6th March 2019, 18:17
The agreed text of the Tax Treaty for Gibraltar and Spain has been published. The Chief Minister has provided the Speaker with a copy.
The Minister for Europe will send a copy of the signed Treaty to the House of Commons with Spain's Minister of Foreign Affairs also distributing it among relevant parliamentarians.
The Chief Minister, says he's pleased to be able to publish the agreed text of the Tax Treaty agreed between Spain and Gibraltar. Publication, says FabianPicardowill enable potentially affected taxpayers to understand how best to structure their affairs and regularise their positions going forward. Additionally, the Government has issued an explainer document and video.
FULL TEXT OF THE TAX TREATY
INTERNATIONAL AGREEMENT ON TAXATION AND THE PROTECTION OF FINANCIAL INTERESTS BETWEEN THE KINGDOM OF SPAIN AND THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND REGARDING GIBRALTAR
CONSIDERING that, for the purposes of this Agreement, the United Kingdom acts as the State responsible for Gibraltar’s external relations,
NOTING that the present Agreement, or any activity or measure taken in application or as a result thereof, do not imply any modification of the respective legal positions of the Kingdom of Spain or of the United Kingdom with regard to sovereignty and jurisdiction in relation to Gibraltar,
The parties, determined to improve co-operation in the field of taxation, and the protection of financial interests have agreed on the following:
Article 1. Protection of financial interests and tax good governance.
Article 2. Tax residency of natural and legal persons, entities and other legal structures or arrangements.
(1) For the purposes of this Agreement, the Parties agree that:
(a) Natural persons shall be tax resident in Spain or in Gibraltar in accordance with their domestic law, including rules regarding the issuance of tax certificates confirming residency and subject to the following rules only in cases of tax residency conflicts;
(b)Where by reason of the provisions in paragraph (1)(a) natural persons are resident of both Parties then their status shall be determined as follows:
(i) Natural persons shall be tax resident only in Spain when any of the following circumstances exist:
D.Two thirds of their net assets, determined pursuant to Spanish Tax legislation, whether held directly or indirectly, are located in Spain;
(c) The following special rules for determining residency shall be applied in all cases without prejudice to the criteria set forth in the preceding paragraphs:
(d) For the purposes of paragraph (1)(c)(ii) above, registered Gibraltarians means any natural person as defined by section 4 of the Gibraltarian Status Act, generally British citizens that have resided in Gibraltar for over ten years;
(e) Gibraltar's special tax residency schemes for High Net Worth Individuals (HNWI), Category 2 Individuals (Cat 2), High Executive Possessing Specialist Skills (HEPSS) or any other equivalent scheme that may be created in the future, shall not of itself, constitute proof of tax residency in Gibraltar for the purposes of this Agreement.
Legal persons, entities and other legal structures or arrangements
(2) The following rules for determining tax residency apply:
(c) When considering annual turnover in paragraph (2)(b)(v), turnover shall be taken to include that of the legal person, entity, other legal structure, or arrangement, together with the turnover of any related party incorporated in Gibraltar, where related party is defined in accordance with International Accounting Standard (IAS) 24 on Related Party Disclosures;
(d) In applying paragraph (2)(b), the Gibraltarian tax authorities, designated pursuant to Article 4 of this Agreement, shall provide the Spanish tax authorities with the list of the legal persons, entities and other legal structures or arrangements which meet the conditions of paragraphs (2)(a)(iii) or (2)(a)(iv) and also meet conditions in paragraphs (2)(b)(i) to (2)(b)(v) above at 31 December 2018. This list shall include details on the legal and beneficial ownership and the natural persons in charge of effective management of those legal persons, entities and other legal structures or arrangements and shall be provided by the Gibraltarian tax authorities by 31 March 2020;
(e) Spanish legal persons, entities, other legal structures or arrangements whose residency is moved to Gibraltar after the date of entry into force of this Agreement shall in all cases maintain tax residency only in Spain.
Elimination of double taxation
(3) The competent authorities shall eliminate, where relevant, double taxation pursuant to the provisions of their domestic law.
Article 3. Administrative cooperation in tax matters
(a) Annual information on workers registered in Gibraltar as residents in Spain, fully identifying every aspect of the underlying employment relationship or any trade, business, profession or vocation carried on or exercised by these workers, including details of duration, economic terms and employer;
(b) Six-monthly information on vessels, aircraft and motor vehicles registered in Gibraltar relating to tax residents in Spain;
(c) The direct and free access to the records of the Registrar of Companies in Gibraltar, provided for in the Directive on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, which amended Directives 2009/138/EC and 2013/36/EU, as well as to the Gibraltar Land Registry;
(9) The first exchange of information in respect of paragraph (5)(b) above shall be in respect of taxable periods as they correspond to calendar years commencing on or after 1 January 2014 until the date of entry into force of this Agreement and shall be exchanged within four months of the date of entry into force of this Agreement. This information shall include the ownership, licence plate number, value and acquisition date regarding vessels, aircraft and motor vehicles registered in Gibraltar.
(10) The Spanish tax authorities, designated pursuant to Article 4 of this Agreement, shall provide the Gibraltarian tax authorities, similarly designated, with the following:
(11) For the purposes of paragraph (10)(a) above, information is to be exchanged within four months after the end of the calendar year to which the information relates.
(12) The first exchange of information in respect of paragraph (10)(a) above, shall be in respect of taxable periods commencing on or after 1 January 2014 until the date of entry into force of this Agreement and shall be exchanged within four months of the date of entry into force of this Agreement.
(13) For the purposes of paragraph (10)(b) above, information is to be exchanged every six months, on 31 March and 30 September. The information exchanged on 31 March shall relate to the period 1 July to 31December of the previous calendar year, and the information exchanged on 30 September shall relate to the period 1 January to 30 June of the same calendar year. The exchanges made shall ensure continuity of information provided such that no period is omitted between the first exchange of information after the date of entry into force of this Agreement and subsequent ongoing exchanges. These information exchanges shall only include details of new registrations of vessels, aircraft and motor vehicles.
(14) The first exchange of information in respect of paragraph (10)(b) above shall be in respect of taxable periods as they correspond to calendar years commencing on or after 1 January 2014 until the date of entry into force of this Agreement and shall be exchanged within four months of the date of entry into force of this Agreement. This information shall include the ownership, license plate number, value and acquisition date regarding vessels, aircraft and motor vehicles registered in Gibraltar.
(15) For the purposes of Article 3 of this Agreement:
Article 4. Liaison bodies
The Parties shall respectively designate the liaison bodies with competence to directly undertake the cooperation actions set forth in this Agreement. Each Party shall inform each other of the liaison bodies designated, within one month of the entry into force of this Agreement.
Article 5. Joint Coordination Committee
(1) The Parties shall create a Joint Coordination Committee formed by the Authorities designated by the Parties, which shall supervise and coordinate the cooperation activities set out in this Agreement.
(2) Additionally, the aforementioned Joint Coordination Committee shall endeavour to resolve by mutual agreement, any difficulties or doubts arising as to the interpretation or application of this Agreement, in particular regarding Article 2, in those specific cases where all the authorities forming the Joint Coordination Committee so decide.
Article 6. Information exchange, Confidentiality and Data Safeguards
Information exchanged under this Agreement is subject to the rules provided in Articles 21 and 22 of the Convention on Mutual Administrative Assistance in Tax Matters of the OECD and the Council of Europe.
Article 7. Duration and termination
This Agreement shall remain in force until terminated by a Party. Either Party may terminate the Agreement, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year. In such an event, the Agreement shall cease to have effect in respect of taxes chargeable for any tax year commencing on or after 1 January in the calendar year next following the year in which the notice is given.
Article 8. Entry into force
(1) This Agreement shall enter into force on the date of the later of the Parties’ notifications that they have completed their internal procedures, and shall have effect for the provisions of paragraphs (1) and (2) of Article 2 for:
(a) taxable periods commencing on or after the date of entry into force of this Agreement; or
(b) in cases where there are no such taxable periods, all charges arising on or after the date of entry into force of this Agreement.
(2) The provisions of Article 3 shall have effect after the date of entry into force of this Agreement as follows:
1 January 2011 or where there is no taxable periods, for all charges to tax arising on or after 1 January 2011.
(3) The remainder of the provisions of this Agreement shall have effect from the date of entry into force.
Article 9. Territorial extent
With respect to the United Kingdom, this Agreement applies only to the territory of Gibraltar.
DONE in duplicate in London on 4 March 2019 and Madrid on 4 March 2019 2019 in the English and Spanish languages, both texts being equally authoritative.
For the United Kingdom - The Rt Hon David Lidington Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster
For the Kingdom of Spain - H.E. Josep Borrell Fontelles Minister of Foreign Affairs, European Union and Cooperation