“Super Thursday” – three new tax related provisions introduced by Gibraltar

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On Super Thursday, the 30th January 2020, HM Government of Gibraltar (HM GoG) published a number of important pieces of tax related legislation in preparation for exit from the European Union. The Gibraltar law transposition of these directives was led by Isaac Levy, a Hassans’ Tax Partner, along with fellow Tax Partner Grahame Jackson and Associate Tania Rahmany.

The key legislation is as follows:

1.- DAC6 Implementation. As part of the Directive on Administrative Cooperation implementation, Gibraltar has implemented the new “DAC6” mandatory disclosure regime with the Income Tax (Amendment) Regulations 2020. Under it those entities which are described as “Intermediaries” will be obliged to report any cross-border arrangement which they assist with which exhibits the pre-defined hallmarks of aggressive tax avoidance. Arrangements dating from 25th July 2018 will need to be reported in late June to the Gibraltar authorities.

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Grahame Jackson commented:

“DAC6 will have wide ranging effects on accountants, fiduciaries, banks and any other tax centred professionals. Hassans has unrivalled expertise in this area and we are able to offer assistance to firms in their implementation and analysis of the requirements. We will be running seminars over the coming weeks so be sure to keep an eye out on social media for forthcoming dates”.

2.- Exit Tax. As part of the final tranche of provisions in the Anti-Tax Avoidance Directive HM GoG published their implementation of the Exit Tax on 30th January in the Income Tax (Amendment No3) Regulations 2020.

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Isaac Levy said;

“The Exit Tax is a major departure for Gibraltar and demonstrates the increasing complexity of Gibraltar Tax Law. This should be considered carefully if a company is changing its tax residence or moves a business which it operates through a branch in Gibraltar. As with all matters such as these, a proper understanding can dispel myths and misunderstandings. We are happy to advise”.

3.- “Hybrid Mismatches”. HM GoG implemented new rules around what are known as “Hybrid Mismatches” These were the third set of EU Directive driven tax provisions which came into force on the 30th January.

Grahame Jackson commented:

“This is the most technical piece of the three. It affects whether or not a company or business can claim a deduction against its profit where the payment may or may not be included on the other side of the transaction, for reasons such as the recipient is tax transparent, or one jurisdiction treats a loan as equity rather than debt. If you are the director of a business and this sounds like something that your business is doing, you should seek advice as this may well have an impact on your profitability.”

James Levy CBE QC, Senior Partner concluded:

“The last 12 months have seen radical change in the Gibraltar tax landscape; from the Spanish Agreement to the UK Double Tax Agreement and this latest batch of provisions introduced by the HM GoG. Gibraltar continues to be a leading and internationally compliant finance centre and an understanding of these provisions is vital for that status to continue.

Hassans has always prided itself on leading the way on Gibraltar tax and it is heartening to see our expertise continue to grow at all levels of the firm. We have always shared that expertise through open seminars and publications because we understand that a tax literate professional is the key to Gibraltar’s future, and I urge interested parties to attend our sessions on tax matters when they can. I am sure that both the business community and wider population will continue to rely on us as their first port of call in tax matters.”