Gibraltar’s mega-rich static but millionaire properties keep popping up

Local estate agents claim that there has been a rise of HNWI interest in buying property in Gibraltar but statistics from the Gibraltar Finance Centre suggest otherwise.

Successive Gibraltar Governments have never shied away from construction for the mega-rich but will lack of growth in this area leave the Rock with empty millionaire properties?

Despite a change of tax law in 2011 to provide HNWI with a more attractive product, whereby HNWI were no longer required to spend a single minute on Gibraltarian soil, numbers were in decline until 2014.

“Total numbers do not tend to increase significantly,” a representative from the Gibraltar Finance Centre told PANORAMA. “There are better retention rates and part of the reason for that is Gibraltar’s high-level tax compliance.”

According to the Finance Centre, more than half of the 330 Cat 2 individuals are UK nationals and 95% are from the EU, European Economic Area or Swiss.

But how much do they contribute in tax to the Rock that would justify an increase in properties available for these ‘elite foreigners’?

Well, with HNWI tax starting at £22,000 and capped at £27,560 on the first £80,000 earned (anything over and above is tax fee) the 330 individuals contribute around £7.26m (roughly 0.5%).

FAILED PRODUCT

Also known as Cat 2 residents, today’s HNWI product targets rich retirees of whom the Gibraltar Government does not expect to be under employment.

That said, the government would not allow a lawyer to come into Gibraltar and practice as a lawyer while also benefitting from Cat 2 status. Their salary (in Gibraltar) would be taxed normally.

The purchased property must also be of a high standard and the Gibraltar Finance Centre does not approve studios.

“The Gibraltar Government guides HNWI into high-end properties, so we try and ensure that accommodation does not influence the local housing market,” the Finance Centre representative said. “The rules specifically state that Cat 2 accommodation has to be available all year round and it is absolutely forbidden to rent that property out.”

So, if a Cat 2 individual purchases more properties, then they would be taxed outside of their certificate and this would also apply to business, which would fall under Gibraltar’s corporate tax laws.

The government allegedly makes ‘obvious checks’ on HNWI subletting and, if someone sublets, then their certificate is immediately removed.

“We would see if any Cat 2 or HEPPS tried to do this and it has not happened yet,” the Finance Centre representative said. “Estate agents must inform clients to register their property as soon as possible.”

22-05-18 PANORAMAdailyGIBRALTAR