Gibraltar implemented formal transfer pricing documentation rules in 2020, which encompass country-by-country reporting (CbCR) and the notification of CbCR for eligible multinational groups. Despite not being a member of the EU or OECD, Gibraltar generally recognizes the OECD Transfer Pricing Guidelines as a valuable reference. Transfer pricing regulations are primarily governed by the Gibraltarian Income Tax Act, while CbCR provisions are guided by EU Directives.
In Gibraltar, the definition of related parties aligns with OECD principles. As for transfer pricing documentation, Gibraltar follows the OECD’s guidelines, even though full adoption of BEPS Action 13 rules has not yet occurred, except for CbCR requirements. The tax avoidance regime is triggered when the tax paid on profits in another jurisdiction is less than 50% of what would be paid in Gibraltar.
Due to Gibraltar’s low corporate tax rate, there’s seldom a need to justify transfer pricing. Tax authorities rarely challenge transfer pricing methods, and queries related to transfer pricing are infrequent.
Gibraltar partially incorporated BEPS Action 13 requirements, applicable from financial years commencing on or after January 1, 2016. These requirements focus on a Country-by-Country Report (CbCR), containing information about the global allocation of income and taxes paid by an MNE, along with a list of constituent entities per tax jurisdiction. Local files and master files are not mandated.
Penalties apply for various offenses, including non-filing, late filing, incomplete or incorrect filing. Penalties range from GBP 300 and can increase, especially if the failure persists for an extended period. Inaccurate information provision can result in penalties of up to GBP 3,000.