Gibraltar Budget 2024 - Additional measures

Further to the Chief Minister’s budget address on 1 July 2024, the Honourable Minister Feetham gave his address on 2 July 2024.  Additional taxation measures were introduced a summary of which is set out below:

Tax loss regime

  • Use of tax losses available for carry forward will be limited to prevent the erosion of taxable profits going forward.
  • The regime will allow current year losses to be deducted and is not intended to tax loss making businesses.
  • The regime will not eliminate losses as these can continue to be used albeit at a slower rate.
  • Benefits obtained from the super deductions introduced between 1 July 2020 and 30 June 2022 will not be removed.
  • Measure is effective as from 1 July 2024 for any returns filed after this date irrespective of the actual accounting period being filed.

Taxation on profits or gains derived from property sales
  • Trading activity in relation to gains made on the purchase and sale of Gibraltar properties has historically been assumed to be outside the scope of the tax regime.
  • New measure has set a threshold for trading activity and therefore tax at the ownership of three of more properties other than a primary residence or other exempted property. Gains arising from the sale of properties, including off-plan purchases, where the seller has three properties or more will be treated as trading income and subject to income tax.
  • Anti-avoidance measure to be implemented whereby professionals undertaking conveyancing activities on behalf of others will have a reporting obligation to the Income Tax Office.
  • Measure will apply with effect from 1 July 2024.

Living accommodation
  • Current measures are being reviewed with the aim to modernise current out of date provisions.
  • Changes will seek to allow the benefit to continue when the employee changes address or employment after having relocated to Gibraltar.
  • Length of period to which exemption applies, which is currently seven years, is considered too long and is being reviewed.
  • Expected transitional rules will be implemented to ensure fair treatment for those individuals currently enjoying the benefit.

Students undertaking employment
  • Students currently in part-time employment enjoy a special status for both PAYE and social insurance purposes.
  • Conditions in this area will be tightened to eliminate abuse.
  • Income received by students in excess of £11,450 will be subject to both PAYE and social insurance contributions by students.

Top up Tax
  • Implementation of Pillar 2 is complex but all efforts are focused on introducing the top up tax by the end of 2024.
  • Draft legislation is expected to be ready by September 2024 at which point it will be open for wider consultation.
  • The implementation of the Income Inclusion Rule is expected during 2025.


Additional explanatory notes in relation to the new measures introduced by Government are expected to be issued shortly.

Contact

For any queries or clarification please contact your usual BDO contact or alternatively, you can contact our tax director / manager:


Christian Summerfield                                               Stephanie Montegriffo
Director                                                                      Senior Manager
+350 200 47300                                                       +350 200 47300
Christian.Summerfield@bdo.gi                                 Stephanie.Montegriffo@bdo.gi