Gibraltar Clarifies Tax Position Of UK Pensions

By Editorial 08 November, 2011

The Gibraltar government has dismissed the possibility that the authorities could enter into an agreement with the UK government to allow Gibraltar residents in receipt of a UK pension to receive tax exemptions now available on Gibraltar pensions.

Following the abolition of tax on pension income by the Gibraltar government, people who live in Gibraltar and enjoy a Gibraltar old age pension or an occupational pension from a Gibraltar employer receive their pension tax free.

There are a number of people resident in Gibraltar who enjoy an occupational or old age pension in the UK and upon which they are liable to tax in the UK under UK tax laws.

The government has underscored that the Gibraltar government can do nothing about UK tax liabilites. It noted a number of public and private representations that the government could enter into a Double Tax Agreement with the UK so that Gibraltar residents could receive their UK pensions free of UK tax when receiving them from Gibraltar.

Responding to the proposal, the government stated:

“There is no merit in this view, which is incorrect. As the term 'Double Taxation Agreement' itself suggests, these agreements are entered into to avoid double taxation, that is to say the same income suffering tax twice, i.e. in both countries. No country, and certainly not the UK, would enter into a Double Taxation Agreement with Gibraltar to allow pension income that is taxable in the UK under UK law to be paid free of UK tax to a country (like Gibraltar) where it would pay no tax (because we do not tax pensions)."

“These issues have already been covered in discussions between Gibraltar and the UK Treasury relating to the exportation to Gibraltar of UK pension schemes,” the government said. “Nevertheless the government would be happy to work with the Pensioners Association, and approach the UK government, in pursuit of any avenue that lawyers advise is open.”

“For example, it may be possible to argue on behalf of Royal Gibraltar Regiment pensioners that even though their pensions are paid by the UK, they should be treated as Gibraltar pensions (like the pensions of other Ministry of Defence employees in Gibraltar) because the job that earned the pension was carried out in Gibraltar. Such an argument would run counter to long established practice, but it may nevertheless be worth exploring.”

A comprehensive report in our Intelligence Report series titled "The Lowtax International Pensions Report" which has an in depth view on The Mechanics of Pensions Provision, 'High-Tax' Country Pension Regimes and 'Lowtax' Jurisdictions In Which To Locate Pensions Savings, is available in the Lowtax Library at and a description of the report can be seen at

Tags: Individuals | Expatriates | Tax | Investment | Pensions | Offshore Pensions | Gibraltar | Law | Retirement | International Financial Centres (IFC) | United Kingdom | Offshore | Agreements |


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