Gibraltar HEPSS Tax Status

Ian Watts – providing legal services in Gibraltar since 2002

International Highly-Skilled Workers

The global migration of highly-skilled workers is prevalent in today’s open economy. Many Government’s worldwide have enacted laws and policies to entice a host of international skills-based elites to their home economies. The band of candidates has ranged from inventors – to scientists – to more recently, Fin-Tech entrepreneurs. There are many viable reasons why such initiatives exist, and a highly-skilled labour force is palpably the cornerstone of a knowledge based-economy. Whatever be the merits or demerits of those proponents or opponents of the so-called “brain drain”, one thing is for sure – the attraction of highly-skilled workers to a country is all the more important when we bear in mind the radical shift in the international labour force in view of globalisation and the advent of disruptive technologies.

Gibraltar’s Income Tax incentives for Highly-Skilled Migrant Workers

Gibraltar, like other Western economies such as Italy, Belgium, Sweden and Ireland, has enacted legislation providing tax incentives to attract highly-skilled human capital. Thus the Gibraltar High Executive Possessing Specialist Skills Rules 2008, which are made under the enabling provisions of the Gibraltar Income Tax Act 2010, create a special revenue status for a “High Executive Possessing Specialist Skills” (styled a “HEPSS individual”) in Gibraltar.

If a HEPSS Certificate is awarded, the HEPSS individual will only be chargeable to Gibraltar Income Tax on the first £160,000 earned under what is known as the “Gross-Based Allowance System” (one of the two main systems of personal income taxation in Gibraltar). Thus, at prevailing rates, for the HEPSS individual, taxation will effectively be limited to a figure of about £39,940.

The latter tax position applies to Gibraltar HEPSS applicants as from 1st August 2021. For individuals who acquired Gibraltar HEPSS status before that date, and who have a valid certificate in force on the 31 July 2021, they will continue to enjoy the tax benefits under the old regime for a period of 3 years from that date until 31st July 2023 (taxation effectively being limited to a figure of about £29,500) – unless their HEPSS Certificate expires or is revoked before then.

Gibraltar HEPSS – Application & Eligibility

HEPSS Application

The process to become a HEPSS individual involves an application by a company (which is either incorporated, registered or carrying on business in Gibraltar), to the Gibraltar Director of Finance for a certificate to be issued designating that a role held within the organisation, is to be carried out by a HEPSS individual. Incidentally, while HEPSS Applications are more within the remit of the Gibraltar private enterprise sector, it is also possible for a Gibraltar Statutory Body to apply for HEPSS Status for one of its prospective workers.

Eligibility for HEPSS Status

The criteria for the endowment of this special tax status largely focus on the macro-economic benefits to Gibraltar, as follows:-

  • The applicant must possess skills which are necessary to promote and sustain economic activity of particular economic value to Gibraltar, or the establishment, development or growth of which the Gibraltar Government is seeking to facilitate and encourage;
  • The applicant will be occupying a senior management position and will earn more than £160,000 per year;
  • The skills possessed by the applicant are important for the economic benefit of Gibraltar;
  • The applicant has for his “exclusive use” for the period covered by the certificate, residential accommodation in Gibraltar approved as such by the Finance Centre Director for Gibraltar HEPSS Tax Status; and
  • The applicant has not been gainfully occupied or resident in Gibraltar for any part of the period of 3 years immediately prior to the making of the HEPSS Application (there exists a power to waive this criterion).

HEPSS & Gibraltar’s Financial Services Industry

Gibraltar is well-developed as an offshore finance centre: its online gaming industry is equally well-rooted. The gaming industry, which has burgeoned over the past 20 years, has hitherto been the main host for HEPSS individuals.

In January 2018, Gibraltar passed legislation seeking to regulate Distributor Ledger Technology (“DLT”), with Gibraltar set-out to become an innovative tech-hub in future. The DLT legislation in Gibraltar has aroused interest from Fintech quarters around the Globe.

We live in the Information Era and Gibraltar’s need for highly-skilled human capital in the financial services technology field is inevitable not least for its overall economic growth, but also for its overall objectives as a Fintech Hub. The Gibraltar HEPSS Regulations are sure to lend support to this exhilarating process.

Further Information

For further information on Gibraltar HEPSS Status, please contact Ian Watts, Barrister-at-Law & Acting Solicitor.

©Ian Watts, Barrister-at-Law, 2017-2021. All Rights Reserved.

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