Recent Articles
BakerTilly Newsletters
Featured Headlines
| Tax Corner #5: Individual's Tax Residence |
 |
 |
(as published on the Gibraltar Chronicle)  What are the basic rules regarding an individual’s tax residence in Gibraltar? From 1 January 2011 onwards you are “ordinarily resident” if you are present in Gibraltar for 183 days or more in a tax year, or for more than 300 days in three consecutive tax years. You do not need to live in Gibraltar to meet the criteria. Why is this important? If you are working in Gibraltar then you will generally have to pay income tax on those earnings. If you are deemed to be ordinarily resident in Gibraltar, you are liable for tax on not only those earnings, but on your worldwide income. As there is no tax payable in Gibraltar on capital gains or on savings (i.e. passive) income and tax relief is usually available if income is already taxed elsewhere, it does not make much difference for many people. If you receive dividends from a Gibraltar company, then those are only taxable in Gibraltar if you are ordinarily resident here and then only to the extent that the Gibraltar company has any income chargeable to tax in Gibraltar. So, for instance, if the only income of the Gibraltar company paying the dividend arises from non-chargeable income (such as passive investment income), then no tax would similarly be payable by you. Residence is highly relevant for trusts. A trust is now taxable in Gibraltar if any of the beneficiaries are ordinarily resident in Gibraltar, or if the class of beneficiaries may include a person who is ordinarily resident, or the children of such a person. If you are involved with a trust in any way, then you should consult your tax advisor now for specific advice. If I’m living in Spain and working here, I can’t be tax resident in both places at once, can I? Yes you can and if that’s the case you should be completing a tax return in both Gibraltar and Spain. You should get tax relief in Gibraltar for Spanish tax paid on Spanish income. On the other side, generally you will get tax relief in Spain for tax payable in Gibraltar on income from Gibraltar. I’ve heard there’s a “30 days rule” for some income If a person is not ordinarily resident in Gibraltar, and is also present here for less than 30 days in a tax year, no tax is charged on income from directors’ fees. There is a similar exemption for non-ordinarily resident employees or self-employed persons whose duties/activities are exclusively outside Gibraltar, except for any duties/activities which are ancillary to that work. Simple Minds are playing a concert in Gibraltar in August – will they have to pay tax here on their earnings from the gig? It depends on how long they play for. There is an exemption for gains or profits by a non-resident person from his/her appearance as a public entertainer in any appearance of not more than three hours duration and not exceeding five such appearances in any tax year. So providing their drummer doesn’t get carried away with his solo, they should be able to complete their gig in a reasonably tax efficient manner.
|