Legal & Tax Issue

If you are interested in purchasing a property in Gibraltar, there are a number of legal and tax issues which require consideration.

Leasehold Property

The Gibraltar Government owns the land in all modern developments in Gibraltar. Typically, the Government grants a lease to the development company for 150 years. The development company then sells each property on the land to purchasers, either in their individual capacity or in the capacity as a company. The purchaser therefore receives a lease over the property for 150 years less 7 days.

Freehold property and Flying Freehold property does still exist in Gibraltar but such properties are far and few between. In the event that you are considering purchasing such class of property, it is recommended that you seek legal advice.

In most leasehold purchases, the estate where the property is situated is managed by a management company. The Purchaser of the property will ordinarily be required to pay service charges on a quarterly or annual basis.

Stamp Duty and Legal Fees

The Stamp Duties Ordinance 2005 recently came into force in Gibraltar. Under the new stamp duty provisions, stamp duty is payable on the purchase price of properties as follows:

Stamp Duty
Where the Property Value does not exceed £160,000.00 Zero
Where the Property Value exceeds £160,000.00 but not £250,000.00 1.26%
Where the Property Value exceeds £250,000.00 but not £350,000.00 1.6%
Where the Property Value exceeds £350,000.00 2.5%

Stamp Duty on Mortgage
For £200,000.00 or less 0.13%
For more than £200,00.00 0.20%

Legal Fees
The standard fee charged by a local lawyer for acting for a person purchasing a property in Gibraltar is 1% of the purchase price. However, Verralls Barristers & Solicitors can offer a more competitive rate.

Taxation & Residency

Qualifying (Category 2) Individual status limits the amount of tax payable in Gibraltar to monies remitted to Gibraltar up to a maximum of £45,000 taxable income, regardless of the actual income of the individual. The maximum tax payable is £20,000 and the minimum is £10,000.

Applying for Category 2 individual status involves an application for Tax Status and an application for Gibraltar residency. The following items are required in support of a category 2 application:

  1. A detailed curriculum vitae;
  2. A property purchase agreement or rental contract on a property which qualifies as a cat 2 property;
  3. A reference letter from an accountant/lawyer or banker confirming the individual’s assets of £2million;
  4. A further reference letter from a different person with the above stated qualifications, confirming the number of years the applicant has been known to them and that he is of good standing, trust and repute
  5. A non-refundable application fee of £1,000;
  6. 2 passport sized photos; and
  7. a copy of a private medical insurance policy covering applicant in Gibraltar.

A lawyer would ideally handle the above procedure on behalf of an individual interested in obtaining such status. Verralls Barristers & Solicitors are our recommended set of lawyers.

Further to the above, there are no capital gains taxes operating under Gibraltar Law. When a property is sold, all profit is free of taxation except in the case of a company which sells as part of its trade.

CAT 3 Status

Companies registered in Gibraltar as Tax Exempt companies may apply to the Director of Gibraltar’s Finance Centre for a certificate designating an individual, employed by them to be certified as a Qualifying Category 3 Individual.

To be considered for such status, an individual must possess skills which are deemed "essential to the operation of the company and which not available in Gibraltar".

It is important to note that an individual applying for such a certificate must not have been employed in or from Gibraltar in the five years preceding the application and must have approved residential accommodation in Gibraltar.

In the event that the individual is registered, tax of £10,000 per annum shall be payable in twelve equal monthly instalments on the taxable income of the individual.