Gibraltar / UK Double Taxation Agreement

Yesterday (26 March 2020), the Gibraltar Government announced that the Double Taxation Agreement (“DTA”) between Gibraltar and the United Kingdom is now in force.

The DTA, which was signed in October 2019, will apply in Gibraltar as follows:

  • For income tax, for the tax year commencing on 1st July 2020 onwards, this being the first tax year following the Agreement coming into force;
  • For corporate tax, for the next accounting period beginning on or after the 1st July 2020.

The DTA will apply in the United Kingdom as follows:

  • For income tax and capital gains tax, for the tax year commencing on 6th April 2020 onwards, this being the first UK tax year following the Agreement coming into force;
  • For corporate tax, for the next financial year beginning on or after 1st April 2020.

DTAs remove tax related barriers to cross border trade and investment. They are designed to assist businesses and the local economy in encouraging investment whilst helping prevent tax evasion and avoidance.

This DTA is based on the OECD Model Tax Convention and is Gibraltar’s first such DTA! It includes, amongst others, provisions dealing with:

  • In which country an individual is resident (UK or Gibraltar);
  • Where a company’s trading profits are taxable, for example, Gibraltar resident company’s trading profits may generally only be taxed in the UK if it is carrying on business through a permanent establishment in the UK;
  • Where employment income is taxable, for example, Gibraltar residents working temporarily in the UK may not be taxable on such income in the UK, if certain conditions are satisfied;
  • Where dividends, interest and royalty income is taxable;
  • Where capital gains are taxable, for example, gains made by Gibraltar residents on UK property may be taxable in the UK;
  • Where pension income is taxable. Specifically, pensions arising in a country may be taxable in that country, so a Gibraltar resident with a UK pension may still be liable to UK tax on UK pension income, so a Gibraltar QROPS transfer may be preferable.

The text of the DTA can be accessed here UK/Gibraltar Double Taxation Agreement