The European Commission has opened an in-depth investigation to verify whether the new Gibraltar corporate tax regime selectively favours certain categories of companies, in breach of EU state aid rules.
The commission will in particular examine the exemption for passive income such as royalties and interest from corporate tax.
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In June 2012, the Commission received a complaint from Spain about the ITA 2010, claiming that it would continue to grant a selective advantage to offshore companies through the combined effect of the territorial system and the tax exemption for passive income.
The Commission, at this stage, considers that the tax exemption for passive interest and royalty income may involve state aid because it departs from the general corporation tax system.
Gibraltar’s chief minister Fabian Picardo said the Gibraltar government’s belief that on balance, the European Commission’s concerns over "two discreet elements of our corporate tax system" that had already been flagged up and earmarked for change were more than outweighed by the fact that the rest of the code was accepted without a problem, International Adviser reported.
The new Gibraltar corporate tax scheme was introduced by the Income Tax Act (ITA) 2010 and recently introduced an amendment.
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By GlobalData
