GIBRALTAR Law and Practice Contributed by: Stuart Dalmedo, Adrian Pilcher and Louise Anne Turnock, ISOLAS LLP
sion-making is actually carried out, not the place of incorporation or day-to-day operations. In practice, this usually, though not always, means the board of directors, and the focus is on where real, substantive board-level decisions are made. Individuals (Relevant for the Company Test) An individual is ordinarily resident in Gibraltar if they are: • present in Gibraltar for at least 183 days in any year of assessment; or • present in Gibraltar for more than 300 days over three consecutive years. These criteria are relevant because a company man - aged and controlled outside Gibraltar may still be con - sidered Gibraltar resident if those exercising manage - ment and control are ordinarily resident in Gibraltar. There is no separate legal concept of “residence” dis - tinguished from “ordinary residence” under Gibraltar law. Transparent Entities (Partnerships) Partnerships, whether general partnerships, limited partnerships (LPs) or limited liability partnerships (LLPs), are tax transparent. Residence is therefore not applied to the partnership itself but to the partners. Each partner is taxed based on: • their own individual or corporate tax residence; and • their proportionate share of the partnership’s tax - able income. LPs and LLPs may elect separate legal personality under the Limited Partnerships Act 2021, but this does not change their treatment as transparent entities for tax purposes. 1.4 Applicable Corporate and Individual Tax Rates Companies The standard rate of taxation for a company is 15%. Utility and energy provider companies are liable to a higher rate of 20%.
Generally, companies are taxed on a territorial basis of taxation (see 2.1 Taxable Profits ). Transparent Entities Due to the fact that partnerships are transparent enti - ties for tax purposes, the profits or gains from the partnership are deemed to be the share to which the partner was entitled. The rate to which the partner would be subject would depend on the type of partner (ie, a company or individual). Individuals Individual taxpayers have the choice of being taxed under either an Allowance Based System (ABS) or a Gross Income Based System (GIBS). Regardless of the system opted for, upon final assessment the Income Tax Office will apply the system that is most This system enables an individual to claim certain allowances against assessable income, including: • personal; • spouse; • child; • nursery school; • medical insurance premiums paid; beneficial to the taxpayer. Allowance Based System
• life assurance premiums paid; • pension contributions paid; • first-time home purchase; • mortgage interest; • low income allowance and credit; • social insurance contributions paid; and • pensioner. The tax rates under the ABS are as follows: • 14% on the first GBP4,000; • 17% on the next GBP12,000; and • 39% on the balance. Gross Income Based System
Under the GIBS, a taxpayer is entitled to very few allowances/reliefs, but the applicable rates are low - er. The allowances/reliefs available under the GIBS include:
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