Transfer Pricing
Country Summary
Gibraltar
This document summarizes the transfer pricing requirements and regulations in Gibraltar. Gibraltar introduced formal transfer pricing documentation requirements in 2020, including country-by-country reporting (CbCR) and notification of CbCR for qualifying multinational groups. While not an EU or OECD member, Gibraltar’s authorities generally accept OECD Transfer Pricing Guidelines as a reference. Transfer pricing is governed by the Gibraltarian Income Tax Act, and CbCR regulations can be found in EU Directives. The definition of related parties and the nature of transfer pricing documentation in Gibraltar are in line with OECD principles. Gibraltar has partially adopted BEPS Action 13 but has not fully adopted its rules. The tax avoidance regime applies when the tax paid on profits in another jurisdiction is less than 50% of what would be paid in Gibraltar.
Overview:
Gibraltar’s Transfer Pricing Requirements
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.
Related Party Definition and Transfer Pricing Documentation
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.
Audit and TP Practice
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.
Transfer Pricing Documentation Requirements
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 and Interest Charges
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.