The three most common tax situations for people working in Gibraltar are: PAYE employees, self-employed individuals, and company directors. Each is taxed differently, so understanding where you fit matters - not just for compliance, but for take-home pay.

PAYE (Employees)

If you’re employed by a Gibraltar company, you’ll usually be taxed under the PAYE (Pay As You Earn) system. Your employer deducts income tax and social insurance directly from your salary before you’re paid. In other words: no surprise bills, no year-end panic.

Gibraltar offers two main tax calculation methods for individuals: Allowance-Based System (ABS) and Gross Income-Based System (GIBS). Most employees are automatically assessed under whichever system results in the lower tax bill.

• Income tax rates are capped (currently topping out well below UK marginal rates).
• There is no capital gains tax, wealth tax, or inheritance tax.
• Only Gibraltar-sourced income is taxed.
• Social Insurance contributions are deducted alongside tax.

For most employees, tax "just works" in the background - your payslip shows deductions, and that’s the end of it unless your circumstances change.

Self-Employed Taxation in Gibraltar

If you work for yourself in Gibraltar, you’ll register as self-employed with the Income Tax Office and the Department of Social Security. You’re responsible for declaring income, paying tax, and making social insurance contributions.

Self-employed individuals typically:

• Submit annual tax returns declaring Gibraltar-sourced income.
• Pay income tax based on net profit (income minus allowable business expenses).
• Pay self-employed social insurance contributions.
• May be required to make payments on account.

The upside? Gibraltar’s tax rates are competitive, the system is predictable, and compliance is far less bureaucratic than many larger jurisdictions. The downside? You need to be organised - nobody deducts tax for you.

Company Directors & Business Owners

If you’re a director of a Gibraltar company, your tax position depends on how you’re paid. The most common options are salary, director’s fees, or dividends.

• Salary: taxed under PAYE, just like any other employee.
• Director’s fees: treated as taxable income.
• Dividends: generally not subject to income tax in Gibraltar.

This structure makes Gibraltar attractive for entrepreneurs and senior professionals, but it also means proper planning matters. Mixing salary and dividends is common, and many directors use professional advice to stay compliant while remaining efficient.

Other Important Tax Facts (That People Always Ask)

• No VAT (Gibraltar is outside the EU VAT area).
• No capital gains tax.
• No inheritance tax.
• Tax residency is generally based on physical presence and employment ties.

Some practical advice for jobseekers: when reviewing a job offer, always ask whether the salary quoted is gross or net, and whether you’ll be PAYE, self-employed, or operating through a company. That single detail can make a meaningful difference to your monthly take-home pay.

Gibraltar’s tax system isn’t about loopholes or gimmicks - it’s all about clarity. If you understand which category you fall into, the rest will fall into place.