Our guide to Payroll on Gibraltar

Doing Business on Gibraltar

Gibraltar provides a business-friendly environment with a competitive corporate tax rate and no VAT, making it attractive for a range of industries. Its close ties to the UK, combined with an English-speaking workforce and familiar legal system, offer ease of doing business. Strong sectors such as financial services, eGaming, and fintech further enhance its appeal as a location for international growth.

Basic Facts about Gibraltar

Setting up a business in Gibraltar is relatively quick, with incorporation through Companies House Gibraltar and a range of recognised company structures. Businesses must register for tax with the Income Tax Office and comply with local regulatory requirements where applicable. Gibraltar has a strong banking sector, but account opening processes can be detailed due to compliance standards. Engaging with local advisors and banks early can help streamline the process.

Requirement to operate a payroll

All employers in Gibraltar are required to calculate the correct amount of tax, based on prescribed tax-tables, to be deducted from their employees’ wages and salaries. They must pay this over, together with Social Insurance (“SI”), to the Income Tax Office (“ITO”) on a monthly basis.

Registering as an employer

All employers are required to be registered with both the:

Employment Service – this is a department of the Government that administers and enforces Gibraltar’s labour laws, and Income Tax Office – this can be done either by ticking the appropriate box when the company first registers with the Income Tax Office, or requested subsequently.

Registration of employees with the Employment Service An employer is required to ensure that any employee working in Gibraltar for them – even on a temporary basis - is registered in advance with the Employment Service. There are significant penalties for non-compliance.

Registration of employees with the Income Tax Office An employer must also notify the ITO of the engagement of any employee. In order to do so, the employee must first be registered with the Employment Service (unless they will not be working at all in Gibraltar).

On notification of the engagement, the ITO will register the employee for PAYE and SI.

The ITO will issue a tax code for the employee (PAYE Allowance & SI Contribution Class Certificate). An employee may visit the Income Tax Office to ensure that the tax code takes account of all allowances to which they are entitled; otherwise it will be issued by the Income Tax Office based on the information that they hold.

Terminating an employee’s contract

You must complete form P7A (Details of employee leaving work) and submit part 1 to the Income Tax Office. Parts 2 and 3 should be given to your employee. Copies of the forms can be sent to email address paye.p7a@gibraltar.gov.gi.

Tax & Social Security

Income Tax

The income tax year in Gibraltar runs from 1 July to 30 June and is assessed on the actual basis of income. Assessable income is the aggregate of the taxpayer’s income (other than non-chargeable income).

PAYE must be calculated using the tax code issued. This can be done manually by reference to tax tables produced by the ITO - or processed using locally-available computer software. In the absence of a tax code, the emergency rate of tax of 20% must be applied.

The standard rate of tax for individuals is 20%.

Ordinary residence

An individual is defined as being “ordinarily resident” for tax purposes if they are present in Gibraltar in:

• 183 days or more in a tax year, or
• three consecutive tax years, for more than 300 days in total

Being ordinarily resident for tax purposes is not the same as being “resident” for immigration or other purposes.

Also, being ordinarily resident in Gibraltar, and/or paying tax in Gibraltar does not mean that one is not regarded by another jurisdiction as being resident and subject to tax in their jurisdiction. This is of particular relevance to employees living in Spain and working in Gibraltar.

Gibraltar’s tax authorities automatically provide information to other jurisdictions under the Convention on Mutual Administrative Assistance in Tax Matters. So, for example, where an individual’s residential address is in Spain, the Gibraltar tax authorities will automatically disclose information to the Spanish tax authorities regarding that individual’s earnings in Gibraltar

Social Insurance

Social insurance is payable in respect of all individuals who are working in Gibraltar – even on a temporary basis. This also applies to any employees on the payroll of a Gibraltar-registered company who are working overseas.

The only exceptions to the above are where:

• the employee is also employed elsewhere in Gibraltar, and their social insurance obligations (employee’s and employer’s contributions) are fully met by the other employer; or
• the employee holds a valid A1 certificate issued by another EEA jurisdiction, in which case social security contributions continue to be made in the employee’s home country.

The amount paid monthly should be based on the certificate issued by the ITO containing the employee’s tax code. In the case of the above exceptions, an application must be made to the ITO, so that they may amend the tax code accordingly..

Payments PAYE and SI for a given month must be paid by the employer by the 15th of the subsequent month

Reporting requirements

Following the end of the tax year on 30th June each year, an employer must complete and submit the following forms to the Income Tax Office by 31st July:

• P8 - Employers Annual Statement Declaration and Certificate – this declares the gross salaries, PAYE and SI by employee, and the total PAYE and SI deducted and paid over by the employer
• P10/P10A – this lists the BIKs by employee
• P12 – Details of Pension Scheme Contributions.
• Employers must also give each employee a completed Form P7 – Certificate of Pay, Tax Deducted & SI Contributions. The employee should retain this - as well as certifying the amount of PAYE & SI paid, the information is needed to complete the employee’s tax return.

Payroll in Gibraltar is managed under a clear and business-friendly system, overseen by the Gibraltar Income Tax Office. Employers must register with HM Revenue & Customs (Gibraltar branch) and operate PAYE (Pay As You Earn) for income tax and National Insurance contributions.

Gibraltar’s social security system is straightforward, with contributions shared between employer and employee. Employers are also responsible for statutory benefits such as pensions and holiday pay.

Payroll is processed monthly, and businesses should ensure accurate record-keeping and timely submissions to remain compliant. Many international companies choose to work with local payroll providers to navigate local rules, tax rates, and reporting requirements efficiently.

Gibraltar’s competitive tax regime, absence of VAT, and English-language legal framework make it an attractive location for companies looking to expand while keeping payroll administration manageable.

New Employees

Hiring employees in Gibraltar requires compliance with employment law and anti-discrimination regulations. Employers must provide a written statement of employment outlining terms, rights, and responsibilities.

For new employees, businesses should verify eligibility to work in Gibraltar and register them with the Social Insurance Office to ensure correct contributions. Employers are responsible for statutory entitlements such as holiday pay, sick leave, and pension contributions.

Leavers

When terminating employment, businesses must follow contractual and statutory notice periods and ensure any redundancies or dismissals comply with employment protections. Maintaining clear records and engaging with local advisors can help reduce legal risk and support smooth workforce management.

Employee Benefits

Benefits-in-kind (“BIKs”)

Benefits received by employees in connection with their employment are treated as part of their earnings, and are taxable accordingly. The Income Tax Act 2010 contains a comprehensive list of items which are considered BIKs, as well as a “catch-all” clause for any other items that are not specifically mentioned.

The legislation states that BIKs should be included in earnings for the purposes of calculating and paying PAYE. However, accepted practice is that instead of this, an employer simply declares BIKs at the end of the tax year, and the ITO will then include the BIKs in the final assessment issued to the employee.

The legislation states that where total BIKs for an employee amount to less than £250, those BIKs are not taxable. In practice, the Income Tax Office generally treats the first £250 as being exempt from tax.

Employers may apply for a “dispensation” to the effect that they pay the tax on BIKs on behalf of the employees. In this case, tax is payable on benefits received by an employee between £250 and £15,000 per annum at the rate of 20%. Benefits in excess of this are taxed at the rate of 29%. The tax paid under a dispensation is not treated as a further benefit (otherwise the tax itself would also be taxable). Tax paid under such a dispensation is not a deductible expense for the employer for corporation tax purposes.

There are several benefits which are specifically excluded; these include:

• Accommodation provided by an employer to a re-located employee, for up to seven years from the date of re-location. Further conditions apply, but it can be well-worth taking this into account when agreeing a package for expatriates (or locals re-locating back to Gibraltar).
• Relocation expenses for re-located employees – again conditions apply.
• Health insurance premiums up to a certain limit, which is subject to change each year. Use of this exemption will limit the employee’s allowance for health insurance, if they are taxed under the Allowance Based System (see below).
• Employer’s contributions to approved personal pension schemes within prescribed limits.
• Motorcycles and scooters.
• Staff parties or similar, where the annual cost per attendee does not exceed £75.

Further information

HM Government of Gibraltar: gibraltar.gov.gi

Gibraltar Income Tax Office: gibraltar.gov.gi/taxation

Employment Service: gibraltar.gov.gi/new/employment

Key Changes in 2026?

Gibraltar is progressing developments linked to a new UK–EU agreement, which may introduce changes to customs arrangements and certain tax mechanisms, such as a proposed transaction tax.

While core company and legal frameworks remain stable, the evolving relationship with the EU continues to shape the business environment.

Businesses should monitor these developments closely, particularly where cross-border trade or EU market access is relevant.