On 19 December 2018, the European Union (EU) published its decision on its long-running State aid investigation into specific aspects of Gibraltar's tax system. The investigation included a review of 165 tax rulings given by the Gibraltar tax authorities. The decision confirmed that the Commission did not find any selective advantage in relation to 160 rulings. State aid was found in five tax rulings.

The decision also ruled that the tax exemption for interest income and royalties between 2011 and 2013 was illegal under State aid rules. (From 1 January 2011 – when the current tax system was implemented – neither non-trading interest income nor royalty income was taxable). The decision welcomed the fact that these exemptions were lifted in 2013 and 2014, respectively. Intercompany interest income became taxable in Gibraltar on 1 July 2013, and royalty income became taxable for companies on 1 January 2014.

The decision directs that Gibraltar must now recover unpaid taxes related to the tax rulings and from companies that had non-taxable interest or royalty income in the years 2011 to 2013.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

EY Limited Gibraltar

• Neil Rumford
  neil.rumford@gi.ey.com

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ATTACHMENT

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