Gibraltar Crypto Tax

Gibraltar is currently in the process of levelling up its crypto regulatory framework, but that shouldn’t prevent licensed crypto companies from accessing the country’s favourable tax environment where taxes aren’t levied on capital gains, sales, gifts or wealth. Even VAT isn’t part of the country’s taxation framework. Dividend withholding tax and crypto-specific tax aren’t imposed either, which raises the question of what taxes crypto companies are actually required to pay.

Depending on their legal structure and type of activities, crypto companies are obligated to comply with current taxation principles and pay the following general taxes:

• Corporation Tax (CT) – 12,5%
• Social Insurance (SI) – 20%
• Stamp Duty (SD) – 0-3% for real estate or 10 GBP per share

Gibraltar’s taxes are collected and administered by the Income Tax Office, and the tax year runs from the 1st of July to the 30th of June.

At the moment Gibraltar has only one agreement on the elimination of double taxation, which is made with the United Kingdom. Additionally, the country has signed several tax information exchange agreements, the model of which was developed by the Organisation for Economic Cooperation and Development (OECD) to enable implementation of transparency in cross-border taxation.

Usually, the tax treatment is dependent on the company’s nature of economic activities and its residency status. A company is considered a tax resident in Gibraltar if it’s managed and controlled (by making corporate level decisions) from Gibraltar or from outside Gibraltar by persons who are ordinarily residents of Gibraltar.

The following crypto-related economic activities are regulated in Gibraltar and should be subject to taxation:

• Exchange between virtual assets and fiat money
• Exchange between virtual assets
• Transfers of virtual assets
• Administration of virtual assets or instruments allowing control of virtual assets (e.g. crypto wallet services)
• Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset

Corporation Tax

In Gibraltar, corporate tax is governed by the Income Tax Act 2010. Companies are generally taxed on a territorial basis, which means that corporate tax is levied on profits derived from and derived from Gibraltar. This means that income-generating activities are subject to corporate tax only if they are predominantly carried out in Gibraltar. If you are unsure whether your cryptography-related activities are taxed, the Regulated United Europe (RUE) team will be more than happy to provide individual advice.

Company whose income derives from a core activity requiring a licence and subject to any Gibraltar law (in this case under the Distributed Accounting Technology System)A company that has a licence in another country but has transit rights to Gibraltar is considered to be a company whose profits are derived from the profits accrued and derived from Gibraltar.

As a rule, any expenses incurred in relation to income are recorded as tax-free expenses, which include interest, bad debts, computer equipment wear and tear.

Crypto companies may be able to take advantage of the following capital benefits:

• An allowance of up to GBP 60,000 for the first year of operation of machinery and equipment from the time of purchase or, at a higher cost, 50 per cent of the cost for that period is fully deducted from the amount
• Purchase of computer equipment up to GBP 100,000 or, in case of higher costs, 50 per cent of the cost for the period is fully deducted from the amount
• Reserve of 25 per cent per annum on a balance-sheet basis

Under the Income Tax Act 2010, all companies registered in Gibraltar were required to file annual tax returns. The deadline is nine months after the end of the month in which the reporting period ends. Companies with an annual gross income of £1,250,000 or more are required to submit their tax returns together with audited accounts. If the annual gross income is less than £1,250,000, the declarations must be submitted together with the accounts accompanied by an independent accounting report.

SOCIAL INSURANCE

If a Gibraltar-registered crypto company is also registered as an employer with the Employment Service and actually employs staff, it will inherently have to pay Social Insurance contributions regardless of the location of its employees. The employer’s share of contributions is based on a percentage of an employee’s salary.

The Social Insurance consists of the following contributory schemes:

• The Employment Injuries Insurance Scheme (covers accidents at work)
• The Social Security Short-Term Benefits Scheme (related to maternity, death, and unemployment)
• The Social Security Open Long-Term Benefits Scheme (related to widowhood, old age pensions and benefits for guardians of orphans)

According to the Social Security (Insurance) Act (Amendment Of Contributions) Order 2021, companies are subject to the following rules:

• Standard rate – 20% of gross salary
• Contributions are payable weekly
• At least 28 GBP per week and no more than 50 GBP per week
• Maximum annual contribution – 2,600 GBP

Exemption from the Social Insurance applies in the following cases:

• An employee is also employed elsewhere in Gibraltar and their contributions are fully paid by another employer
• An employee holds a valid A1 certificate issued by another EEA country, where their contributions are paid

STAMP DUTY

Stamp Duty is levied on the transfer or sale of any real estate situated in Gibraltar or shares in a company owning real estate situated in Gibraltar on an amount based on the market value of the real estate.

The rates vary as follows:

• If the value of the property doesn’t exceed 200,000 GBP – 0%
• If the value of the property is more than 200,000 GBP but doesn’t exceed 350,000 GBP – 2% on the first 250,000 GBP and 5.5% on the balance
• If the property is valued more than 350,000 GBP – 3% on the first 350,000 GBP and 3.5% on the balance

TAX CREDITS AND INCENTIVES

In addition to very favourable tax rates, Gibraltar offered a range of credits and incentives to boost investment and business growth in the country.

Crypto Companies Can Take Advantage of The Tax Benefits That Are Available to Those Responsible for Paying Corporate Tax under the Income Tax Act 2010, But Can Prove to the Tax Office, That they have paid or are obliged to pay income tax in another jurisdiction for the same profit or receives.

In Gibraltar, all startups can claim 100% of their eligible capital subsidies in the first year of their economic activity. The startup, with up to 20 employees, can obtain a loan of £100 per employee in the first year of social insurance. Small enterprises with up to 10 employees can also claim this credit.

The cost of training workers in occupations related to the work may be deducted from the profit of the enterprise at 150 per cent.

Start-ups are also supported through the Employment Promotion Programme, which provides an additional deduction from the fixed wage of 50 per cent of new employees hired after 1 July 2021. The system excludes incentives such as bonuses, overtime and various allowances for employees.

Companies registered in Gibraltar may also claim a deduction of 50% of marketing and advertising costs, provided that they can prove to the Tax and Income Tax Administration, That these costs were incurred as a result of active marketing or marketing of goods or services to consumers in order to generate income from business activities in Gibraltar or from Gibraltar.

How do I pay taxes on crypto in Gibraltar in 2024?

In Gibraltar, which aspires to become one of the leading centres for the blockchain and cryptocurrency industries, taxation of cryptocurrency gains is subject to a specific regulatory environment. In 2024, Gibraltar’s tax policy remains focused on attracting investors and companies in digital assets, while providing a clear and transparent tax environment.

Taxation of Cryptocurrency Transactions

Gibraltar does not levy tax on capital gains, gifts, inheritances or sales, making it an attractive place to invest and trade cryptocurrencies. However, this does not mean a complete absence of tax liability for individuals and companies dealing with cryptocurrency.

For Individuals

Income earned by individuals from mining or trading cryptocurrencies as part of their general activities may be subject to taxation as part of their ordinary income tax. It is important to note that Gibraltar has a maximum income tax threshold, which can be favourable for large traders and investors.

For Companies

Companies incorporated in Gibraltar and engaged in cryptocurrency activities are subject to corporation tax at the standard rate of 10%. This applies to income derived both inside and outside Gibraltar if the activity is managed and controlled from Gibraltar.

Regulation and Licensing

Gibraltar has developed specialised licences for blockchain and cryptocurrency companies, highlighting the need to meet high standards of transparency and consumer protection. Companies wishing to operate in this area must go through a licensing process and comply with the Gibraltar Financial Services Authority (GFSC).

Reporting and Accounting

Both individuals and businesses must keep careful records of all cryptocurrency transactions for tax reporting purposes. Although cryptocurrencies are not considered legal tender in Gibraltar, they are recognised as assets and the related income must be reported in tax returns.

Conclusion

Gibraltar offers one of the most progressive and cryptocurrency-friendly tax environments, aiming to become a global leader in blockchain regulation. Investors and cryptocurrency companies in Gibraltar can enjoy many benefits, but must carefully comply with local tax requirements and regulations. Awareness of tax obligations and active engagement with local tax advisors can help maximise these benefits and ensure compliance.

Table with the main tax rates in Gibraltar

These rates reflect Gibraltar’s unique tax structure aimed at attracting business and investment to the region, particularly in the financial technology and cryptocurrency sectors. The absence of capital gains tax, VAT and inheritance and gift tax makes Gibraltar an attractive jurisdiction for many investors and entrepreneurs.

If you’re determined to take advantage of Gibraltar’s taxation framework but aren’t sure where to start, highly qualified and experienced consultants of Regulated United Europe (RUE) will be delighted to assist you in structuring your taxes. We strive to ensure that our clients not only comply with local regulations, but also operate in a tax efficient way.  Moreover, we’re more than happy to help you with the company formation, crypto licensing in Gibraltar, familiarise you with all cryptocurrency regulations in Gibraltar and financial accounting. Book a personalised consultation now.

Also, lawyers from Regulated United Europe provide legal support for crypto projects and help with adaptation to MICA regulations.