Economy of Gibraltar
Encyclopedia
The economy of Gibraltar is managed and controlled by the Government of Gibraltar. Whilst being part of the European Union
, the British overseas territory
of Gibraltar
has a separate legal jurisdiction
from the United Kingdom
and enjoys a different tax system
.
The role of the UK Ministry of Defence
, which at one time was Gibraltar's main source of income, has declined, with today's economy mainly based on shipping
, tourism
, financial services
, and the Internet
.
In his June 2009, budget speech, Chief Minister
Peter Caruana
noted that Gibraltar's economy remains in good shape and Government finances remain healthy, solid, stable and robust, despite global economic and financial turmoil.
Gibraltar will soon have a functioning stock exchange
, the GibEX.
In December 2008 in a landmark decision the European Court of Justice
ruled that:
This allowed the implementation of a new low tax system which is to take full effect by 2010.
, adjacent to the Strait of Gibraltar
(one of the world's busiest shipping lane
s) and with over 7,000 ship calls each year, Gibraltar is home to a wealth of shipping expertise and to many specialist companies offering a comprehensive range of support services, most notably the dockyard of Gibdock.
as a Special Member State territory, having joined the European Economic Community
with the United Kingdom in 1973, under the provisions of the Treaty of Rome
relating to European dependent territories. However, it is exempt of the Common external tariff
, the Common Agricultural Policy
and the requirement to levy Value added tax
.
Financial institution
s operating in Gibraltar are regulated by the Gibraltar Financial Services Commission.
Subject to notifying the Commissioner, who must be satisfied that they meet certain criteria in accordance with the relevant EU Directive, Gibraltar licensed or authorised financial institutions can provide services throughout the EU and European Economic Area
without having to seek separate licences or authorisation in the host Member State
. This is known as the passporting of financial services
.
Referred to as an International Finance Centre, Gibraltar was among 35 jurisdictions identified by the Organisation for Economic Co-operation and Development
(OECD) as a tax haven
in June 2000. However, the list's disclaimer states:
As a result of having made a commitment in accordance with the OECD's 2001 Progress Report on the OECD's Project on Harmful Tax Practices, Gibraltar is not included in the OECD's list of uncooperative tax havens. It has also never been listed on the FATF Blacklist
of uncooperative countries in the fight against money laundering
. It may also be referred to as an Offshore financial centre
, by international institutions such as the International Monetary Fund
(IMF).
However, in its April 2009 progress report, the OECD listed Gibraltar in the list of jurisdictions which, although committed, had not "substantially implemented" yet the internationally agreed tax standard. Following Gibraltar's signing of 12 additional Tax Information Exchange Agreements
(TIEAs), as of October 2009, with jurisdictions including the UK, US and Germany, to sum 13, Gibraltar is currently listed in the OECD "white list"
, and is considered a jurisdiction that has substantially implemented the tax standard. It therefore shares the same status as OECD member states such as the UK, the US, Spain or Germany.
Fiscal advantages, including no tax on capital income, are offered to a maximum of 8,464 offshore qualified companies incorporated
in Gibraltar. After an agreement with the European Union in 2005, this tax exempt
regime is due to disappear on the 31 December 2010.
A 2007 IMF report on the regulatory environment and anti-money laundering has once again endorsed Gibraltar’s robust regulatory environment.
According to the report:
In 2008 Gibraltar was listed for the first time in the Global Financial Centres Index
published by the City of London Corporation. The Rock
was ranked 26th in a list of 69 leading finance centres around the world based on an online survey of 1,236 business professionals, who provided a total of 18,878 assessments.
Gibraltar was also ranked in the top 20 centres for e-readiness
, coming 20th after major capitals and leading offshore centres.
terminal and is increasingly popular with this trade. Its coach park
is popular with day-tripper
s mainly from Spain
. The Gibraltar Airport
is serviced daily by flights from the UK and certain charter flights. In 2005 an estimated 6,000,000 tourists visited Gibraltar.
Preliminary work was begun in 2004 on a 10-year project to construct a new hotel and marina project on the Eastside of the Rock, overlooking Spain's Costa del Sol. Designed by world-famous British architect Norman Foster
, the 2 billion euro mega-project will feature three, 200-metre long finger quays and a sweeping kilometre-long curved breakwater to surround them, totaling over 300,000 square metres of infill. The project, known as Sovereign Bay, will include several hotels and casinos and is scheduled for completion in 2014. The deep-draft breakwater will be capable of berthing large ocean liners within the "bay", while the marina will accommodate 500 private boats. Spanish news outlets expressed outrage over the Sovereign Bay project in January 2009, particularly over the fact that infill material to create the quays and breakwater was reportedly coming from Spanish quarries in Andalucia.
, good internet
connectivity along with a well-developed regulatory system. All gambling
operations in Gibraltar require licensing under the Gambling Act 2005
. The Gibraltar Regulatory Authority
is the Gambling Commissioner under the Gambling Act 2005, and therefore the regulatory body. Good regulation, and being part of the EU is seen as a strong advantange by large legitimate operators. The UK has published plans to protect online gamblers from crime and exploitation by banning gambling adverts from poorly regulated countries which specifically mention Gibraltar as an approved location.
was originally the mainstay of Gibraltar's economy but this has greatly reduced to around 6% of the GDP. In 2006 the MoD announced that it would contractorise the provision of services to the military base
to make further cost savings.
This was finalised in January 2007.
Self-sufficient Gibraltar benefits from an extensive shipping trade, offshore banking, and its position as an international conference center. The British military presence has been sharply reduced and now contributes about 7% to the local economy, compared with 60% in 1984. The financial sector, tourism (almost 5 million visitors in 1998), shipping services fees, and duties on consumer goods also generate revenue. The financial sector, the shipping sector, and tourism each contribute 25%-30% of GDP. Telecommunications accounts for another 10%. In recent years, Gibraltar has seen major structural change from a public to a private sector economy, but changes in government spending still have a major impact on the level of employment.
Figures from the CIA World Factbook show the main export markets in 2006 were United Kingdom
30.8%, Spain
22.7%, Germany
13.7%, Turkmenistan
10.4%, Switzerland
8.3%, Italy
6.7% while the corresponding figures for imports are Spain
23.4%, Russia
12.3%, Italy
12%, UK 9%, France
8.9%, Netherlands
6.8% and United States
4.7%.
The Gibraltar Government state that economy grew in 2004/2005 by 7% to a GDP of £599,180,000. Based on statistics in the 2006 surveys, the Government statisticians estimate it has grown by 8.5% in 2005/6 and by 10.8% in 2006/7 and that the GDP is probably now around 730 million. Inflation was running at 2.6% in 2006 and predicted to be 2% to 3% in 2007. Speaking at the 2007 budget session, Peter Caruana, the Chief Minister said "The scale of Gibraltar's economic success makes it one of the most affluent communities in the entire world."
Labor force:
12,690 (including non-Gibraltar laborers) (2001)
Labor force - by occupation:
services 60%, industry 40%, agriculture NEGL%
Unemployment rate
2% (2001)
Budget
revenues: $455.1 million
expenditures: $423.6 million (2005 est.)
Public Debt
15.7% of GDP (2005 est.)
Industries
tourism
, banking and finance
, ship
repairing, tobacco
Industrial production growth rate
NA%
Electricity
- production
142 million kWh (2006 est.)
Electricity - production by source
fossil fuel
100%
hydro
0%
nuclear
0%
other
0%
Electricity - consumption
142 million kWh (2006 est.)
Electricity - exports
0 kWh (1998)
Electricity - imports
0 kWh (1998)
Oil - production
0 oilbbl/d (2001 est.)
Oil - consumption
42000 oilbbl/d 2001
Oil - exports
NA (2001)
Oil - imports
NA (2001)
Agriculture
- products
none
Exports
$271 million (2004 est.)
Exports - commodities
(principally reexports) petroleum
51%, manufactured goods 41%, other 8%
Exports - partners
UK
, Morocco
, Portugal
, Netherlands
, Spain
, US
, Germany
Imports
$2.967 billion (2004 est.)
Imports - commodities
Fuels, manufactured goods, and foodstuffs
Imports - partners
UK, Spain, Japan
, Netherlands
Fiscal year
1 July - 30 June
The above figures taken from the CIA World Factbook September 2009 edition.
produced by Professor John Fletcher of Bournemouth University
. The report aimed at clarifying the effects of Gibraltar's economy on the Campo area. It demonstrated that Gibraltar's economy has a significant and very positive economic impact on the Campo de Gibraltar. It also noted that the Campo region played a "significant role [..] in Gibraltar's economic development as well", concluding that "[b]oth economies and societies would be the poorer without the other..."
Its conclusions were:
The law of Gibraltar
is based on English law
, but is separate from the UK legal system
. Non-resident businesses do not pay income tax unless the source of this income is Gibraltar proper. There is no tax on capital income.
In Gibraltar there is no capital gains tax
, wealth tax
, sales tax
or value added tax
. Import duty is payable on most items at 12% The main tax for companies is Corporation Tax, and Social insurance
contributions. There are also stamp duties
on certain transactions, and property tax
es ('rates').
Non-resident companies can take advantage of a number of offshore regimes in order to reduce taxation, although in line with the elimination of unfair tax practices this is being phased out. Individuals pay quite high taxes on their income in Gibraltar unless they are able to take advantage of High net worth individual
status or gain exemption as an expatriate
executive. There is a moderately high estate duty, and import duties are quite high on some items.
Assessment and collection of tax is administered by the Commissioner of Income Tax; the tax year runs from first July to the following 30 June.
Disclaimer: Tax rates may vary and information here may be incorrect or out of date. For the latest data see the Government of Gibraltar website listed in external links.
s and bets placed for online bookmakers), capped at £425,000 with a minimum payable of £85,000.
, wine
s, tobacco
and mineral oil
s.
Minimums and maxima shown are per week.
No contributions are payable if the person is not in receipt of earnings.
Income earned by a student on holiday is exempt.
As an anti-avoidance provision, it will not apply in respect of any commercial activity being carried out before 25 June 2009 and that is reorganised by the taxpayer in the name of a different entity for the purpose of benefiting from the scheme.
In addition, no tax is payable on dividends between Gibraltar companies
GROSS INCOME BASED SYSTEM
1. Persons on gross income up to £16,000
2. Persons on gross income £16,000 to £25,000
3. Persons on gross income between £25,001 and £35,000
A rate of 20% applies less tapering relief on gross income between £25,001 and £26,000. With the tapering relief on gross income of £25,000, there is a tax-free amount of £2000 that reduces by £2 for every £1 increase in gross income.
4. Persons on gross income between £35,001 and £100,000
The effective (average) tax rate is reduced by 0.5% from the previous year using a complex formula to give a maximum effective tax rate of 26.25% on gross income of £100,000. The tax liability is arrived at by first calculating using the previous year’s tax band (i.e. 20% for tax bands of £0 - £25,000 and 29% for £25,001 - £100,000), then reducing it by 0.5% and finally applying the resulting rate of taxable income (gross income less tapering relief). With the tapering relief on gross income of £35,001, there is a tax-free amount of £3284 that reduces by £2 for every £1 increase in gross income.
5. Persons on gross income between £100,001 and £353,000
A rate of 20% on the first £25,000 of gross income applies, with the balance taxed at 29%. With the tapering relief on gross income of £100,001, there is a tax-free amount of £1722 that reduces by £2 for every £1 increase in gross income.
6. Individuals on Gross Income over £353,000
ALLOWANCE BASED SCHEME
A wide range of allowances apply for children, single parents, mortgage relief etc. (Below)
On purchase of Real Estate:
and approximately 1.5 times that of immigrants in the UK
, thus making people of Indian descent by far the most economically affluent ethnic group
in Gibraltar.
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
, the British overseas territory
British overseas territories
The British Overseas Territories are fourteen territories of the United Kingdom which, although they do not form part of the United Kingdom itself, fall under its jurisdiction. They are remnants of the British Empire that have not acquired independence or have voted to remain British territories...
of Gibraltar
Gibraltar
Gibraltar is a British overseas territory located on the southern end of the Iberian Peninsula at the entrance of the Mediterranean. A peninsula with an area of , it has a northern border with Andalusia, Spain. The Rock of Gibraltar is the major landmark of the region...
has a separate legal jurisdiction
Law of Gibraltar
The law of Gibraltar is a combination of common law and statute, and is based heavily upon English law.The English Law Act of 1962 stipulates that English common law will apply to Gibraltar unless overridden by Gibraltar law...
from the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
and enjoys a different tax system
Tax law
Tax law is the codified system of laws that describes government levies on economic transactions, commonly called taxes.-Major issues:Primary taxation issues facing the governments world over include;* taxes on income and wealth...
.
The role of the UK Ministry of Defence
Ministry of Defence (United Kingdom)
The Ministry of Defence is the United Kingdom government department responsible for implementation of government defence policy and is the headquarters of the British Armed Forces....
, which at one time was Gibraltar's main source of income, has declined, with today's economy mainly based on shipping
Shipping
Shipping has multiple meanings. It can be a physical process of transporting commodities and merchandise goods and cargo, by land, air, and sea. It also can describe the movement of objects by ship.Land or "ground" shipping can be by train or by truck...
, tourism
Tourism in Gibraltar
Tourism is an important asset to Gibraltar and is one of the three pillars of the Gibraltar economy, the other two being the British military and financial services.Gibraltar attracted over 100,000 visitors in 2005, more than three times its population...
, financial services
Financial services
Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...
, and the Internet
Internet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
.
In his June 2009, budget speech, Chief Minister
Chief Minister of Gibraltar
The Chief Minister of Gibraltar is the leader of the largest party elected to the Gibraltar Parliament, and is formally appointed by the Governor of Gibraltar, representative of the British Crown.-List of Chief Ministers:...
Peter Caruana
Peter Caruana
Peter Richard Caruana, QC is a Gibraltarian politician, and has been Chief Minister of Gibraltar since 1996, when his party, the Gibraltar Social Democrats , first came to power. His party was re-elected to office in 2000, 2003 and 2007...
noted that Gibraltar's economy remains in good shape and Government finances remain healthy, solid, stable and robust, despite global economic and financial turmoil.
Gibraltar will soon have a functioning stock exchange
Gibraltar Stock Exchange
The Gibraltar Stock Exchange is the only stock exchange in Gibraltar. It was established in 2006, and was to begin full operations in 2007. This is the second time there has been a planned stock exchange in Gibraltar; during the 1990s, a market was planned but was not backed with government...
, the GibEX.
In December 2008 in a landmark decision the European Court of Justice
European Court of Justice
The Court can sit in plenary session, as a Grand Chamber of 13 judges, or in chambers of three or five judges. Plenary sitting are now very rare, and the court mostly sits in chambers of three or five judges...
ruled that:
This allowed the implementation of a new low tax system which is to take full effect by 2010.
Shipping
Situated at the entrance to the Mediterranean SeaMediterranean Sea
The Mediterranean Sea is a sea connected to the Atlantic Ocean surrounded by the Mediterranean region and almost completely enclosed by land: on the north by Anatolia and Europe, on the south by North Africa, and on the east by the Levant...
, adjacent to the Strait of Gibraltar
Strait of Gibraltar
The Strait of Gibraltar is a narrow strait that connects the Atlantic Ocean to the Mediterranean Sea and separates Spain in Europe from Morocco in Africa. The name comes from Gibraltar, which in turn originates from the Arabic Jebel Tariq , albeit the Arab name for the Strait is Bab el-Zakat or...
(one of the world's busiest shipping lane
Sea lane
A sea lane or shipping lane is a regularly used route for ocean-going and Great Lakes vessels. In the time of sailing ships they were not only determined by the distribution of land masses but also the prevailing winds, whose discovery was crucial for the success of long voyages...
s) and with over 7,000 ship calls each year, Gibraltar is home to a wealth of shipping expertise and to many specialist companies offering a comprehensive range of support services, most notably the dockyard of Gibdock.
Bunkering
Gibraltar is one of the largest bunkering ports in the Mediterranean Sea, with 4.3 million tonnes of bunkers delivered in 2007. This has become the main activity within the Port of Gibraltar.Finance
Gibraltar is a constituent part of the European UnionEuropean Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
as a Special Member State territory, having joined the European Economic Community
European Economic Community
The European Economic Community The European Economic Community (EEC) The European Economic Community (EEC) (also known as the Common Market in the English-speaking world, renamed the European Community (EC) in 1993The information in this article primarily covers the EEC's time as an independent...
with the United Kingdom in 1973, under the provisions of the Treaty of Rome
Treaty of Rome
The Treaty of Rome, officially the Treaty establishing the European Economic Community, was an international agreement that led to the founding of the European Economic Community on 1 January 1958. It was signed on 25 March 1957 by Belgium, France, Italy, Luxembourg, the Netherlands and West Germany...
relating to European dependent territories. However, it is exempt of the Common external tariff
Common external tariff
When a group of countries form a customs union they must introduce a common external tariff. The same customs duties, import quotas, preferences or other non-tariff barriers to trade apply to all goods entering the area, regardless of which country within the area they are entering...
, the Common Agricultural Policy
Common Agricultural Policy
The Common Agricultural Policy is a system of European Union agricultural subsidies and programmes. It represents 48% of the EU's budget, €49.8 billion in 2006 ....
and the requirement to levy Value added tax
Value added tax
A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...
.
Financial institution
Financial institution
In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries...
s operating in Gibraltar are regulated by the Gibraltar Financial Services Commission.
Subject to notifying the Commissioner, who must be satisfied that they meet certain criteria in accordance with the relevant EU Directive, Gibraltar licensed or authorised financial institutions can provide services throughout the EU and European Economic Area
European Economic Area
The European Economic Area was established on 1 January 1994 following an agreement between the member states of the European Free Trade Association and the European Community, later the European Union . Specifically, it allows Iceland, Liechtenstein and Norway to participate in the EU's Internal...
without having to seek separate licences or authorisation in the host Member State
Member State of the European Union
A member state of the European Union is a state that is party to treaties of the European Union and has thereby undertaken the privileges and obligations that EU membership entails. Unlike membership of an international organisation, being an EU member state places a country under binding laws in...
. This is known as the passporting of financial services
Financial services
Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...
.
Referred to as an International Finance Centre, Gibraltar was among 35 jurisdictions identified by the Organisation for Economic Co-operation and Development
Organisation for Economic Co-operation and Development
The Organisation for Economic Co-operation and Development is an international economic organisation of 34 countries founded in 1961 to stimulate economic progress and world trade...
(OECD) as a tax haven
Tax haven
A tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate....
in June 2000. However, the list's disclaimer states:
As a result of having made a commitment in accordance with the OECD's 2001 Progress Report on the OECD's Project on Harmful Tax Practices, Gibraltar is not included in the OECD's list of uncooperative tax havens. It has also never been listed on the FATF Blacklist
FATF Blacklist
The FATF blacklist was the common shorthand description for the Financial Action Task Force list of "Non-Cooperative Countries or Territories" ; that is, countries which it perceived to be non-cooperative in the global fight against money laundering and terrorist financing...
of uncooperative countries in the fight against money laundering
Money laundering
Money laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
. It may also be referred to as an Offshore financial centre
Offshore financial centre
An offshore financial centre , though not precisely defined, is usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds....
, by international institutions such as the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF).
However, in its April 2009 progress report, the OECD listed Gibraltar in the list of jurisdictions which, although committed, had not "substantially implemented" yet the internationally agreed tax standard. Following Gibraltar's signing of 12 additional Tax Information Exchange Agreements
Tax information exchange agreements
Tax information exchange agreements provide for exchange of information on request relating to a specific criminal or civil tax investigation or civil tax matters under investigation....
(TIEAs), as of October 2009, with jurisdictions including the UK, US and Germany, to sum 13, Gibraltar is currently listed in the OECD "white list"
Whitelisted gambling jurisdictions
Whitelisted gambling jurisdictions are those gambling jurisdictions that are allowed to advertise gambling services on the territory of the United Kingdom....
, and is considered a jurisdiction that has substantially implemented the tax standard. It therefore shares the same status as OECD member states such as the UK, the US, Spain or Germany.
Fiscal advantages, including no tax on capital income, are offered to a maximum of 8,464 offshore qualified companies incorporated
Incorporation (business)
Incorporation is the forming of a new corporation . The corporation may be a business, a non-profit organisation, sports club, or a government of a new city or town...
in Gibraltar. After an agreement with the European Union in 2005, this tax exempt
Tax exemption
Various tax systems grant a tax exemption to certain organizations, persons, income, property or other items taxable under the system. Tax exemption may also refer to a personal allowance or specific monetary exemption which may be claimed by an individual to reduce taxable income under some...
regime is due to disappear on the 31 December 2010.
A 2007 IMF report on the regulatory environment and anti-money laundering has once again endorsed Gibraltar’s robust regulatory environment.
According to the report:
In 2008 Gibraltar was listed for the first time in the Global Financial Centres Index
Global Financial Centres Index
The Global Financial Centres Index is a ranking of the competitiveness of financial centres based on 26,629 financial centre assessments from an online questionnaire together with over 60 indices...
published by the City of London Corporation. The Rock
Rock of Gibraltar
The Rock of Gibraltar is a monolithic limestone promontory located in Gibraltar, off the southwestern tip of Europe on the Iberian Peninsula. It is high...
was ranked 26th in a list of 69 leading finance centres around the world based on an online survey of 1,236 business professionals, who provided a total of 18,878 assessments.
Gibraltar was also ranked in the top 20 centres for e-readiness
E-readiness
E-Readiness is the ability to use information and communication technologies to develop one's economy and to foster one's welfare.There are several benchmarking indices at the macro level, e.g., those calculated by the UNPAN, World Bank, Economist Intelligence Unit etc.Because what appear on the...
, coming 20th after major capitals and leading offshore centres.
Tourism
Gibraltar has invested in a new cruise shipCruise ship
A cruise ship or cruise liner is a passenger ship used for pleasure voyages, where the voyage itself and the ship's amenities are part of the experience, as well as the different destinations along the way...
terminal and is increasingly popular with this trade. Its coach park
Bus terminus
A bus terminus is a designated place where a bus or coach starts or ends its scheduled route. The terminus is the designated place that a timetable is timed from. Termini can be located at bus stations, interchanges, bus garages or simple bus stops. Termini can both start and stop at the same...
is popular with day-tripper
Day-tripper
A day-tripper is a person who visits a tourist destination or visitor attraction from his/her home and returns home on the same day.- Definition :In other words, this excursion does not involve a night away from home such as experienced on a holiday...
s mainly from Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
. The Gibraltar Airport
Gibraltar Airport
Gibraltar Airport or North Front Airport is the civilian airport that serves the British overseas territory of Gibraltar. It is owned by the Ministry of Defence for use by the Royal Air Force as RAF Gibraltar. Civilian operators use the airport; currently the only scheduled flights operate to the...
is serviced daily by flights from the UK and certain charter flights. In 2005 an estimated 6,000,000 tourists visited Gibraltar.
Preliminary work was begun in 2004 on a 10-year project to construct a new hotel and marina project on the Eastside of the Rock, overlooking Spain's Costa del Sol. Designed by world-famous British architect Norman Foster
Norman Foster, Baron Foster of Thames Bank
Norman Robert Foster, Baron Foster of Thames Bank, OM is a British architect whose company maintains an international design practice, Foster + Partners....
, the 2 billion euro mega-project will feature three, 200-metre long finger quays and a sweeping kilometre-long curved breakwater to surround them, totaling over 300,000 square metres of infill. The project, known as Sovereign Bay, will include several hotels and casinos and is scheduled for completion in 2014. The deep-draft breakwater will be capable of berthing large ocean liners within the "bay", while the marina will accommodate 500 private boats. Spanish news outlets expressed outrage over the Sovereign Bay project in January 2009, particularly over the fact that infill material to create the quays and breakwater was reportedly coming from Spanish quarries in Andalucia.
Internet business
Gibraltar offers a favourable tax systemTax law
Tax law is the codified system of laws that describes government levies on economic transactions, commonly called taxes.-Major issues:Primary taxation issues facing the governments world over include;* taxes on income and wealth...
, good internet
Internet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
connectivity along with a well-developed regulatory system. All gambling
Gambling
Gambling is the wagering of money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods...
operations in Gibraltar require licensing under the Gambling Act 2005
Gambling Act 2005
The Gambling Act 2005 is an Act of the Parliament of the United Kingdom. It mainly applies to England and Wales, and to Scotland, and is designed to control all forms of gambling...
. The Gibraltar Regulatory Authority
Gibraltar Regulatory Authority
The Gibraltar Regulatory Authority was established by the Gibraltar Regulatory Act in October 2000. The GRA is the statutory body in Gibraltar responsible for regulating electronic communications. This includes telecommunications, radio communications and broadcasting transmissions. The GRA serves...
is the Gambling Commissioner under the Gambling Act 2005, and therefore the regulatory body. Good regulation, and being part of the EU is seen as a strong advantange by large legitimate operators. The UK has published plans to protect online gamblers from crime and exploitation by banning gambling adverts from poorly regulated countries which specifically mention Gibraltar as an approved location.
Defence spending
The UK's Ministry of DefenceMinistry of Defence (United Kingdom)
The Ministry of Defence is the United Kingdom government department responsible for implementation of government defence policy and is the headquarters of the British Armed Forces....
was originally the mainstay of Gibraltar's economy but this has greatly reduced to around 6% of the GDP. In 2006 the MoD announced that it would contractorise the provision of services to the military base
Military base
A military base is a facility directly owned and operated by or for the military or one of its branches that shelters military equipment and personnel, and facilitates training and operations. In general, a military base provides accommodations for one or more units, but it may also be used as a...
to make further cost savings.
This was finalised in January 2007.
Economy in detail
Gibraltar benefits from an extensive shipping trade, a well regulated international finance center, tourism, and has become a global leader in the virtual gaming industry.Self-sufficient Gibraltar benefits from an extensive shipping trade, offshore banking, and its position as an international conference center. The British military presence has been sharply reduced and now contributes about 7% to the local economy, compared with 60% in 1984. The financial sector, tourism (almost 5 million visitors in 1998), shipping services fees, and duties on consumer goods also generate revenue. The financial sector, the shipping sector, and tourism each contribute 25%-30% of GDP. Telecommunications accounts for another 10%. In recent years, Gibraltar has seen major structural change from a public to a private sector economy, but changes in government spending still have a major impact on the level of employment.
Figures from the CIA World Factbook show the main export markets in 2006 were United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
30.8%, Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
22.7%, Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
13.7%, Turkmenistan
Turkmenistan
Turkmenistan , formerly also known as Turkmenia is one of the Turkic states in Central Asia. Until 1991, it was a constituent republic of the Soviet Union, the Turkmen Soviet Socialist Republic . Turkmenistan is one of the six independent Turkic states...
10.4%, Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....
8.3%, Italy
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
6.7% while the corresponding figures for imports are Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
23.4%, Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
12.3%, Italy
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
12%, UK 9%, France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
8.9%, Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
6.8% and United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
4.7%.
The Gibraltar Government state that economy grew in 2004/2005 by 7% to a GDP of £599,180,000. Based on statistics in the 2006 surveys, the Government statisticians estimate it has grown by 8.5% in 2005/6 and by 10.8% in 2006/7 and that the GDP is probably now around 730 million. Inflation was running at 2.6% in 2006 and predicted to be 2% to 3% in 2007. Speaking at the 2007 budget session, Peter Caruana, the Chief Minister said "The scale of Gibraltar's economic success makes it one of the most affluent communities in the entire world."
Labor force:
12,690 (including non-Gibraltar laborers) (2001)
Labor force - by occupation:
services 60%, industry 40%, agriculture NEGL%
Unemployment rate
2% (2001)
Budget
revenues: $455.1 million
expenditures: $423.6 million (2005 est.)
Public Debt
15.7% of GDP (2005 est.)
Industries
tourism
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
, banking and finance
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
, ship
Ship
Since the end of the age of sail a ship has been any large buoyant marine vessel. Ships are generally distinguished from boats based on size and cargo or passenger capacity. Ships are used on lakes, seas, and rivers for a variety of activities, such as the transport of people or goods, fishing,...
repairing, tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
Industrial production growth rate
NA%
Electricity
Electricity
Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...
- production
142 million kWh (2006 est.)
Electricity - production by source
fossil fuel
Fossil fuel
Fossil fuels are fuels formed by natural processes such as anaerobic decomposition of buried dead organisms. The age of the organisms and their resulting fossil fuels is typically millions of years, and sometimes exceeds 650 million years...
100%
hydro
Hydropower
Hydropower, hydraulic power, hydrokinetic power or water power is power that is derived from the force or energy of falling water, which may be harnessed for useful purposes. Since ancient times, hydropower has been used for irrigation and the operation of various mechanical devices, such as...
0%
nuclear
Nuclear reactor
A nuclear reactor is a device to initiate and control a sustained nuclear chain reaction. Most commonly they are used for generating electricity and for the propulsion of ships. Usually heat from nuclear fission is passed to a working fluid , which runs through turbines that power either ship's...
0%
other
0%
Electricity - consumption
142 million kWh (2006 est.)
Electricity - exports
0 kWh (1998)
Electricity - imports
0 kWh (1998)
Oil - production
0 oilbbl/d (2001 est.)
Oil - consumption
42000 oilbbl/d 2001
Oil - exports
NA (2001)
Oil - imports
NA (2001)
Agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
- products
none
Exports
$271 million (2004 est.)
Exports - commodities
(principally reexports) petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
51%, manufactured goods 41%, other 8%
Exports - partners
UK
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, Morocco
Morocco
Morocco , officially the Kingdom of Morocco , is a country located in North Africa. It has a population of more than 32 million and an area of 710,850 km², and also primarily administers the disputed region of the Western Sahara...
, Portugal
Portugal
Portugal , officially the Portuguese Republic is a country situated in southwestern Europe on the Iberian Peninsula. Portugal is the westernmost country of Europe, and is bordered by the Atlantic Ocean to the West and South and by Spain to the North and East. The Atlantic archipelagos of the...
, Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
, Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
, US
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
Imports
$2.967 billion (2004 est.)
Imports - commodities
Fuels, manufactured goods, and foodstuffs
Imports - partners
UK, Spain, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
, Netherlands
Fiscal year
1 July - 30 June
The above figures taken from the CIA World Factbook September 2009 edition.
Interaction with the nearby area
In September 2009 the Gibraltar Chamber of Commerce released an Economic impact study and analysis of the economies of Gibraltar and the Campo de GibraltarCampo de Gibraltar
The comarca of the Campo de Gibraltar is a comarca in the province of Cádiz, Spain, in the southwestern part of the autonomous community of Andalusia, the southernmost part of continental Western Europe...
produced by Professor John Fletcher of Bournemouth University
Bournemouth University
Bournemouth University is a university in and around the large south coast town of Bournemouth, UK...
. The report aimed at clarifying the effects of Gibraltar's economy on the Campo area. It demonstrated that Gibraltar's economy has a significant and very positive economic impact on the Campo de Gibraltar. It also noted that the Campo region played a "significant role [..] in Gibraltar's economic development as well", concluding that "[b]oth economies and societies would be the poorer without the other..."
Its conclusions were:
Taxation
Gibraltar benefits from an extensive shipping trade, offshore banking, and its position as an international conference center. It is a well known and regulated international finance centre and has been a popular jurisdiction for European offshore companies. The financial sector, tourism, shipping services fees, and duties on consumer goods generate revenue.The law of Gibraltar
Law of Gibraltar
The law of Gibraltar is a combination of common law and statute, and is based heavily upon English law.The English Law Act of 1962 stipulates that English common law will apply to Gibraltar unless overridden by Gibraltar law...
is based on English law
English law
English law is the legal system of England and Wales, and is the basis of common law legal systems used in most Commonwealth countries and the United States except Louisiana...
, but is separate from the UK legal system
Law of the United Kingdom
The United Kingdom has three legal systems. English law, which applies in England and Wales, and Northern Ireland law, which applies in Northern Ireland, are based on common-law principles. Scots law, which applies in Scotland, is a pluralistic system based on civil-law principles, with common law...
. Non-resident businesses do not pay income tax unless the source of this income is Gibraltar proper. There is no tax on capital income.
In Gibraltar there is no capital gains tax
Capital gains tax
A capital gains tax is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property...
, wealth tax
Wealth tax
A wealth tax is generally conceived of as a levy based on the aggregate value of all household holdings actually accumulated as purchasing power stock , including owner-occupied housing; cash, bank deposits, money funds, and savings in insurance and pension plans; investment in real estate and...
, sales tax
Sales tax
A sales tax is a tax, usually paid by the consumer at the point of purchase, itemized separately from the base price, for certain goods and services. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale....
or value added tax
Value added tax
A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...
. Import duty is payable on most items at 12% The main tax for companies is Corporation Tax, and Social insurance
Social insurance
Social insurance is any government-sponsored program with the following four characteristics:* the benefits, eligibility requirements and other aspects of the program are defined by statute;...
contributions. There are also stamp duties
Stamp duty
Stamp duty is a tax that is levied on documents. Historically, this included the majority of legal documents such as cheques, receipts, military commissions, marriage licences and land transactions. A physical stamp had to be attached to or impressed upon the document to denote that stamp duty...
on certain transactions, and property tax
Property tax
A property tax is an ad valorem levy on the value of property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state or a municipality...
es ('rates').
Non-resident companies can take advantage of a number of offshore regimes in order to reduce taxation, although in line with the elimination of unfair tax practices this is being phased out. Individuals pay quite high taxes on their income in Gibraltar unless they are able to take advantage of High net worth individual
High net worth individual
A high-net-worth individual is a person with a high net worth. In the private banking business, these individuals typically are defined as having investable assets in excess of US$1 million. As explained below, the U.S...
status or gain exemption as an expatriate
Expatriate
An expatriate is a person temporarily or permanently residing in a country and culture other than that of the person's upbringing...
executive. There is a moderately high estate duty, and import duties are quite high on some items.
Assessment and collection of tax is administered by the Commissioner of Income Tax; the tax year runs from first July to the following 30 June.
Tax rate information
Information in this section taken from the publication "Gibraltar Tax facts"Disclaimer: Tax rates may vary and information here may be incorrect or out of date. For the latest data see the Government of Gibraltar website listed in external links.
Gaming tax (Online gaming)
Levied at the rate of 1% of relevant income (gaming yield for online casinoOnline casino
Online casinos, also known as virtual casinos or Internet casinos, are online versions of traditional casinos. Online casinos enable gamblers to play and wager on casino games through the Internet....
s and bets placed for online bookmakers), capped at £425,000 with a minimum payable of £85,000.
Import duties
Import duties are levied on goods imported into Gibraltar, mostly at rates 0% - 12%. As of 1 July 2010, import duty on pedal cycles, electric cars, solar paneling and related equipment has been reduced to 0%. Import duty on hybrid cars has similarly been reduced, though it has increased for petrol and diesel powered vehicles.Excise duties
Levied mainly on spiritsDistilled beverage
A distilled beverage, liquor, or spirit is an alcoholic beverage containing ethanol that is produced by distilling ethanol produced by means of fermenting grain, fruit, or vegetables...
, wine
Wine
Wine is an alcoholic beverage, made of fermented fruit juice, usually from grapes. The natural chemical balance of grapes lets them ferment without the addition of sugars, acids, enzymes, or other nutrients. Grape wine is produced by fermenting crushed grapes using various types of yeast. Yeast...
s, tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
and mineral oil
Mineral oil
A mineral oil is any of various colorless, odorless, light mixtures of alkanes in the C15 to C40 range from a non-vegetable source, particularly a distillate of petroleum....
s.
Social insurance, 2009
| Class | Rate | Minimum | Maximum |
|---|---|---|---|
| Employee (under 60) | 10% earnings | £5.00 | £25.16 |
| Employee (Aged 60 & Over) | 0% earnings | £0.00 | £0.00 |
| Employer | 20% earnings | £15.00 | £32.97 |
| Self Employed | 20% earnings | £10.00 | £30.17 |
Minimums and maxima shown are per week.
No contributions are payable if the person is not in receipt of earnings.
Income earned by a student on holiday is exempt.
Corporation tax
Before 2009, the rate of corporation tax was 22%. With effect from 1 July 2009, regarding any new businesses, a start up rate of 10% will apply to any business established in Gibraltar after 1 July 2009. Tax will be assessed on an actual year basis. With effect from 1 January 2011, a new rate of 10% will apply to all companies except energy and utility providers, which will pay a 10% surcharge and thus incur a rate of 20%. These will include electricity, fuel, telephone service and water providers.As an anti-avoidance provision, it will not apply in respect of any commercial activity being carried out before 25 June 2009 and that is reorganised by the taxpayer in the name of a different entity for the purpose of benefiting from the scheme.
Withholding tax
| Class | Rate |
|---|---|
| dividends | 0% |
| In interest paid to resident individuals | 0% |
| On interest paid to resident companies | 22% |
| On interest paid to non-residents | 0% |
In addition, no tax is payable on dividends between Gibraltar companies
Companies enjoying special concessions
Tax rate/amount (irrespective of profits) Ordinarily resident Flat rate of £450 per annum. This will be phased out in 2010.Capital taxation
- Estate Duty - There is no Estate duty in Gibraltar
- Capital Gains Tax - There is no Capital Gains Tax in Gibraltar.
- Other Capital Taxes - There are no wealth, gift or other capital taxes
Income tax rates
Gibraltar has two tax systems, one based on gross income which does not provide any allowances, and another with different rates which does. The choice of which system to apply is made by the taxable person.GROSS INCOME BASED SYSTEM
1. Persons on gross income up to £16,000
| Income | Rate | Payable |
|---|---|---|
| 0 - £10,000 | 8% | £800 |
| £10,001 - £16,000 | 20% | £1200 |
2. Persons on gross income £16,000 to £25,000
| Income | On first | Rate | Balance at 20% | Payable |
|---|---|---|---|---|
| £16,001 - £17,000 | £6000 | 0% | £10,001 - £11,000 | £2,000 - £2,200 |
| £17,001 - £18,000 | £5,000 | 0% | £12,001 - £13,000 | £2,400 - £2,600 |
| £18,001 - £19,000 | £4000 | 0% | £14,001 - £15,000 | £2,800 - £3,000 |
| £19,001 - £20,000 | £3000 | 0% | £16,001 - £17,000 | £3,200 - £3,400 |
| £20,001 - £25,000 | £2000 | 0% | £18,001 - £23,000 | £3,600 - £4,600 |
3. Persons on gross income between £25,001 and £35,000
A rate of 20% applies less tapering relief on gross income between £25,001 and £26,000. With the tapering relief on gross income of £25,000, there is a tax-free amount of £2000 that reduces by £2 for every £1 increase in gross income.
4. Persons on gross income between £35,001 and £100,000
The effective (average) tax rate is reduced by 0.5% from the previous year using a complex formula to give a maximum effective tax rate of 26.25% on gross income of £100,000. The tax liability is arrived at by first calculating using the previous year’s tax band (i.e. 20% for tax bands of £0 - £25,000 and 29% for £25,001 - £100,000), then reducing it by 0.5% and finally applying the resulting rate of taxable income (gross income less tapering relief). With the tapering relief on gross income of £35,001, there is a tax-free amount of £3284 that reduces by £2 for every £1 increase in gross income.
5. Persons on gross income between £100,001 and £353,000
A rate of 20% on the first £25,000 of gross income applies, with the balance taxed at 29%. With the tapering relief on gross income of £100,001, there is a tax-free amount of £1722 that reduces by £2 for every £1 increase in gross income.
6. Individuals on Gross Income over £353,000
| Taxed As Follows | Tax Rate |
|---|---|
| First £25,001 | 20% |
| £25,001 - £353,000 | 29% |
| £353,001 - £704,800 | 20% |
| £704,801 - £1,000,000 | 10% |
| Excess over £1,000,000 | 5% |
ALLOWANCE BASED SCHEME
| Bands | Tax Rate | Tax on band |
|---|---|---|
| 0 - 4,000 | 17% (reduced rate) | £680 |
| 4,001 - 16,000 | 30% (standard rate) | £3,600 |
| Over - 16,000 | 40% |
A wide range of allowances apply for children, single parents, mortgage relief etc. (Below)
| Main Income Tax Allowances & Reliefs | |
|---|---|
| Personal Allowance | £2812 |
| Spouse Allowance | £2632 |
| Nursery School Allowance (per child) | £1023 |
| Child Relief in respect of first child only | £997 |
| Child Relief in respect of each child educated abroad | £1105 |
| Disabled Person | £2724 |
| Dependent Relatives (maximum for Resident) | £190 |
| Dependent Relatives (maximum for Non-resident) | £139 |
| Blind person | £627 |
| Apprentice | £380 |
| Single parent | £2632 |
| Home Purchase Allowance (deduction) | £11,500 |
| Home Purchase (Special - £1000 maximum p.a.) | £4000 |
| Social Insurance (Employee) | £335 |
| Social Insurance (Self-employed) | £432 |
Stamp duty
Stamp Duty is only payable on real estate and capital transactions at the following rates:- £10 for Share Capital
- £10 for Loan Capital
On purchase of Real Estate:
- Nil for real estate costing up to £200,000
- 2% on the first £250,000 and 5.5% on the balance for real estate costing between £200,001 and £350,000
- 3% on first £350,000 and 3.5% on the balance for real estate costing over £350,000
Other Allowances & Reliefs
- Low Income Earners Allowance – Individuals earning less than £8000 per tax year will not be subject to any taxation. An additional tax allowance is also given to taxpayers whose earned annual income is less than £19,500.
- Students – Earnings during school or university vacations are exempt from tax.
- Mortgage Interest Relief – This is interest fully allowable on loans to finance residential property in Gibraltar occupied by the taxpayer. The allowance is restricted on loans issued on or after 1 July 2008 to a maximum of £300,000. Conversely, loans of over £300,000 issued before this date will be grandfathered with the amount over the limit that is allowable being reduced by 1/10 per annum.
- Life Assurance Premiums – These are premiums fully allowable provided they do not exceed 1/7 of assessable income or 7% of the capital sum assured at death. In respect of policies issued on or after 3 June 2008, the allowance is limited to a basic tax rate of 17%.
- Working Pensioners’ Relief – Anyone that is over the age of 60 that is not in receipt of an occupational pension scheme and continues to work is entitled to a tax credit of £4000.
- Medical Insurance Allowance – The first £1120 of eligible premiums paid in the tax year by an individual for personal health insurance cover or for the benefit of that individual’s spouse or dependent children is fully allowable.
- ‘Topping-up’ Allowances – Individuals whose total allowances are less than £3700 will have their allowances ‘topped up’ to this amount. In the case of elderly people (men aged over 65 and over; women aged 60 and over), the allowances are topped-up to £10,887.
- Pension Contributions and withdrawal of capital (tax-free) – Contributions to approved personal or occupational pension schemes are allowable subject to certain limits. There is no requirement to buy an annuity. Additionally, pensioners may withdraw the whole of the capital tax-free. With effect from 25 June 2009, the possibility to ‘carry back’ excess contributions to earlier tax years was abolished. Furthermore, with effect from 1 July 2009, tax relief on contributions to retirement annuity contracts and personal pension schemePersonal pension schemeA Personal Pension Scheme , sometimes called a Personal Pension Plan , is a UK tax-privileged individual investment vehicle, with the primary purpose of building a capital sum to provide retirement benefits, although it may also be used to provide death benefits.These plans first became available...
s is limited to the lower of 20% of earned income or £35,000. - Income from occupational pensions – Income from occupational pensions is generally taxed at 0% for those aged 60 and over.
- Savings Income – Income from qualified investments, such as interest from bank and building society deposits and income from quoted investments, is tax-free.
- Gibraltar Government Debentures – Investments in various Government debentures are exempt from Income Tax
Various economic indicators by national origin
Due to their business culture, the average annual earnings of Indo-Gibraltarians is nearly twice that of the rest of Gibraltarian peopleGibraltarian people
The Gibraltarians are a cultural group native to Gibraltar, a British overseas territory located near the southernmost tip of the Iberian Peninsula at the entrance to the Mediterranean sea.- Origins :...
and approximately 1.5 times that of immigrants in the UK
Immigration to the United Kingdom since 1922
Immigration to the United Kingdom of Great Britain and Northern Ireland since 1922 has been substantial, in particular from Ireland and the former colonies and other territories of the British Empire - such as India, Bangladesh, Pakistan, the Caribbean, South Africa, Kenya and Hong Kong - under...
, thus making people of Indian descent by far the most economically affluent ethnic group
Ethnic group
An ethnic group is a group of people whose members identify with each other, through a common heritage, often consisting of a common language, a common culture and/or an ideology that stresses common ancestry or endogamy...
in Gibraltar.
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