Category 2 residency in Gibraltar explained (2026)

Category 2 is a special tax status for wealthy individuals who make Gibraltar their home. Tax is charged only on the first £118,000 of assessable income, so the annual bill sits between £37,000 and £42,380 however much you earn. As of October 2026, new applicants pay a £5,000 fee, must show net assets the government now puts at £5 million, and need an approved home kept for their exclusive use.

At a glance

What is Category 2 status?

Category 2 is a certificate issued under the Qualifying (Category 2) Individuals Rules 2004, made under Gibraltar’s income tax legislation. It does not replace the normal tax system with a flat fee. Instead, it limits the income on which you are taxed to the first £118,000, with a floor and a ceiling on the bill.

The regime is aimed at people of substantial means who want a base in Gibraltar without moving their whole economic life there. There is no minimum stay, and the certificate does not prevent you being tax resident in another country. That flexibility is useful, but it also means you need advice on where else you might be taxable. Because it has no age limit, Category 2 is also the main option in our guide to retiring to Gibraltar.

Category 2 is separate from the ordinary residence permit system that applies to employees and the self-employed. It is also separate from HEPSS for senior executives, which suits people earning a high salary from a Gibraltar employer rather than living on wealth. For the full range of routes, see the residency and living hub.

Who qualifies for Category 2?

The Finance Centre Director has discretion, but the core conditions are set out in the Rules and in Gibraltar Finance’s guidance.

• Financial standing. The Rules require “substantial and sound financial standing”. In practice this has meant a minimum net worth, which the government raised to £5 million for new applicants on 18 June 2026.
• No recent Gibraltar residence. You cannot normally qualify if, in any of the five tax years before you apply, you spent more than 183 days in Gibraltar, or averaged more than 90 days a year over any three of those years.
• No recent Gibraltar work. You must not have carried on a trade, business or employment in Gibraltar in those five years, other than work incidental to a business run elsewhere.
• Good character. The Director must be satisfied that granting the certificate will not harm Gibraltar’s reputation.
• An approved home. See the accommodation section below.

The Director can waive the prior-residence and prior-work conditions where a certificate would benefit Gibraltar’s economic development. Private medical insurance is a formal requirement. Gibraltar Finance’s June 2026 application checklist asks for a copy of the policy within two months of approval, with cover in Gibraltar of at least £100,000 per insured person, including evacuation and repatriation, and for any family members included in your certificate.

How much tax do you pay under Category 2?

Tax is worked out under the allowance-based system on the first £118,000 of assessable income only. Income above that is not taxed. The Income Tax Office puts the annual liability at a minimum of £37,000 and a maximum of £42,380 at current rates.

In your first and last years, the minimum is charged per month or part month the certificate is in force, at £3,083.33 a month. The Gibraltar tax year runs from 1 July to 30 June.

Several types of income are left out of assessable income unless you choose to include them:

• dividends from outside Gibraltar
• pensions from outside Gibraltar
• employment income from outside Gibraltar

Rent from Gibraltar property is taxable, as is any Gibraltar-source business income the Director has approved. That income is taxed in addition to the Category 2 amount. Gibraltar has no capital gains tax, and local firms note there is no inheritance or gift tax either. Budget 2026 left personal tax rates unchanged, so the Income Tax Office still gives £42,380 as the maximum, and Sovereign’s 2026/27 guide uses the same figure for this tax year.

You also pay a refundable advance payment with your application and by 30 November each tax year after that. Rule 8 sets it at the maximum Category 2 tax, which is £42,380 at current rates, and Sovereign Tax Services quotes the same amount for new applicants. It is refunded, less any tax owed, if your application is refused or you give up the certificate.

How much does Category 2 cost?

The fee rose from £1,233 to £5,000 under the Qualifying (Category 2) Individuals (Amendment) Rules 2026, published on 22 June 2026. Your largest recurring costs are likely to be the tax itself and the home.

What are the accommodation rules?

You must have approved residential accommodation in Gibraltar, available for your exclusive use for the whole tax year (or from the date of your certificate in your first year). You can buy or rent it.

“Exclusive use” means the property is for you and your family, with occasional unpaid guests. You cannot let it out in any form. Your spouse, civil partner and children can share the same approved home.

The property must be of a standard the Finance Centre Director considers suitable for someone of substantial means. Gibraltar Finance asks for a Residential Accommodation Approval form, with the title deeds or tenancy agreement provided at application or within two months of the certificate being issued. Our guide to buying and renting property explains how purchases and leases work locally.

How to apply for Category 2

1. Get advice on your wider tax position. Check how a move affects your tax residence in your current country and anywhere else you spend time.
2. Secure a suitable home. Agree a purchase or tenancy that is likely to be approved, and complete the accommodation approval form.
3. Prepare your evidence. Gibraltar Finance asks for a passport copy, a CV, proof of financial standing, and two references: one from a bank and one from a law or accountancy firm.
4. Disclose any planned activity. Tell the Director about any business you intend to carry on in Gibraltar before you apply.
5. Submit the application to Gibraltar Finance with the £5,000 fee and the advance payment.
6. Sort out your residence documents. The tax certificate and your right to live in Gibraltar are dealt with separately (see below).

Once issued, the certificate continues while you meet the conditions. You must submit it for endorsement in the 30 days before every third anniversary. It can be revoked if you stop meeting a condition, fail to pay tax or no longer meet the character test. Gibraltar Finance publishes no processing time and does not start work until the fee and every document are in, so ask your adviser for a current estimate before you commit to a move date.

Can your family be included?

Yes. Your spouse, civil partner or a qualifying child can elect to have their income treated as yours, so it falls under your Category 2 certificate. A qualifying child is broadly one who is unmarried and under 18, or in full-time education. Family members can apply for their own certificates instead. An election is not available for a family member who would themselves fail the five-year prior-residence test.

What changed in 2026?

The government announced targeted changes to Category 2 on 18 June 2026, linking them to the UK–EU treaty and a sharp rise in interest in the regime.

• Higher fee. £5,000 instead of £1,233, in force from 22 June 2026.
• Higher wealth threshold. £5 million instead of £2 million for new applicants. The published Rules do not contain a wealth figure. Hassans and Sovereign now list £5 million as the requirement for new applicants, but Gibraltar Finance’s website still shows £2 million and no start date has been published, so confirm the test with the Finance Centre Director before you apply.
• Grandfathering. Existing Category 2 individuals keep their status and are not affected by the new threshold.
• No public services. The government restated that Category 2 status gives no entitlement to publicly funded schooling or healthcare.
• Residence tied to status. The government said that anyone who no longer holds Category 2 status will have no right to continue living in Gibraltar. The June 2026 amendment to the Rules did not add this; instead, the application form now asks applicants to declare they accept it.

The tax rules themselves, including the £37,000 minimum and the £118,000 cap, were not changed.

Does the UK–EU treaty affect Category 2?

The treaty does not change the tax regime, but it does affect your residence and travel. The Residency Regulations 2026, in force from 14 July 2026, set out permit categories for employees, the self-employed, students and existing residents. Category 2 is not listed as one of them, and the new age and salary tests do not apply to Category 2. The closest fit is the Government’s discretion to direct a permit for people of good character whose residence brings wider economic benefit, but no official guidance yet says this is the route, so your adviser and the Department of Immigration and Home Affairs will confirm how your residence document is issued.

Once you hold a Gibraltar residence document, the government says it is intended to give the same travel benefits as a Schengen residence permit, including exemption from the Entry/Exit System (EES). You can cross the land border into Spain without routine immigration checks. Gibraltar residence does not, however, give you a right to live in Spain, and time spent elsewhere in Schengen remains subject to the 90-days-in-180 limit. For more on the border, see goods, customs and the border after July 2026.