Gibraltar IP Structuring Opportunities

The new Income Tax Act ("the Act"), which came into force on 1st January 2011, introduces a new corporate tax rate of 10% and various other changes to the taxation regime in Gibraltar.

One of the features of this legislation is the new provision related to the holding and management of IP arrangements. This is achieved, in part, by the removal of tax charges on royalty payments. Part 2 of Schedule 5 to the Act specifically states that "royalty payments arising in Gibraltar shall be exempt from any taxes imposed on those payments". Businesses which utilise IP are thus able to centralise their IP rights and establish a vehicle in Gibraltar which exploits these rights. Such a company will not suffer any tax in respect of the receipt of any royalty payments. This, coupled with the fact that any payment of dividends would not be subject to withholding tax in Gibraltar and not suffer tax in the hands of another company in Gibraltar, means the jurisdiction has become a very