European Commission to extend Gibraltar corporate tax probe

gibraltar

Gibraltar’s tax rulings and frameworks are to be further examined by the European Commission (EC), as European Union (EU) member states, notably Spain have complained about Gibraltar corporate tax regime favouring certain Gibraltar registered companies, who may have received illicit state aid.

The EC will investigate Gibraltar’s corporate tax regime, focusing on its corporate tax exemption policies, in particular those which enable registered companies to ask for advanced exemptions to corporate incomes that are generated from overseas territories.

After reviewing more than 160 tax rulings, the EC said it had concerns that potential rulings may contain state aid for private corporations, this would breach EU business policies and rulings by creating unfair tax conditions between EU member states.

In 2010 the Gibraltar government had introduced new amendments to its corporate tax system, which allowed registered or inquiring corporations to ask for advanced confirmation of whether certain income channels could be granted exemption from corporate taxation.

In 2012 Spain issued a complaint to the EC against Gibraltar’s corporate income tax act, stating that it had granted selective and pre advanced  tax exemption advantages to offshore companies, thus creating unfair corporate tax conditions  for registered companies.

The EC followed Spain’s complaint by opening an investigation into Gibraltar’s tax rulings regarding corporate tax exemptions from multiple income channels .

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