The Big Deal - Spain and Britain Sign Gibraltar Fiscal Treaty
Monday 4 March saw the signing of an important deal between Spain and Britain which will seek to curb some of the Gibraltar wealth management issues that Spain currently sees as a problem.
The deal will see the creation of a joint co-ordination committee to oversee tax matters between Spain and Gibraltar and primarily seeks to create certainty over tax residency and to curb tax evasion and money laundering.
The treaty will stipulate that an individual will be treated as a tax resident of Spain if they:
- spend more than 183 nights per year in Spain, or
- have a spouse residing habitually in Spain, or
- have a permanent home in Spain, or
- have two-thirds of their net assets in Spain.
The agreement also seeks to remove any relevant double taxation issues and offer compliance with individual domestic laws of the country in which an individual resides.
Competitive wealth management options in Gibraltar and Spain
Spain has long bemoaned the benefits gained by Gibraltar's low tax rates for individuals and businesses – for example, there is a 10% tax on corporate profits in Gibraltar, whereas the rate is 25% in Spain. The GB Island territory is currently host to an estimated 55,000 companies which far outstrips the population of around 30,000.
And Spain is seeking to ensure that when an individual or business has the majority of their assets and business activity in Spain, they pay their tax in Spain.
However, if a Gibraltar-registered business can prove that at least 75% of their revenue is generated in Gibraltar and they were registered there before 16 November 2018, then they will be able to remain as tax resident in Gibraltar.
The Chief Minister of Her Majesty's Government of Gibraltar, the Hon Fabian Picardo QC MP, said, "This is an important moment for Gibraltar and for our relations with our neighbour."
In a letter to David Liddington MP (Theresa May's de facto deputy) Mr Picardo acknowledged that the treaty was massively significant.
Blacktower wealth management advice in Gibraltar and Spain
Whether you are an expat in Gibraltar or Spain, Blacktower FM can help you make the most of your investments, pensions and savings wherever you reside.
Contact your local office for wealth management advice in Gibraltar or any one of our four regional Spanish offices in Barcelona, Costa Blanca, Costa Cálida and Costa del Sol today.