Gibraltar-UK Double Taxation Treaty
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While most countries sign double taxation treaties, Gibraltar has signed predominantly agreements for the exchange of tax information, because it is a British territory. However, in 2009 Gibraltar and the United Kingdom have agreed upon the elimination of double taxation. The Gibraltar – UK double tax treaty covers the taxes imposed by the authorities in both countries, including similar taxes. Also, if any change related to taxation should occur in any of the two states, the other country will be notified about them.
Our company registration agents in Gibraltar can offer more information on the advantages offered by the Government to foreign investors in terms of taxation.
Taxation under the Gibraltar – UK double tax treaty
Gibraltar included in its Income Tax Law of 2010 the main provisions on the avoidance of double taxation which also specifies how companies and individuals with a place of management, respectively residence or domicile in Gibraltar and the UK will be taxed.
Gibraltar will only impose the income tax on the income accrued here, therefore any subsidiary or branch office of a Gibraltar company operating in the UK will be taxed there. The UK, on the other hand, will use the tax credit or the tax exemption methods when it comes to avoiding double taxation. It should be noted that Gibraltar imposes no wealth, capital gains or inheritance taxes.
Avoidance of double taxation in Gibraltar
The UK has included reduced rate related to the taxation of dividends, interest and royalties in most of its double tax treaties, including in the agreement with Gibraltar. In 2013, Gibraltar changed the provisions on the taxation of interests and royalties which will be imposed a tax rate of 10%.
In order to avoid double taxation, the Gibraltar Tax Commissioner agreed to offer a tax deduction to the party subject to double taxation. The deduction would be 5% of the gross income, the expense incurred by the party or 75% of the net profits which could be obtained before any expenses arise. The same regulations apply to the Gibraltar – UK agreement for the avoidance of double taxation.
For more information on Gibraltar’s agreements for the exchange of tax information, you can contact us. You can also rely on us if you want to open a company in Gibraltar.