Interest income (except for banks) is not subject to tax in Gibraltar.
However, following the conclusion of the EU Code of Conduct Group back in November 2012 that the intercompany interest tax treatment in Gibraltar is not in line with EU requirements, the Government of Gibraltar has approved amendments in this respect that will apply as of 1 July 2013. Under these amendments, interest received or receivable (more than GBP£100,000) from inter-company loans will be taxable in Gibraltar if the company receiving the interest is registered in Gibraltar.
The new taxation rate of intercompany interest is:
- 10% for inter-company interest above GBP£100,000.
- 0% for inter-company interest less than GBP£100,000 unless the income falls within the scope of trading income (e.g. banks, building societies etc).
Interest receivable or received from all group companies will be aggregated when determining the GBP£100,000 threshold.
Interest Expense Deductibility
Interest expense is tax-deductible only if incurred wholly and exclusively for the production of taxable income.
Withholding Tax on Interest
Gibraltar does not impose any withholding tax on payments to foreign recipients.
There is no withholding tax on the payment of interest by one Gibraltar Company to another Gibraltar company.