Cat 2 Status in Gibraltar, Category 2 and High Executive Possessing Specialist Skills (HEPPS) status are both residency programs designed to attract high-net-worth individuals and skilled professionals to the territory. While they share some similarities, they also have distinct characteristics and offer different tax advantages.

Cat 2 Status in Gibraltar

Category 2 residency status is aimed at individuals who wish to establish Gibraltar as their place of residence and have a significant amount of wealth. To qualify for Cat 2 status, applicants must meet certain criteria, including having a minimum net worth and demonstrating financial solvency. They must also have suitable accommodation in Gibraltar and be able to show that they do not intend to engage in employment in the territory except for activities related to their investments and business interests.

One of the main attractions of Cat 2 status is its favourable tax regime. Cat 2 individuals are only taxed on the first £105,000 of their assessable income, with a maximum annual tax liability of £37,310. This means that any income earned over £105,000 is effectively tax-free in Gibraltar, making it an appealing option for wealthy individuals seeking tax efficiency.

In addition to the tax advantages, Cat 2 residents benefit from Gibraltar’s stable political and economic environment, as well as its attractive lifestyle and climate. They also have access to a range of financial and business services, including banking, investment management, and legal and accounting expertise.

High Executive Possessing Specialist Skills (HEPPS) Status

HEPPS status is targeted at high-level executives and individuals with specialized skills who are employed by qualifying Gibraltar-based companies. To be eligible for HEPPS status, applicants must hold a senior management or technical position within the company and possess skills that are deemed essential to the company’s operations.

HEPPS status offers certain tax advantages similar to Cat 2 status, although the specifics may vary depending on individual circumstances and the terms of employment. HEPPS individuals may benefit from Gibraltar’s low personal income tax rates, as well as other tax incentives available to companies operating in Gibraltar.

One of the key differences between Cat 2 and HEPPS status is the requirement for employment. While Cat 2 residents are generally not permitted to work in Gibraltar except for certain activities related to their investments, HEPPS individuals are employed by Gibraltar-based companies and actively contribute to the local economy through their work.

Main Differences

1. Eligibility Criteria: Cat 2 status is open to individuals with significant wealth who wish to establish residency in Gibraltar, while HEPPS status is aimed at high-level executives and skilled professionals employed by Gibraltar-based companies.

2. Tax Treatment: Both Cat 2 and HEPPS status offer tax advantages, but the specifics may differ. Cat 2 residents are subject to a maximum annual tax liability based on their assessable income, while HEPPS individuals may benefit from low personal income tax rates and other tax incentives available to Gibraltar-based companies.

3. Employment Restrictions: Cat 2 residents are generally not permitted to engage in employment in Gibraltar except for certain activities related to their investments, while HEPPS individuals are actively employed by Gibraltar-based companies and contribute to the local economy through their work.

The key conditions of obtaining Category 2 status are as follows:

  • The Category 2 individual must be of substantial and sound financial standing and have a minimum net worth of £2 million.
  • The Category 2 resident must either own or rent approved residential accommodation in Gibraltar. The accommodation must be approved by the Gibraltar Finance Centre and be used exclusively by the Category 2 individual and his direct family. His direct family includes his spouse, children, brother, sister, parents and his spouse’s parents. Therefore, the Category 2 individual cannot rent the property and is limited to occasionally allowing others to stay there, otherwise he will not be deemed to have “exclusive use” and would consequently lose his status.
  • The Category 2 individual cannot have been resident in Gibraltar during the five years immediately proceeding the year of assessment. Previous residency (as defined in the Category 2 rules) includes 183 days in any tax year during the previous 5 years or an average of 90 days in any three of the previous 5 years.
  • The Category 2 individual is not allowed to engage in a trade, business or employment in Gibraltar. Exceptions to this rule include where duties are incidental to a business outside of Gibraltar or the Category 2 resident is a director of a Gibraltar Exempt Company or a director of a Company which does not transact any trade or business in Gibraltar. The Gibraltar Finance Centre has issued guidelines in the form of a circular confirming the list of permissible activities that a Category 2 individual may in principle carry out. In addition to this, it is also possible to apply for a ruling to determine whether proposed activities would contravene the Category 2 rules.
  • Category 2 status is granted on an indefinite basis, but the Category 2 residency certificate needs to be sent to the Gibraltar Finance Centre for endorsement every three years.
  • The Category 2 individual must have medical cover in Gibraltar (usually in the form of private medical cover).
  • There is no minimum stay in Gibraltar for a Category 2 resident individual, therefore as long as the individual fulfils all of the above conditions he will retain his Gibraltar residency without the need to spend any time in Gibraltar.

Tax Advantages, It is vitally important that you obtain tax advice if you are considering becoming Category 2 resident

The tax advantages offered by Cat 2 and HEPPS status can be significant for qualifying individuals. Gibraltar’s low personal income tax rates and favourable tax regime make it an attractive destination for high-net-worth individuals and skilled professionals seeking tax efficiency.

For Cat 2 residents, the ability to cap their annual tax liability at a maximum amount provides certainty and predictability, allowing them to plan their finances more effectively. Meanwhile, HEPPS individuals may benefit from low personal income tax rates and other tax incentives available to Gibraltar-based companies, depending on their employment arrangements and the nature of their work.

How to Apply for your Cat 2 Residency Gibraltar?

Cornwalls Lane Ltd, our partner, is available to help you with your application for Cat 2 residency status in Gibraltar. They offer a variety of services for Cat 2 clients, which include assistance with the application and immigration process, as well as tax planning to optimize the advantages of your Cat 2 status.

Gibraltar Cat 2 Property

Approved residential accommodation in Gibraltar for sale For Cat 2 Individuals

    ×

    Click to chat

    × C21 WhatsApp Chat