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Legislation
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or l When a tax deduction is allowed for a payment in one EU Member State but the corresponding income is not recognised for tax purposes when received by an entity in another Member State of the EU (Deduction without Inclusion).
The result of the rule is that if there is a Double Deduction, the deduction of the payment will only be given where Gibraltar is the source of the payment. In cases of a Deduction without Inclusion – the deduction of such a payment will not be allowed by the Gibco.
4.Exit Tax
The Gibraltar ATAD Regulations do not implement Exit Taxation rules as the Gibraltar Government has chosen to adopt rules relating to this at a later date (by no later than 31 December 2019 in accordance with the ATAD Directive).
5.General Anti-Abuse Rule (GAAR) Section 40 and Schedule 4 of the Act is already in line with the GAAR found in the ATAD Directive. Therefore, no further changes will be introduced relating to GAAR in Gibraltar law.
Implications of Brexit on the ATAD Directive A political agreement was reached on the ATAD Directive by all of the Member States of the EU - including the UK - a matter of days before the UK voted to leave the EU on 23 June 2016. The ATAD Directive was implemented into domestic Gibraltar law just 3 months before the Brexit deadline of 29 March 2019. The Gibraltar ATAD Regulations will therefore remain Gibraltar law after Brexit unless they are repealed or modified by legislation.
It is difficult to predict with certainty
what impact Brexit will have on Gibraltar’s continuing application of the ATAD Directive. Gibraltar will have to wait and see what the Withdrawal Agreement between the United Kingdom and the EU will look like. This will dictate Gibraltar’s new relationship with the EU and reveal to what extent Gibraltar can amend legislation derived from EU law. It is our view that due to the Gibraltar Government’s commitment to the OECD’s BEPS Action Plan, it is likely that the Gibraltar ATAD Regulations will survive Brexit.
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26 Gibraltar International
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