Brussels, 02/10/2014 (Agence Europe) - On Wednesday 1 October, the European Commission decided to extend the in-depth investigation underway into the corporate tax regime in place in Gibraltar to the practice known as “tax ruling”, or anticipatory decision-making in taxation matters. This principle was set in place in Gibraltar with the new law on income tax of 2010.
Amongst other things, “tax ruling” is used to confirm agreements to set transfer prices, which are the prices invoiced for commercial transactions between different entities of the same group. These prices influence the way in which the taxable profit is divided up between the subsidiaries of the group established in different countries. Three in-depth investigations are already underway into “tax ruling” decisions taken by Ireland regarding Apple, the Netherlands regarding Starbucks and Luxembourg regarding Fiat Finance and Trade. In the case of Gibraltar, 165 anticipatory decisions granted by the tax authorities to various companies in 2011, 2012 and up to August 2013 have been investigated by the services of the Commission.
The Commission has concerns that all of the anticipatory decisions could potentially feature state aid, as none is based on sufficient information to guarantee that the level of taxation on the activities in question is reconciled with the amount of tax paid by other companies generating income which should be deemed to have been generated or originated in Gibraltar. (EL)