Gibraltar is continuously attracting High Net Worth Individuals due to its Category 2 (Cat2) status offering extremely attractive taxation benefits, duly introduced by HM Government of Gibraltar in 1992 to encourage wealthy individuals to establish a residence in Gibraltar.
Over the years Gibraltar have seen a steady stream of wealthy overseas clients from United Kingdom, Switzerland, France, Canada, Germany and Belgium to name but a few, expressing genuine interest in applying to the Finance Centre Director in order to be issued with a certificate to be qualified as a Category 2 individual, due to the low annual personal income tax payable in Gibraltar.
An individual who has been issued with a Category 2 Individual certificate shall be liable to income tax on the first £118,000 of assessable income only and the minimum annual tax liability payable in any year of assessment shall not be less than £37,000 and the maximum annual tax liability is £44,740. as tax rates presently stand.
Income in excess of £118,000 that may be covered by the Cat2 Certificate, is not subject to tax in Gibraltar.
Application for a Category 2 Status is to be made to the Finance Centre Director and the applicant needs to provide evidence that he is not resident in Gibraltar and has not been in the previous five years and has secured an approved Cat2 luxury residential accommodation in Gibraltar for his own private use for the whole of the financial year of assessment, which will cater to his family's requirement.
The applicant via his lawyer, will need to submit an application to the Finance Centre Director and confirm his source of wealth, income, two references vouching the applicant's good financial standing and copy of his passport, in addition to confirmation that the applicant's worldwide assets are in excess of £2,000,000. Moreover, the applicant will have to pay a non-refundable deposit of £1,000 and provide evidence of ownership or rental of an approved Cat2 luxury property in Gibraltar.
Applicants will have to take into consideration that the respective Cat2 luxury property needs to be ready to move in and therefore off-plan luxury properties which are still under construction will not be considered by the Finance Centre Director.
However, in the event that the applicant wishes to acquire an off-plan luxury property which is still under construction, then the applicant will have to rent an approved Cat2 luxury property, at time of presenting his Cat2 application to the Finance Centre Director.
Once the applicant takes possession of his off-plan property on completion of the development, he will then be able to transfer his Cat2 Certificate to his new property address.
In order to be eligible for a HEPSS status, the applicant will need to prove to the Gibraltar Finance Director that they will promote and sustain economic activity of a particular economic value to Gibraltar. Furthermore, they will need to prove that they earn more than £160,000 per annum.
As per the Cat2 requisites, the conditions on residential accommodation and previous non-residency will apply when applying for a HEPSS status.
A HEPSS status individual can only be taxed under the Gross Income Based System which will be limited to the first £160,000 of their assessable income. As tax rates presently stand, the annual total tax liability would be £39,940.
In order to qualify, the employer must satisfy the Finance Centre Director the appointment of a High Executive Possessing Specialist Skills Individual.