Tax on property in Gibraltar

Every non-resident landlord should know what tax is payable in Gibraltar on their Gibraltar property rental income. However, this is not always easy to calculate. In this article we set out the main rules on the tax payable on the rental of Gibraltar property by a non-resident (of Gibraltar) individual.

Tax on property in Gibraltar

Tax is charged on income of all individuals in respect of rents, premiums and any other interest in property located in Gibraltar.

Income Tax Office registration

The individual must register at the Income Tax Office and receive a taxpayer identification number. By the end of every tax year (30 June), the landlord must submit a completed tax return together with an income and expenditure account by 30 November each year.

Payment of tax

Initially the landlord should complete a tax return to 30 June by 30 November.

Payments on account are then due by the following 31 January and 30 June based on 50% of the previous year’s tax liability.  Penalties can be charged for late filing and payments.

Tax rate

For non-resident individuals, the first £16,000 of taxable income is charged at 17% with the remaining balance at 39%. The individual can, however, opt to be taxed as an ordinary resident so long as they declare their worldwide income. This is particularly helpful for non-resident landlords with no other Gibraltar taxable income.  On their annual tax return the non-resident landlord would need to advise the Income Tax Office of their intention to opt to declare their worldwide income and enclose proof of said income showing the income earned abroad and tax deducted.

Which expenses may be deducted?

Deductions for expenses are only allowed if they are wholly and exclusively expended for the purpose of the property rental and are revenue rather than capital expenses.  Capital expenditure generally relates to buying, improving or selling the property and is not normally allowable although expenditure on painting, decorating, repairing or enhancing the appearance of the property can be an allowable expense if certified by the Town Planner.

Common types of revenue expenses paid by the owner that can generally be deducted are: 

• Rates and service charges
• General maintenance and repairs to the property
• Interest on a mortgage to buy the property
• Letting agent and management fees

Can a landlord claim capital allowances?

Equipment, fittings and furniture used inside a residential property do qualify for capital allowances in Gibraltar.  This can provide a significant deduction against income. The assets which may be eligible for capital allowances include all the furniture used in the property as well as rugs and white goods.  Generally, this means that 100% of the cost of such purchases can be deducted in the year of purchase, up to £30,000 per year, and for excess a 20% annual writing down allowance.

Can Chestertons assist with Gibraltar landlord tax compliance?

Yes, our property management systems are fully endorsed by the Institute of Chartered Accountants in England & Wales.  Our landlord statements provide a full summary of income and expenditure between any two dates.  We maintain these records for you at no extra cost where you choose to rent your property with us.

Our compliance services

Our group company, Buckingham Corporate Services, will be able to manage all the necessary tax compliance paperwork for you.  

1. Registration for income tax and obtaining a Taxpayer Identification Number;
2. Annual tax return preparation & filing;
3. Agreement of the tax assessment with the Income Tax Office based on the tax return, including appealing the assessment if necessary;
4. Routine correspondences with the Income Tax Office as and when required;
5. Advising you of the tax payments required and provision of the Remittance Advice form for submission to the authorities when you make a tax payment. We can also facilitate tax payments via our Client Account. Payment receipts will be emailed to you.

Fee Basis

Landlords availing themselves of Chestertons' property management service are entitled to a 25% fee reduction on the above rates, in which case the fees will be deducted against rents received.

Gibraltar tax advisory services can also be provided and subject to a separate fee agreement starting at £250 per hour.

Basic information required:

• Copy of your passport and proof of your residential address;
• Details of Gibraltar property - address, date of purchase and proof of ownership;
• Name of locally appointed property agent;
• Details of any finance used to purchase the property.

Please note the above advice since been updated.