Is rental income taxable in Gibraltar?

In Gibraltar, rental income generated from properties is subject to taxation for both residents and non-residents. Understanding the tax obligations associated with rental income is essential for property owners to ensure compliance with local laws and to manage their financial responsibilities effectively.

Taxation of Rental Income

Under Gibraltar tax law, profits derived from renting property in Gibraltar are chargeable to income tax, regardless of the owner's residency status. This means that both Gibraltar residents and non-residents earning rental income from properties located within Gibraltar must report and pay tax on these earnings. 

Registration Requirements for Landlords

All individuals receiving rental income from Gibraltar properties are required to register with the Income Tax Office (ITO). The registration process involves submitting a completed Rental Income Registration Form (Form S4), along with a valid ID or passport and proof of property ownership. In cases where a property is owned jointly, each owner must register separately and report their respective share of the rental profits on their annual tax returns. 

Calculation of Rental Profits

Rental profits are calculated by deducting allowable expenses from the gross rental income. Allowable expenses must be wholly and exclusively incurred for the purpose of renting out the property and are typically revenue in nature rather than capital. Examples include costs for painting, decorating, repairing, or enhancing the appearance of the property, provided these are certified by the Town Planner. 

Tax Rates Applicable to Rental Income

The tax rates on rental income in Gibraltar vary depending on the residency status of the landlord:

Non-Resident Individuals: Non-resident landlords pay 19% tax on the first £16,000 of net rental income and 41% on any amount exceeding £16,000. 

Resident Individuals: Residents are taxed on their worldwide income, including rental income, at progressive rates under Gibraltar's dual tax system. They can elect between the allowance-based system and the gross income-based system. For the tax year 2023-24, the standard rate of tax for individuals is 20%. 

Tax Filing and Payment Obligations

Landlords must adhere to specific filing and payment deadlines:

Initial Payment: Taxes should be paid by the first filing deadline of 30th November.

Subsequent Payments: Payments on account are due by the following 31st January and 30th June, each based on 50% of the previous year's tax liability. Late filing and late payments may incur penalties. 

Exemptions and Special Considerations

Gibraltar does not levy capital gains tax (CGT); however, recent legislative changes have introduced taxation on gains from the disposal of certain residential properties. Effective from 1 January 2025, profits from the sale of residential properties may be subject to income tax if specific conditions are met. Property owners should stay informed about these developments to understand their potential tax implications. 

Conclusion

Rental income in Gibraltar is taxable for both residents and non-residents, with specific registration, calculation, and payment procedures to follow. Property owners should ensure compliance with local tax laws by registering with the Income Tax Office, accurately calculating taxable rental profits, adhering to filing deadlines, and staying informed about any legislative changes that may affect their tax obligations.

For further information about renting your property and how Richardsons can help you, get in touch with one of our team today

call 00350 200 79210

WhatsApp: 35056004845

or email info@richardsons.gi

Disclaimer: This article is for interest purposes only and should not be taken as tax or legal advice.  For tax planning, you must consult a registered tax adviser