Real Estate in Gibraltar

In Gibraltar, only the following persons can hold land or property:

1. British subject or British citizen;
2. Gibraltar registered company;
3. United Kingdom registered company;
4. A National of a member state of the European Union who has a valid residence permit issued under the Gibraltar Immigration Control Ordinance;
5. A company incorporated under the law of a member state of the European Union and which has the right of establishment in Gibraltar and has exercised that right.

However, the most usual way for foreign nationals or foreign companies, whether EU companies or not, to purchase property in Gibraltar is through a Gibraltar company. This is because there is no restriction whatsoever on the nationality of persons who may own a Gibraltar registered company nor are there any restrictions on the nationality of the person or persons who may be directors of a Gibraltar registered company. The usual situation is therefore that a foreign purchaser incorporates a wholly owned subsidiary in Gibraltar. This may also have tax advantages.

In all modern developments in Gibraltar the land is owned by the Government of Gibraltar ("GOG") which grants a lease to the development company for 150 years. The development company then sells on to a purchaser.

The purchaser receives a lease over the property for 150 years less 7 days.
There are no capital gains taxes in Gibraltar. On the sale of property, any profit made is free of all taxation provided that the company is not actually trading in property. This may occur where a company purchases for example five properties and sells the properties individually over a period of time.

Effectively, if the company buys five properties and sells all five properties simultaneously at a later date, then no income tax liability will arise. However if the company sells the properties at different times then the likelihood is that the Commissioner of Income tax will consider the company to be trading and assessable to income tax at the company rate in Gibraltar of 33%.

This liability to income tax can be avoided by purchasing individual units in separate Gibraltar companies. If one Gibraltar company is incorporated for the purchase of each unit then on re-sale of that unit there will be no income tax liability.