GIBRALTAR Law and Practice Contributed by: Emma Lejeune, Stuart Dalmedo, Nicholas Isola, James Castle and Louise Anne Turnock, ISOLAS LLP
Development Aid In order to encourage private development in Gibraltar, promoters and developers of approved projects are offered certain incentives such as tax relief, import duty relief and rates relief. In order to qualify for the above reliefs, the project needs to be a new project and meet certain cri - teria. 5.4 Tax Consolidation Tax consolidation is not available in Gibraltar. 5.5 Thin Capitalisation Rules and Other Limitations Thin capitalisation rules are applicable in Gibral - tar. For instance, interest paid on a loan by a company to related parties that are not compa - nies, or loans secured by related parties where the ratio of the value of the loan capital to the equity of the company exceeds 5:1, would be considered a dividend payment and would not be a deductible expense for tax purposes. The interest limitation rule in Gibraltar provides that exceeding interest expenses are deductible up to the greater of (i) 30% of EBITDA, or (ii) EUR3 million. The overarching anti-avoidance provision in place in Gibraltar relates to the principle of “arti - ficial and fictitious”, as referring to transactions that are seen as inauthentic and not real. 5.6 Transfer Pricing The general anti-avoidance rules should be inter - preted in the manner that best secures consist - ency with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administra - tions and other documents designed as com - prising part of the transfer pricing guidelines.
If an amount charged for goods and services by a connected person is not at arm’s length, the expense allowed shall be subject to a minimum of (i) the amount of the expense; (ii) 5% of the gross turnover of the company; or (iii) 75% of the pre-expenses profit of the company. 5.7 Anti-Evasion Rules A person commits an offence if they are know - ingly involved in the fraudulent evasion of income tax by them or any other person, and could be imprisoned for up to seven years. 5.8 Tariffs No response provided. On 1 January 2021, the Competition Act 2020 (the “Act”) was introduced into Gibraltar law. The Act is the primary legislation governing merger control in Gibraltar. Under the Act, notification of arrangements or proposed arrangements which might have resulted or might result in the crea - tion of a ”relevant merger situation” may be done on a voluntary basis. A “relevant merger situation” is created for the purpose of the Act if two or more enterprises ”cease to be distinct” and the value of the turno - ver in Gibraltar of the enterprise being taken over exceeds certain thresholds or meets the share of supply test. 6. Competition Law 6.1 Merger Control Notification Enterprises will be deemed to “cease to be dis - tinct” if they are brought under common owner - ship or control. Enterprises will be treated as being under com - mon control if they are:
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