European Commission finds Gibraltar’s corporate tax regime illegal under EU State aid rules

The European Commission has found that Gibraltar’s corporate tax exemption regime for interest and royalties, as well as five tax rulings, are illegal under EU State aid rules. The beneficiaries now have to return unpaid taxes of around €100 million to Gibraltar.

Commissioner Margrethe Vestager, in charge of competition policy, said “Our investigation has found that Gibraltar gave unfair and selective tax benefits to several multinational companies, through a corporate tax exemption scheme and through five tax rulings. This preferential tax treatment is illegal under EU State aid rules and Gibraltar must now recover the unpaid taxes. At the same time, I very much welcome the significant actions taken by Gibraltar to remove the illegal tax exemptions, streamline its tax ruling practice, and reinforce its transfer pricing rules – this should help ensure that these issues remain in the past.”