GIBRALTAR Law and Practice Contributed by: Stuart Dalmedo, Adrian Pilcher and Louise Anne Turnock, ISOLAS LLP
9.9 Anti-Avoidance Rules It is highly unlikely that any double tax convention limi - tation of benefit or anti-avoidance rules will have any impact in Gibraltar, at least for the foreseeable future. 9.10 Transfer Pricing and IP Taxation Gibraltar has not yet implemented a full transfer pric - ing regime in line with BEPS Actions 8–10. However, the Income Tax Act now expressly allows the Com - missioner to adjust arrangements that are not con - sistent with the OECD Transfer Pricing Guidelines, meaning that non-arm’s length transactions, particu - larly between connected parties, may be challenged under both the traditional “artificial or fictitious” rule and the expanded 2024 GAAR. 9.11 Country-by-Country Reporting and Transparency Provisions Gibraltar has introduced legislation on country-by- country reporting and the automatic exchange of information, indicating the country’s approval of enhancing transparency in combatting BEPS. 9.12 Digital Economy Businesses Gibraltar has not implemented any changes in rela - tion to the taxation of transactions effected or profits generated by digital economy businesses operating largely outside Gibraltar, nor have any been discussed or proposed. 9.13 Approach to Digital Services Taxation Gibraltar has not yet stated its position in relation to digital taxation, and no proposals have been put for - ward. 9.14 Offshore IP Provisions Gibraltar does not have any specific provisions dealing with the taxation of offshore intellectual property that is deployed within Gibraltar. As a result, it does not impose any withholding tax or tax by direct assess - ment on the IP owner. It is important to stress the Commissioner’s powers regarding expenses incurred with a connected party (see 5.6 Deductibility of Intra- Group Management and Administrative Charges ).
• no capital gains tax; • no withholding tax; and • tax treaties and agreements with only the UK and Spain. This is likely to continue to be balanced against any implementation of BEPS recommendations. 9.6 Hybrid Instruments and BEPS Implementation Gibraltar’s implementation of hybrid instruments relat - ing to the BEPS recommendations has focused pri - marily on the implementation of EU Directives focused on anti-tax avoidance. Under Gibraltar law, payments under hybrid instru - ments and payments to associated hybrid entities will be disregarded where the deduction or payment ben - efits from a tax deduction in the payer’s jurisdiction and is not taxed in the jurisdiction where the payment is received. 9.7 Interest Deductibility and Territorial Tax Regime Gibraltar’s tax system is territorial in nature (see 2.1 Taxable Profits ). Gibraltar has interest deductibility restrictions in place (see 2.5 Deduction of Interest ). 9.8 Controlled Foreign Corporation Reform The OECD’s Action Plan in respect of CFCs builds on the existing fundamental principles of residence- based taxation, which would not align with a tradition - al territorial basis of taxation. However, Gibraltar has transposed the Anti-Tax Avoidance Directive (ATAD), which includes CFC rules (see 6.5 Controlled Foreign Corporation-Type Rules ). Therefore, while Gibraltar’s tax system is largely territorial, it is more hybrid in nature to accommodate domestic goals and interna - tional standards. Gibraltar is expected to take a similar approach to any future CFC proposals.
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