Any person of any nationality may own property in Gibraltar
Any person of any Nationality may own a Gibraltar Registered Company. Purchasing through a Gibraltar Registered Company may have Tax advantages.
The sale procedure in Gibraltar is similar to that in the UK
As from June 2015 first-time and second-time buyers (referred to as “Qualifying Purchasers ”) will be liable to Stamp Duty as follows:
All other transactions relating to (“non-Qualifying Purchasers”) will be liable to stamp duty according to the standard thresholds as follows:
Want to calculate the stamp duty on your purchase? Click here
“Ordinarily resident” when applied to an individual means an individual who irrespective of whether such individual is domiciled in Gibraltar or otherwise, in any year of assessment is present in Gibraltar for a period of at least 183 days in aggregate or is present in Gibraltar in excess of 300 days in three consecutive years. Non-resident means any person other than a person ordinarily resident.
Qualifying (Category 2) Individual
A Qualifying (Category 2) Individual is an individual who for the year of assessment:
An individual who has been issued with a Category 2 Individual certificate shall be liable to income tax on the first £ 80,000 of assessable income only and the amount of tax due and payable in any year of assessment shall be not less than £ 22,000.
There are no capital gains taxes in Gibraltar. On the sale of property, any profit made is free of all taxation provided that the company is not actually trading in property. This may occur where a company purchases for example five properties and sells the properties individually over a period of time. Effectively, if the company buys five properties and sells all five properties simultaneously at a later date, then no income tax liability will arise. However if the company sells the properties at different times then the likelihood is that the Commissioner of Income tax will consider the company to be trading and assessable to income tax at the company rate in Gibraltar of 10%.
This liability to income tax can be avoided by purchasing individual units in separate Gibraltar companies. If one Gibraltar company is incorporated for the purchase of each unit then on re-sale of that unit there will be no income tax liability.
Whether you are self employed, employed or are able to claim a special tax status in Gibraltar read the following links to the Gibraltar Government website will provide more information:
There is no Estate Duty in Gibraltar
There are no wealth, gift or other Capital Taxes
There is no VAT in Gibraltar
The standard rate of corporate tax is 10% although 20% is payable in the case of utility and fuel supply companies and companies abusing a dominant market position. Companies are taxed on profits accrued in or derived from Gibraltar (i.e., territorial basis of taxation). In the case of companies licensed and regulated in Gibraltar, the profits are deemed to accrue in and derive from Gibraltar, except for activities carried on outside Gibraltar by a branch or permanent establishment.
For more information visit Gibraltar Government website at:
Gibraltar's currency is the Gibraltar pound. The sterling pound is also accepted in Gibraltar on a one to one basis with the Gibraltar pound. There are no exchange controls in Gibraltar.
Gibraltar enjoys a sophisticated communications system boasting the most up to date telephone and satellite communication systems as well as regular air services to London.
With the passing of the Financial Services Act and the appointment of a Financial Services Commission dedicated to regulating investment business in Gibraltar people should be confident that Gibraltar has the necessary expertise, regulation and supervision to ensure the maximum protection for the investor or client whilst at the same time ensuring the development of Gibraltar as an offshore finance centre.
The functions of the Commission are to keep under review the operation of Gibraltar legislation and the effectiveness of supervision of financial services; to monitor the extent to which Gibraltar legislation and supervision complies with European Union obligations and supervisory standards governing financial services in the United Kingdom where Community law applies; to protect the public against financial loss arising out of dishonesty, incompetence or malpractice; to advise the Government of Gibraltar and the Government of the United Kingdom on matters concerning financial services; and to draw up codes for regulating the terms of service of persons employed by the Commission.
In all modern developments in Gibraltar the land is owned by the Government of Gibraltar which grants a lease to the development company for 150 years. The development company then sells on to a purchaser. The purchaser receives a lease over the property for 150 years less 7 days.
A management company manages the development as a whole. Usually the purchasers own the management company and contribute to the running costs of the development by way of service charges payable quarterly or annually in advance.
For further information on the management of buildings and for advice how your development could be managed more efficiently, click here.
The Rating system has developed from the old UK model and all premises are re-assessed annually to ascertain their Net Annual Value. Rates are generally charged at 60% of the Net Annual Value and are paid quarterly in advance with a 10% discount for early payment in the case of non-domestic premises. Most new developments however enjoy rates relief so that the tenant does not pay rates for the remainder of the first tax year (July to June) of occupation which is thereafter based on a rising scale until the 6th year of occupation when full rates become payable.
This buying guide is for general guidance only. Professional Legal advice should always be sought in any matters relating thereto. Richardsons do not make representations or warranties of any kind with respect to the content./p>
Once you have found a property Richardsons will guide you through the purchase process. Your offer will be passed on to the vendors and once the price is agreed you will be required to pay a Subject to Contract deposit .This deposit is fully refundable should the purchase not proceed to completion.
The Civil Code (Codigo Civil) in fact provides that the vendor pays the Notary Fees for the Escritura (Transfer Deed) and the purchaser for the second and any further copies.
This is usually a matter of negotiation at pre contract stage as it is common that the purchaser pays for all costs as part of the overall deal.
Another Municipal tax called Plus Valia Tax, which is levied on the increase of urban land is payable by the vendor.
This Tax is a Local Tax and should not be confused with Capital Gains Tax.
Whether or not you have included your Spanish property in your will, it is advisable to make a Spanish will. This is a relatively simple procedure and will save your beneficiaries a considerable amount of time and expense in the future. The distribution of your Spanish estate will not depend on your obtaining probate of your native will. Your Spanish will is drawn up in double column in your native and Spanish language and will refer to your present and future assets in Spain. The document is signed in the presence of a Spanish Notary Public and filed in his office. A copy is also filed in the Central Registry in Madrid.
Upon the death of a grantor, a death certificate is sent to the Registrar in Madrid, who will then issue a certificate containing details of the will and the details of the Notary Office where it was issued. The beneficiary will then make a notarised statement accepting the inheritance, pay the Inheritance Tax and take over the estate. This process takes approximately 30 days to conclude. The Inheritance Tax is payable by the beneficiary and not by the estate. The amount payable will depend on the number of beneficiaries.
Any non-resident owning property in Spain is liable for the payment of three taxes:
These taxes must be paid on an annual basis. Failure to pay your income and wealth tax may result in heavy fines and penalties being imposed which could eventually result in an embargo against all your assets in Spain.
In order to pay your taxes you must apply for a “numero de identificacion fiscal de extranjeros” applicable to foreign residents and non-residents alike. All foreigners who have assets i.e. property, investments etc in Spain are required by law to be in possessions of a N.I.E.
Taxpayers are obliged to appoint an individual or legal person with residence in Spain, to represent them before the tax authorities in relation to their tax obligations.
The taxpayer or his representative will be obliged to notify the tax authorities of the appointment, duly evidenced, within two months as from the date thereof. The notification must be addressed to the Tax Administration or Agency Branch, at which the return must be filed, enclosing the representative’s acceptance with the said notification. Breach of these obligations constitutes a “simple tax infringement” and may be penalized by a fine of between 1,500.00 Euros to 6,000.00 Euros.
The fiscal representative assures the Spanish Tax Authorities that they are reliable contact within Spain for the non-resident taxpayer. The fiscal representative is not a property manager but can ensure that you will be properly represented in relation to any official matter concerning your property in Spain. The type of issues, which the fiscal representative will process, includes governmental and local tax notifications.
Our undertaking as your fiscal representative refers to the following:
Non-residents who have one property reserved exclusively for their own use and enjoyment are not bound by this obligation. However the Tax Authorities will not communicate with them directly but will send notifications to the property itself giving 15 days grace in which to deal with the requirement before taking the pertinent legal action or imposing a fine. It is therefore advisable to name a Fiscal Representative in order to avoid action.
Non-residents must file a Property Tax Return, if they own property in Spain on the 31st December of each year regardless of the value of property.
Urban property must be declared at the highest of the following three values:
The net wealth (which is the taxable amount) is determined by the difference between the value and the charges (if any) registered against the Property. The most usual debts or charge are Spanish bank mortgages.
Non-residents file an income and wealth tax return every year until the 31st of December if they only own one property and receive no income from it in respect of rentals etc. otherwise the returns must be filed and the taxes paid between 1st May and 20th June each year. Each individual property owner must file a separate return. If you purchase a property during 2010, the year 2011 is the first year you will have to pay your taxes.
A non-resident whose only taxable property in Spain is a dwelling fundamentally for own use is liable to pay income tax on assumed income derived from the use and enjoyment of that property i.e. income in kind received from the personal use of the property. The Fiscal Authority deems that the owner of the property is receiving an annual income equal to 2% of its value (or 1.1% if the value has been revised) and a flat rate of 25% tax is imposed on that income. The valuation for the Deemed Income Tax is the one shown on the rates receipts (catastral value).
This tax, based on the catastral value, can vary widely from town to town for the same type of property because it is a municipal tax. Each municipality has elaborated a census and with assigned value for each property. The amount payable is calculated by applying the tax rate set by the Municipal Authorities to the catastral value. The tax is raised every year as a result of inflation.
The Real Estate Tax is commonly called IBI “impuesto de Bienes Inmuebles”.
Each year a Real Estate Tax Payment slip is issued for each property in the census. Municipal Authorities normally allow the payment to be made by direct debit to a bank account, which makes it easy for the taxpayer to pay the tax before the deadline and thus avoid surcharges.
The time for payment of this tax varies in each municipality, but is normally paid around the months of September. October and November in each year.