The changes come about as a new treaty between the UK and European Union takes effect from 15 July, ending physical border controls with neighbouring Spain – and giving freer access to Europe's Schenghen area. It also means that the required minimum net wealth to be a resident of "The Rock" will be increased.

In a shakeup to Gibraltar’s relationship with neighbouring Spain, the British Overseas Territory is more than doubling the minimum amount of net wealth required of people who want to reside there to £5 million ($6.7 million) from £2 million. On the upside, border controls with Spain are being taken down and Gibraltar residents have access to the Schengen area.

The change is being imposed on new Category 2 applicants for “Gib.” Existing Category 2 certificate holders remain protected from the change under grandfathering provisions.  

European jurisdictions are competing to attract HNW individuals. For example, Italy's resident regime requires qualifying individuals to pay a fixed annual tax of €300,000 ($342,994) on foreign-source income, while Greece's regime imposes an annual flat tax of €100,000. Dozens of countries, including several in the EU such as Malta, Spain and Portugal, have offered variations on golden visas. (Portugal has narrowed the scope of its programme, Malta has shifted towards a more merit-based system, and Spain has ended it.) Outside the EU, countries such as New Zealand have resumed their programmes; the UK ended its system after Russia’s invasion of Ukraine in 2022. The UK has also ended its resident non-dom system, replacing it with a regime in which a person living outside the UK for at least a decade is exempted from tax on foreign income and gains for four years. 

The treaty
The UK and European governments have reached a treaty that removes physical border checks between Gibraltar and Spain, replacing them with a fluid border that will allow people and goods to cross freely. (Britain has ruled Gibraltar since 1713.)

The treaty is due to take effect from 15 July.

Significantly, Spain has removed Gibraltar from its list of non-cooperative tax jurisdictions.

“The reforms represent the most significant overhaul of Gibraltar's residency framework in modern history, coinciding with Gibraltar's biggest transformation in European access since Brexit,” Fiduciary Wealth Management Ltd, a financial advisory and consultancy based in the jurisdiction, said in a note.

Gibraltar will align with the Schengen Area for border management purposes, allowing Gibraltar residents easier travel throughout the EU’s Schengen Zone. It means that Gibraltar residents will have easier movement inside the EU than is available to most UK nationals, the firm said.

As jurisdictions compete to attract HNW individuals, Gibraltar is determined to make the most of the change. Situated in the western Mediterranean and with a sometimes-difficult relationship with Spain, Gibraltar was once a major UK military base, as was Malta – now an EU member state.

WealthBriefing has contacted the Gibraltar government about the matter.

In its briefing note, Fiduciary Wealth Management Ltd said the treaty will also open Gibraltar International Airport to commercial flights from across the EU for the first time through a new joint operational framework between Gibraltar and Spain. It said the treaty preserves UK sovereignty over Gibraltar.

Residency reforms
In other details, Gibraltar’s reforms inspired by the treaty will remove several historic residency pathways, including residence through living aboard vessels in Gibraltar's marinas, transferring from Category 2 status to self-sufficiency, and the long-established route allowing certain UK state pension recipients to transfer NHS healthcare rights to the Gibraltar Health Authority, the Fiduciary Wealth Management Ltd note said. 

“Future residency will place greater emphasis on genuine economic participation. Applicants seeking residence through employment or self-employment will generally be expected to demonstrate real economic substance, with entrepreneurs encouraged to establish businesses that create local employment and contribute to Gibraltar's economy,” it said. “The government has also introduced flexibility for applicants under 30 entering the workforce and limited discretionary provisions for applicants aged over 55.”

“The pathway towards long-term settlement has also been extended. The qualifying period for permanent residence has increased from five to 10 years, while eligibility for Gibraltarian status has doubled from 10 to 20 years,” it continued. 

The firm said reforms also restrict access to a range of publicly funded services for some categories of new residents. For their first 20 years of residence, residents will not generally qualify for free state education, Gibraltar Health Authority healthcare, government-funded Elderly Residential Services (ERC), domiciliary care and certain other taxpayer-funded welfare and social care services, unless they satisfy the government's qualifying criteria.

Gibraltar has no capital gains tax, inheritance tax, wealth tax, and no value-added tax.