Gibraltar issues Budget 2024, including corporate tax increases

On 1 July 2024, Gibraltar's Chief Minister announced tax measures in his Budget address for the year 2024/25. This address was followed by further announcements on taxation by Gibraltar's Minister for Justice, Trade and Industry on 3 July 2024.

The measures include a slight decrease in tax rates for many individuals, together with an increase in the headline corporate tax rate.

Key highlights of the announcement are summarized below.

Key highlights

Corporate taxation

• The corporate tax rate is increased from 12.5% of taxable profits to 15%. It has not yet been announced when this will first be applied.

• There is an additional 50% deduction for any cost or expense that businesses incur in achieving net-zero emissions if the Commissioner of Income Tax considers the deduction reasonable and directly associated with achieving the net-zero objective. Any such additional deduction will be capped at a maximum of 10,000 Gibraltar pounds (GIP10,000) per annum (p.a.).

• A limit is placed on the use of accumulated tax losses by companies in the financial services and gaming sectors with significant tax losses. Such losses can currently be carried forward and offset against future taxable profits indefinitely. The measure would not remove or eliminate the use of these losses but would require that they be used at a slower rate. This is to apply for tax returns filed after 1 July 2024, irrespective of the accounting year.

Personal tax and social security

• There are no changes to the tax bands under either the Allowance Based System or Gross Income Based System.

• The maximum effective (overall) tax rate will be decreased to 25%. For tax year 2023/24, this rate was 26% for assessable incomes of up to GIP100,000 p.a., or 27% for assessable incomes exceeding GIP100,000 p.a. The tax rates that apply to the respective tax bands under both the Allowance Based System and Gross Income Based System are reduced by 1% for taxpayers with assessable incomes up to GIP100,000, and by 2% for taxpayers with assessable incomes exceeding GIP100,000.

• The cap on employers' and employees' social insurance is increased by 5%.

Property-related

• Profits or gains from the sale of property where the seller owns three or more properties, other than a primary residence or other exempted property, are to be treated as trading income and taxed accordingly. This is to apply with effect from 1 of July 2024. Professionals providing conveyancing services will be required to report these transactions to the Income Tax Office.

• A new 0.5% stamp duty is payable by the assignor on the assignment of a purchase agreement (e.g., the sale of rights from off-plan purchases).

• The reduced stamp duty rates that apply to first- and second-time homebuyers will now only to apply to properties costing less than GIP800,000.

• An equivalent to the first-time-buyers allowance is being introduced for those selling after the age of 65 and moving to a smaller property.