GIBRALTAR Law and Practice Contributed by: Emma Lejeune, Stuart Dalmedo, Adrian Pilcher, Nicholas Isola, Danielle Victor, James Castle, Louise Anne Turnock and Danielle Curtis, ISOLAS LLP
• child; • medical insurance premiums paid; • life insurance premiums paid; • pension contributions paid; • first-time home purchase; • mortgage interest; • 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 (GIBS)
Employee contributions are 10% of gross earnings, subject to a minimum of GBP14.34 per week and a maximum of GBP40.79 per week. Employer contributions are 18% of gross earnings subject to a minimum of GBP31.98 per week and a maximum of GBP56.22 per week. Individuals aged 60 and over are exempt from paying the employee’s share of social insurance contribu - tions. There is also an exemption (subject to certain con - ditions) from the employer’s and employee’s social insurance contribution in respect of an employee’s secondary employment. A credit in respect of the employer’s social insur - ance contributions is available to businesses with ten employees or less. This is increased to 20 employees for new businesses within the first year of operation. This is subject to all payments of tax and social insur - ance having been made on time by the company. 5.2 Taxes Applicable to Businesses Companies are taxed on a territorial basis of taxa - tion, meaning that only income accrued in or derived from Gibraltar will be subject to taxation in Gibraltar. Accrued in and derived from refers to the location of activities, which gives rise to the profits of the com - pany. A business whose income arises from an underlying activity that requires a licence and regulation under any law of Gibraltar (such as a business licence or licence issued by the Gibraltar Financial Services Commission), or is licensed in another jurisdiction but enjoys passporting rights into Gibraltar, shall have its income deemed as accruing in and deriving from Gibraltar. Intercompany loan interest (which exceeds GBP100,000 per annum) and royalty income shall be deemed to accrue in and derive from Gibraltar if it is received by a company registered in Gibraltar. Intercompany loan interest and royalty income will be subject to tax at 15%.
Under the GIBS, a taxpayer is entitled to very few allowances/reliefs, but the applicable rates are lower. The allowances/relief available under the GIBS include: • first-time home purchase; • mortgage interest; The tax rates under the GIBS are as follows. • Individuals with gross assessable income up to GBP25,000: (a) 6% on the first GBP10,000; (b) 20% on GBP10,001 to GBP17,000; and (c) 28% on the balance. • Individuals with gross assessable income of more than GBP25,000 and up to GBP100,000: (a) 16% on the first GBP17,000; (b) 19% on GBP17,001 to GBP25,000; (c) 25% on GBP25,000 to GBP40,000; (d) 28% on GBP40,001 to GBP105,000; and (e) 25% on the balance. Any taxpayer with income of GBP11,450 or less is not liable to income tax in Gibraltar. Social Insurance Social insurance contributions are payable by every employee in any week in which they work. • pension contributions paid; and • medical insurance premiums paid.
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