EU Investigates after Spain complainsThe European Commission has launched an investigation into Gibraltar’s new corporate tax regime after receiving a complaint from Spain in June 2012. The investigation is to look into weather Gibraltar breaks European Union state aid rules by favoring certain businesses, particularly ‘offshore’ companies. It will focus on a corporate tax exemption for passive income such as royalties and interest. Gibraltar (a British overseas territory) introduced the tax regime back in 2010, it taxes all income deriving from or accrued in Gibraltar, however it grants an exemption for passive income regardless of the source. Gibraltar then amended its laws on the 1st July, 2013 to repeal the exemption for inter-company loan interest exceeding GBP100, 000 per annum received from Gibraltar or abroad. This is not the first time the European Commission has had involvement in Gibraltar’s tax system, Gibraltar has made substantial reforms in the past, however they did succeed in fighting off one major challenge in the European Court of Justice. You can follow the ongoing investigation on the Commission’s State Aid Register under case number SA.34914.