- The Category 2 individual cannot have been resident in Gibraltar during the five years immediately preceding the year of assessment. Previous residency (as defined in the Category 2 rules) includes 183 days in any tax year during the previous 5 years or an average of 90 days in any three of the previous 5 years.

- The Category 2 individual is not allowed to engage in a trade, business or employment in Gibraltar. Exceptions to this rule include where duties are incidental to a business outside of Gibraltar or the Category 2 resident is a director of a Gibraltar Exempt Company or a director of a Company which does not transact any trade or business in Gibraltar. The Gibraltar Finance Centre has issued guidelines in the form of a circular confirming the list of permissible activities that a Category 2 individual may in principle carry out. In addition to this, it is also possible to apply for a ruling to determine whether proposed activities would contravene the Category 2 rules.

- Category 2 status is granted on an indefinite basis, but the Category 2 residency certificate needs to be sent to the Gibraltar Finance Centre for endorsement every three years.

- The Category 2 individual must have medical cover in Gibraltar (usually in the form of private medical cover).

- There is no minimum stay in Gibraltar for a Category 2 resident individual, therefore as long as the individual fulfills all of the above conditions he will retain his Gibraltar residency without the need to spend any time in Gibraltar.