Corporation Tax
Companies are generally subject to taxation on income “accrued in or derived” from Gibraltar on the profits or gains for the financial year.
This includes those businesses whose income arises from an underlying activity that requires a licence and regulation under any law of Gibraltar.
The standard rate of taxation for a company is 15%.
Companies must file their tax returns within nine months after the date of its financial year end.
A company will be considered ordinarily resident in Gibraltar if, the management and control of its business is exercised from Gibraltar, or if the management and control is exercised outside Gibraltar by persons who are ordinarily resident in Gibraltar.
Submission of accounts and tax returns
Companies are required to prepare and file their tax returns based on their financial year. Tax returns, together with supporting accounts, must be submitted within nine months from the end of the company’s financial year. For example, a company with a financial year ending on 31 December must file its tax return by 30 September of the subsequent year.
Due dates and payment of tax
Companies must make two advance tax payments each year, due by 28 February and 30 September. Each payment on account should equal 50% of the tax liability calculated based on the relevant accounting period as defined by the Act. The final balance of tax owed is due with the submission of the company’s annual tax return and is calculated by deducting the two payments on account from the total tax liability for that year
Pillar Two
Gibraltar has recently adopted the OECD’s Pillar Two Global Anti-Base Erosion (GloBE) Rules and expects to fully implement Pillar Two for financial periods beginning after 31st December 2024. The introduction of Pillar Two will address the international tax framework and will ensure large multinational enterprises (“MNEs”) account for their fair share of taxes.
This “top-up” tax will be introduced consistently with the OECD Model Rules and will apply to companies belonging to MNE groups with an annual revenue of €750 million or more in the Consolidated Financial Statements of the Ultimate Parent Entity (“UPE”). This top-up tax shall apply to subsidiaries or permanent establishments of such groups where the UPE is in a jurisdiction that has introduced the Pillar Two rules. Such companies will therefore be subject to a minimum effective tax rate of 15% on any excess profits arising in each jurisdiction in which they operate.
This initiative protects the right to tax income generated by those subsidiaries or permanent establishments resident in Gibraltar and shield their revenue from being taxed in the jurisdiction of their UPE in which they are tax resident.
Capital Allowances
the first-year allowance for plant and machinery of up to £30,000.
the first-year allowance for computer equipment of up to £50,000. with the balance deductible at the rate of 15% per annum on a reducing balance basis.
Double Taxation Agreements
The following double tax agreements are currently in force:
- Double Tax Agreement between Gibraltar and the United Kingdom dated 15th October 2019 (“Gibraltar/UK Agreement”); and
2. International Tax Agreement between Spain and the UK regarding Gibraltar (the “Gibraltar/Spain Agreement”).
Due to the various agreement entered into, Gibraltar is now well positioned to seek new DTAs with relevant jurisdictions globally.
The agreements brought greater clarity for businesses operating in Gibraltar, as bilateral taxation agreements remove barriers to international trade and investment and provide a clear framework for taxing businesses that trade between jurisdictions.
The deals also positions Gibraltar’s offering on a level playing field with competing jurisdictions who already have double taxation agreements with the UK. The agreement has highlighted Gibraltar’s commitments to the international standards of tax transparency and its reputation as a robust and reputable financial centre.
