Gibraltar – A Summary on International Cooperation
Gibraltar is a fully self-governing and fully self-financing British Overseas Territory to which the Treaties establishing the European Union apply, with only certain exceptions. We are within the EU single market for the purposes of the free movement of persons, the freedom to provide services and the free movement of capital. We are not within the Common Customs Union and we do not have to apply a VAT regime. Our status applies until the United Kingdom formally exits the European Union. We will continue to have access to the United Kingdom in all financial services areas that are covered by cross border Directives.
EU Regulations apply directly and EU Directives are transposed by Gibraltar’s Parliament. This includes all measures on financial supervision and regulation, direct taxation and anti money laundering. Our corporation tax rate is 10% and we have a maximum effective rate on personal tax of 25%. Our taxation regime is subject to European Union scrutiny.
“Gibraltar ensures transparency and exchange of information on fiscal matters through three principal legal instruments:
(1) Council Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC1) which has been fully implemented in Gibraltar and applies in relation to all 28 EU Member States. We have also transposed the DAC 2,3,4 and 5.
(2) The OECD and Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters, to which Gibraltar committed in 2014.
(3) Bilateral Tax Information Exchange Agreements(“TIEAs”) to OECD standards. Gibraltar has concluded 27 TIEAs. These include 14 EU Member States and other major countries around the world. The Convention referred to above has now done away with the need for further bilateral TIEAs.
Pursuant to these three instruments, Gibraltar has approximately 174 exchange of information mechanisms to the OECD standard with 121 countries and territories around the world.
As a general comment, it is to be noted that in its detailed Phase 2 Review Report on the effectiveness of exchange of tax information in Gibraltar, published on 29 October 2014, the OECD found that Gibraltar was “Largely Compliant”. That is the second highest grade and the same as countries such as the United Kingdom, Germany and the United States of America.
Actions 5 and 13 of the OECD’s 15 measures against Base Erosion Profit Shifting (BEPS) were given effect to in Gibraltar by virtue of our implementation of Council Directive (EU) 2015/2376 and Council Directive (EU) 2016/881respectively, both amending Directive 2011/16/EU. OECD Action 5 focuses on compulsory spontaneous exchange of tax rulings. OECD Action 13 contains revised guidance on transfer pricing documentation, including the template for country-by-country reporting.
Gibraltar is committed to transpose further measures against BEPS as they are coordinated as well as further measures against double non taxation.
Gibraltar has joined the OECD framework on Base Erosion Profit Shifting.
Separately, we have been supplying comprehensive tax data on an automatic basis under FATCA to the USA since September 2015 and the same under the United Kingdom IGA since September 2016. On 30 September 2017, Gibraltar exchanged comprehensive tax data on an automatic basis with all EU Member States under the EU version of the Common Reporting Standard (deriving from Directive 2011/16/EU as amended). On the same date, Gibraltar exchanged comprehensive tax data on an automatic basis with the ‘first wave’ of countries under the Common Reporting Standard. (We did so again in 2018 and will continue to do so even when we have left the EU.)
As regards Anti Money Laundering, Gibraltar has draconian all crimes anti money laundering (“AML”) legislation deriving from all EU legislation on this subject. Our legislation, systems and administrative practices have been independently tested in the past by the FATF and the IMF and we are being reviewed under the Moneyval process.
We have appointed a National Coordinator for AML, published a National Risk Assessment and are ensuring our legislation is compliant with FATF principles in parallel with the 4th AML Directive. The 4th AMLD was transposed into Gibraltar law on 26th June 2017 including the establishment of a private register of beneficial ownership.
The Gibraltar Financial Intelligence Unit (“GFIU”) is a member of the International Egmont Group of Financial Intelligence Units and shares information systematically and spontaneously with all members. Tax evasion, along with all other serious crime, is a predicate offence for money laundering and subject to suspicious transaction reporting.
We are following developments closely in respect of the 5th Anti Money Laundering Directive which includes a requirement for the establishment of a ‘public’ register of ultimate beneficial ownership. This Directive was adopted in June 2018; with a transposition deadline of January 2020. Given this timing and our status within the EU, Gibraltar will transpose this new Directive and amongst other things, create a public register of ultimate beneficial ownership.
Separately and notwithstanding the above, Gibraltar is committed to the existing OECD international standard as regards the sharing of registers of ultimate beneficial ownership.
A copy of a Matrix is can be viewed here, showing all of the countries that we have tax information exchange mechanisms with.