TaxCorporate TaxUK set deadline for Gibraltar tax reform

UK set deadline for Gibraltar tax reform

The European Commission has ordered the British government to reform Gibraltar's offshore company taxation rules by ensuring its 'Exempt Company' regime is phased out by December 2005 at the latest.

Link: Gibraltar’s tax laws under EC scrutiny

Its action follows an inquiry, which led to the Commission concluding that the tax system constituted illegal state aid, banned under EU law because it unfairly favours one European company over another.

Exempt Companies are financial services companies domiciled in Gibraltar that may not conduct any trade or business within the colony; they pay a fixed annual tax of between £225 and £300 and are exempt from any further taxation in Gibraltar; its standard company tax on profits is 35%.

The Commission has told the British government that it expects it to state publicly by next month how it will reform this system. If Britain refuses, the Commission could start legal proceedings that may end in the government being taken to the European Court of Justice.

Brussels has long been opposed to this offshore tax break, opening a formal state aid investigation in July 2001. This was scrapped this April, however, after the Gibraltar government persuaded the ECJ that the Commission had made procedural errors in the inquiry.

Related Articles

Watch out when winding up

Corporate Tax Watch out when winding up

1m Emma Rawson, ATT Technical Officer
How might Brexit affect UK tax policy?

Brexit & Economy How might Brexit affect UK tax policy?

1m Santhie Goundar
Corporation tax losses – your newly flexible friends

Corporate Tax Corporation tax losses – your newly flexible friends

3m Emma Rawson, ATT Technical Officer
HMRC large business tax enquiry duration rises to 3 years

Corporate Tax HMRC large business tax enquiry duration rises to 3 years

4m Emma Smith, Managing Editor
SMEs paying higher rate of corporation tax than big businesses

Corporate Tax SMEs paying higher rate of corporation tax than big businesses

4m Alia Shoaib, Reporter
Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

7m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

7m Emma Rawson, ATT Technical Officer
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

8m Alia Shoaib, Reporter