. This can be challenging when the property is located in a different country to the owner’s country of residency, but with increasing information exchange, the pressure to comply intensifies.

Sovereign Tax Services, can guide and assist landlords by providing the following services for Gibraltar and/or UK property:

GIBRALTAR PROPERTY

Landlord registration with the Gibraltar Income Tax Office and preparation and filing of annual Gibraltar Tax Returns reporting the rental profits. This may include a calculation of any available capital allowances and consideration of any available tax credits for new property rentals. Both Gibraltar and non-Gibraltar resident landlords are legally required to comply with these rules.

On 24 February 2022, the Gibraltar Government announced the launch of its Register of Property Occupation, by commencement of the Register of Property Occupation Act 2021. This Register is fully integrated into the Gov.gi eServices portal, and will provide the Government with an accurate and live record of people who reside in Gibraltar. With effect from 24 February 2022, Gibraltar residents have a legal requirement to register and detail the names of all persons who are residing in their property whether owned by them, rented or licensed by them, within a period of 3 months. For rented property, this requires tenants and landlords to provide details to be maintained in the Register. There are fines for non-compliance. It is highly recommended that landlords of Gibraltar property (whether resident themselves in Gibraltar or not) review their tax arrangements and ensure that they are compliant and up-to-date as soon as possible. Sovereign Tax Services provide Gibraltar tax compliance services to landlords, helping to provide peace of mind that tax affairs are dealt with correctly and are up to date.

UK PROPERTY

Many non-UK residents own UK property, this is often a result of retaining a previous UK residence or having built up a property portfolio in the UK. The UK tax law in this area has changed rapidly and significantly in recent years. This poses challenges for non-UK resident owners who are often unaware of such developments.

Sovereign Tax Services can assist with reviewing the UK tax position in order to plan for the future and to avoid being caught unawares. We can prepare and submit online UK Self-Assessment tax returns, providing peace of mind that tax affairs have been dealt with. A review undertaken in good time can save considerable time and anxiety in the long term.

In particular, Sovereign Tax Services can provide the following services:

For UK property rentals, registration with HM Revenue & Customs (HMRC) as a non-resident landlord (if required) and preparation and online filing of annual UK Income Tax Returns.

For any UK property disposals, we can advise on the position in respect of UK Capital Gains Tax.
Advising on the UK Inheritance Tax position in respect of UK property ownership.

Both UK resident and non-resident landlords are legally required to comply with these rules.

Interested in Tax advisory services?