Corporate - Income determination

Last reviewed - 05 December 2023

Generally, companies are subject to Gibraltar taxation on income accrued in and derived from Gibraltar.

The ‘accrued in and derived from’ principle is defined by reference to the location of the activities that give rise to the profits.

Should the activity of a business be a licensable activity under Gibraltar law, the profits from this activity will be deemed to arise in Gibraltar. Furthermore, the profits of a business that can lawfully be transacted in Gibraltar, through a branch or any form of PE, by virtue of the fact that it is licensed in another jurisdiction that enjoys passporting rights into Gibraltar and which would otherwise require such licence and regulation in Gibraltar shall be deemed to arise in Gibraltar.

In the case of royalty income and inter-company interest income, both revenue streams are deemed to accrue in and derive from Gibraltar where the entity in receipt of the income is a Gibraltar-registered company.

Inventory valuation

Inventory is valued at the lower of historical cost or net realisable value. A first in first out (FIFO) basis of determining cost where items cannot be identified is acceptable, but not the base-stock or the last in first out (LIFO) method.

Capital gains

Capital gains are not subject to tax in Gibraltar.

Dividend income

There is no charge to tax on the receipt by a Gibraltar company of dividends from any other company.

Interest income

Companies with a banking or money lending licence and earning interest as a trading receipt will have that interest treated as income chargeable to tax.

Interest received or receivable by a Gibraltar company arising from an inter-company loan will be chargeable to tax at the standard CIT rate. Where the interest received or receivable is less than GBP 100,000 per annum, the interest is exempt from any charge to taxation.

All other interest received or receivable is not taxable in Gibraltar.

Royalty income

Income from royalties received or receivable by a Gibraltar company is taxable at the standard CIT rate.

Foreign income

Foreign income is not normally taxed in Gibraltar. Exceptions to this rule are interest income and royalty income (see above).