The British overseas territory is raising the minimum wealth requirement for Category 2 residency from £2million to £5million

Gibraltar is dramatically raising the bar for wealthy individuals seeking its coveted Category 2 residency status, more than doubling the minimum wealth requirement from £2million to £5million.

The British overseas territory will introduce the stricter threshold from July 15, the same date the UK-EU Treaty is due to take provisional effect.

The landmark agreement will incorporate Gibraltar into the EU's Schengen zone, effectively removing the land frontier with Spain and allowing seamless movement between the two territories.

Toughening of eligibility criteria follows a surge in applications since the Brexit agreement was finalised in 2020.

Demand became so strong that Gibraltar temporarily suspended new residency applications from British and European Economic Area nationals last year.

Official figures show more than 3,000 people relocated to Gibraltar between 2022 and 2024, highlighting the territory's growing appeal among wealthy individuals.

Alongside the increase to the wealth threshold, the Government has more than quadrupled application fees for the special status, with charges rising from £1,233 to £5,000.

Trade minister Nigel Feetham said: "We are seeing strong interest in Category 2 status following the Treaty announcement, which reflects growing confidence in Gibraltar's future."

He said the regime must remain "aligned with Gibraltar's broader economic objectives and the opportunities arising from the Treaty".

Mr Feetham added that the reforms would "support Gibraltar's strategic direction" while maintaining the territory's competitive position in attracting wealthy residents.

Industry figures have warned the higher threshold could significantly reduce the number of people relocating under the scheme.

Paul Correa, from Gibraltar-based wealth manager Fiduciary, said: "They are tightening the rules to such a degree that it could kill off high-net-worth relocation to Gibraltar."

He said the Government appeared to be deliberately reducing demand through the residency route, adding that the pool of eligible applicants had been significantly narrowed.

Louis Montegriffo, Managing Director of Gibraltar estate agency BMI Group, suggested the increase was designed to manage the volume of applications.

Mr Montegriffo said: "I think around one per cent of the UK is worth about £2million, so therefore the Government may have wanted to be a bit stricter to tackle the volumes."

He said Gibraltar's economy does not rely on Category 2 residents, with financial services, gaming, tourism and shipping remaining the territory's four main economic sectors.

Despite the tougher entry requirements, Gibraltar's tax regime continues to be a major attraction for wealthy applicants.

Those granted Category 2 status are taxed only on the first £118,000 of their annual income, limiting their maximum tax liability to around £37,000.

Investment income generated outside Gibraltar is not subject to tax.

The territory also does not levy capital gains tax, inheritance tax or VAT.

The Government has not increased tax rates alongside the higher wealth requirement, meaning fewer wealthy individuals are expected to qualify for the scheme under the revised rules.

Applicants must demonstrate genuine economic activity through employment or business interests, secure suitable accommodation and pass background checks before being granted Category 2 status.

There is also no requirement for successful applicants to make Gibraltar their primary residence or spend a minimum amount of time in the territory.