Corporate Income Tax Rate                   (%)10(a)

Capital Gains Tax Rate                            (%)0 

Branch Tax Rate                                       (%)10(a)

Withholding Tax                                       (%)  

Dividends                                                   0 

Interest                                                       0 

Royalties                                                    0 

Branch Remittance Tax                           0 

Net Operating Losses                              (Years)  

Carry back                                                  0 

Carry forward                                             Unlimited (b)

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(a)A tax rate of 20% applies to utility, energy and fuel supply companies and companies abusing a dominant market position.

 

(b)In general, the carryforward is unlimited. However, if both a change in ownership and a major change in the nature or conduct of a trade carried on by the company occurs within a three-year period, losses incurred before the change in ownership cannot be offset against losses incurred subsequent to the change in ownership.

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TAXES ON CORPORATE INCOME AND GAINS

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Corporate income tax. Companies are taxed on profits “accrued in or derived from” Gibraltar. “Accrued in or derived from” is defined by reference to the location of the activities that generate the profits. If a company’s income results from an underlying activity that requires a license and regulation under any law of Gibraltar, the income is deemed to accrue in and derive from Gibraltar, except for income from activities carried on outside Gibraltar by a branch or permanent establishment.

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The above rule applies regardless of whether a company is registered in Gibraltar or whether it is ordinarily resident in Gibraltar. A company is ordinarily resident in Gibraltar if central management and control is exercised there.

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Rates of corporation tax. All companies are chargeable on taxable profits at a rate of 10%, except for utility, energy and fuel supply companies and companies deemed to be abusing a dominant market position, which are subject to tax at a rate of 20%.

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Capital gains. Capital gains are not taxed in Gibraltar. Capital losses are not deductible.

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Administration. For financial periods ending on or after 1 January 2016, all companies that are registered in Gibraltar or that have income assessable to tax in Gibraltar are required to file a return. For prior financial periods, only companies with income assessable to tax in Gibraltar were required to file a return. Returns, accounts and computations must be filed within nine months after the end of the month in which the financial period ends.

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For financial periods ending on or after 1 January 2016, all companies incorporated in Gibraltar that declare a dividend in a financial period are required to file a dividend return within nine months after the end of the month in which that financial period ends. Before 2016, only companies incorporated in Gibraltar that declared a dividend in favor of a person ordinarily resident in Gibraltar or in favor of another company incorporated in Gibraltar were required to file a dividend return.

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Companies must make payments on account of their corporation tax by 28 February and 30 September each year. Each payment is made toward the tax liability for the financial period in which the payment on account is due. The amount of payment on account due is based on the tax payable for the last relevant financial period. An application can be made for a reduced or zero payment if basing the payment on a prior year would result in an excessive payment. The final payment with respect to a financial period is due within nine months after the end of the month in which that financial period ends.

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Companies not complying with filing and payment deadlines are subject to penalties and surcharges.

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A self-assessment system requires companies to assess correctly their tax liabilities or face significant penalties.

Companies may request advance tax rulings.

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Dividends. Dividends paid by Gibraltar companies are not subject to withholding tax. Tax credits are attached to dividends paid by companies incorporated in Gibraltar. This tax credit equals the tax paid by the company on the profits out of which the dividend is paid. Restrictions may apply to how such tax credits may be utilized.

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Dividend income is not taxable in the following circumstances:

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• The dividend is received by a company from another company.

• The dividend is received by a person who is not ordinarily resident in Gibraltar.

• The dividend is received from a company that has its shares listed on a recognized stock exchange.

• The dividend represents the distribution of profits or gains on which no tax has been charged in accordance with the provisions of the

• Income Tax Act 2010 (the act contains rules governing the allocation of dividends to specific profits or gains).

 

The above exceptions may be subject to the anti-avoidance provisions introduced into the EU Parent-Subsidiary Directive, which apply from 31 December 2015.

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Interest. Withholding tax is not imposed on the payment of interest. Interest income is not taxable, except for the following:

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• Interest on loans or advances by one company to another company if the interest from an individual company is GIP100,000 or more per year. Under an anti-avoidance measure, interest received or receivable from different companies is considered to be from the same company for the purposes of the GIP100,000 threshold if those companies are “connected persons.” For this purpose, interest is deemed to be accrued and derived in Gibraltar if the company in receipt of the interest is a Gibraltar-registered company.

• Interest income of a company that lends to, or takes deposits from, the general public or engages in similar activities.

 

Royalties. Royalty income received or receivable by a company is taxable. Such income is deemed to be accrued and derived in Gibraltar if the company receiving the royalties is a Gibraltar-registered company.

Foreign tax relief. Unilateral tax relief is granted with respect to tax paid or payable in another jurisdiction on income from that jurisdiction. This is restricted to the tax that would otherwise have been payable in Gibraltar on that income.

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The content is based on information current as of 1 January 2018, unless otherwise indicated in the text of the chapter. Changes to the tax laws and other applicable rules in various countries covered by this publication may be proposed. Therefore, readers should seek independent tax advice from their local and international firms to obtain further information.

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This publication contains information in summary form and is sourced from the Ernst & Young Worldwide Corporate Tax Guide, and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither Aston & Willson LLP  or EYGM Limited nor any other member of an organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.