Cat 2 individuals are taxed under Gibraltar’s allowances-based system, with their gross assessable income capped at £80,000 per annum. To qualify for Cat 2 status, certain conditions must be met and accommodation approved. So are there set rules for qualification? He we take a look at what would qualify for Cat 2 status.
Key Conditions for Obtaining Category 2 Status
Financial Standing: The individual must have a minimum net worth of £2 million and demonstrate substantial financial stability.
Residential Requirements: The individual must own or rent residential property in Gibraltar, approved by the Gibraltar Finance Centre. This accommodation must be used exclusively by the individual and their immediate family, which includes a spouse, children, siblings, parents, and in-laws. Renting out the property or allowing others to use it beyond occasional stays could result in the loss of Cat 2 status.
Previous Residency: The individual cannot have been resident in Gibraltar for at least five years prior to the year of application. This is defined as spending 183 days in any single tax year or an average of 90 days per year over three of the previous five years.
Business Restrictions: Category 2 individuals cannot engage in local trade, business, or employment in Gibraltar, with some exceptions. These include roles where duties are incidental to a business outside Gibraltar, being a director of a Gibraltar Exempt Company, or serving as a director of a company that does not conduct trade in Gibraltar. The Gibraltar Finance Centre provides guidelines on permissible activities, and rulings can be sought to clarify whether specific actions would violate Cat 2 rules.
Certificate Renewal: Although Cat 2 status is granted indefinitely, the residency certificate must be endorsed by the Gibraltar Finance Centre every three years.
Medical Cover: The individual must have private medical insurance in Gibraltar.
No Minimum Stay: There is no requirement for a minimum stay in Gibraltar to maintain Cat 2 status, as long as the individual continues to meet all other conditions.
Properties that qualify for Cat 2 status
While there is no hard and fast rule for which properties do or don't qualify for Cat 2 status, on the whole, properties must be in the top 50% of property values or rental prices for that type pf property. Past approval of Cat 2 in a certain building / location is a good indicator and a casual request to the Finance Centre ought to be able to give you an indication of this. (Please note that past approval does not guarantee that cat 2 status will be granted again).
The qualification for a property to be approved also depends upon the applicant themselves and the suitability for the applicant's family. For example, a high-end one bedroom property may have been approved for Cat 2 status for a single HNWI with no spouse or dependents, but would be rejected for a family of 4.
In the same vein, a property in a development that has previously been rejected, may be approved for someone else due to other factors such as health or mobility. At Richardsons we have successfully acquired Cat 2 status for a ground floor property in a development that was initially rejected as the applicant was in a wheelchair and there were no other ground floor properties available.
While there are no set rules, typically to qualify a property must:
- Have sufficent bedrooms for each dependent to have their own room
- Be in the top half of the price range (typically over £500,000 or £2,500pcm although this could be lower for single applicants)
- Not be 'affordable' housing (aka "50:50"s / residency restricted)
- Not be pre-war, previously rent-protected properties (regardless of current deregulation)
- Have communal facilities such as pools and/or gyms
- Have allocated parking
Again it's important to stress that these are only guidelines and it is possible for properties to be approved without meeting the above criteria. We have in the past been succesful on appeal for applicants that were initially refused.
If you would like to know more about qualifying for Cat 2 status, we have a team of experts at Richardsons that can guide you through the process and make the application for you.