GIBRALTAR Law and Practice Contributed by: Stuart Dalmedo, Adrian Pilcher and Louise Anne Turnock, ISOLAS LLP
Intra-Group Transfer of Losses Where a trade or business is transferred as part of a group restructuring, any associated tax losses may also transfer and may be offset against profits of the business in the transferee company. 2.5 Deduction of Interest General Provisions Any interest incurred for the production of income shall be deductible. Any interest paid or payable to a person that is charged at more than a reasonable commercial rate shall not be deductible. A deduction is not allowed for any interest paid or pay - able on money borrowed other than for the purposes of the trade or profession that generates the income, or for acquiring the capital employed in acquiring the trade or profession that generates the income. Specific Anti-Avoidance Provisions Thin capitalisation Interest paid on a loan by a company to related parties (which are not themselves companies), or on loans where security is provided by related parties, where the ratio of the value of the loan capital to the equity of the company exceeds 5:1 is considered as a dividend payment and is therefore not a deductible expense for tax purposes. Payments to connected parties The amount of interest paid to connected persons that is in excess of that payable at “arm’s length” is deemed a dividend payment and is therefore not a deductible expense for tax purposes. Interest limitation rule The interest limitation rule provides that exceeding interest expenses are deductible up to either 30% of earnings before interest, taxes, depreciation and amortisation (EBITDA) or EUR3 million, whichever is higher. 2.6 Consolidated Tax Grouping There are no rules in Gibraltar for consolidated tax groupings. 2.7 Capital Gains There is no capital gains taxation in Gibraltar.
tions. This operates as a full deduction against the company’s first year’s corporate tax liability. Incentives Gibraltar also provides a range of incentive-based deductions, including: • approved expenditure on business premises; • expenditure improving a building’s EPC rating; • qualifying training costs; and • approved property investment expenditure. These may be taken as additional deductions where the statutory criteria are met. 2.2 Technology Investments No special incentives exist for technology investments in Gibraltar. 2.3 Special Incentives No special incentives apply to particular industries. 2.4 Loss Relief General Rules on Loss Relief A company may carry forward trading losses indefi - nitely, provided: • there is no change in ownership; and • there is no major change in the nature or conduct of the business within a period of three years. Gibraltar does not permit the carrying back of losses. Losses may only be offset against future taxable prof - its accruing in or derived from Gibraltar. Restrictions on Use of Carried-Forward Losses For certain regulated sectors, Gibraltar now restricts the use of carried-forward losses. Entities carrying out regulated activities under Section 5 of the Finan - cial Services Act 2014, companies operating activi - ties licensable under Section 3 (1) of the Gambling Act, and any connected persons to such entities may only offset up to 50% of their taxable profits in any accounting period using losses brought forward. The remaining 50% of profit is fully taxable for that year.
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