Commission Decision (EU) 2019/700 of 19 December 2018 on the State Aid SA.34914 (2013/C) implemented by the United Kingdom as regards the Gibraltar Corporate Income Tax Regime (notified under document C(2018) 7848)

1 The State aid scheme in the form of the passive interest income tax exemption applicable in Gibraltar under the Income Tax Act 2010 between 1 January 2011 and 30 June 2013 and unlawfully put into effect by Gibraltar in contravention of Article 108(3) of the Treaty is incompatible with the internal market within the meaning of Article 107(1) of the Treaty.

2 The State aid scheme in the form of the royalty income tax exemption applicable in Gibraltar under the Income Tax Act 2010 between 1 January 2011 and 31 December 2013 and unlawfully put into effect by Gibraltar in contravention of Article 108(3) of the Treaty is incompatible with the internal market within the meaning of Article 107(1) of the Treaty.

The individual State aids granted by the Government of Gibraltar, on the basis of the tax rulings (referred to in the Annex as rulings No 83, 84, 139, 140 and 144) to five Gibraltar companies with interests in Dutch limited partnerships (Commanditaire Vennootschappen) in receipt of royalty and passive interest income, which were unlawfully put into effect by the United Kingdom in contravention of Article 108(3) of the Treaty, are incompatible with the internal market within the meaning of Article 107(1) of the Treaty.

1 The tax ruling practice under the Income Tax Act 2010 does not constitute a State aid scheme within the meaning of Article 107(1) of the Treaty.

2 The 126 rulings, listed in the Annex to this Decision, other than the five rulings covered by Article 2 and the 34 rulings referred to in recital 144 , do not constitute individual State aids within the meaning of Article 107(1) of the Treaty.

1 Articles 1 and 2 of this Decision shall not apply to individual aid granted on the basis of the aid schemes referred to in Article 1 or on the basis of the tax rulings referred to in Article 2 if, at the time the individual aid was granted, it fulfilled the conditions laid down by the Regulation adopted pursuant to Article 2 of Council Regulation (EC) No 994/98 which was applicable at the time the aid was granted.

2 For the purposes of this Article and Article 5, individual aid is deemed to be put at a beneficiary's disposal, with respect to each tax year, on the day that the tax foregone for that tax year as a result of the aid schemes referred to in Article 1 or the tax rulings referred to in Article 2 would have fallen due in the absence of that scheme or ruling.

1 The United Kingdom shall recover all incompatible aid granted on the basis of the aid schemes referred to in Article 1 or on the basis of the tax rulings referred to in Article 2, from the beneficiaries of that aid.

2 Any individual aid granted on the basis of the tax rulings referred to in Article 2 which cannot be recovered from the Gibraltar company in question shall be recovered from other entities forming a single economic unit with that Gibraltar company, i.e. the relevant Dutch BV, the Dutch CV or the parent company of the Gibraltar company.

3 The sums to be recovered shall bear interest from the date on which they were put at the disposal of the beneficiary until their actual recovery.

4 The interest shall be calculated on a compound basis in accordance with Chapter V of Commission Regulation (EC) No 794/2004 .

5 The United Kingdom shall cease granting the aid on the basis of the aid schemes referred to in Article 1 or the tax rulings referred to in Article 2, with effect from the date of notification of this Decision.

1 Recovery of the aid in accordance with Article 5 shall be immediate and effective.

2 The United Kingdom shall ensure that this Decision is implemented within four months from the date of notification of this Decision.

1 Within two months from the date of notification of this Decision, the United Kingdom shall submit the following information to the Commission: (a) an assessment, for each Gibraltar company that generated passive interest income in the period between 1 January 2011 and 30 June 2013, of whether such interest income accrued in or was derived from Gibraltar, based on the ‘situs of the loan’ rule; (b) a list of beneficiaries that have received aid on the basis of the aid schemes referred to in Article 1, together with the following information for each of them and for each relevant tax year: the amount of profits achieved (indicating separately the profits achieved from royalty income and the profits achieved from passive interest income), the tax basis, the applicable income tax rate, the amount of income tax paid and the amount of the tax foregone, the total amount of aid received; (c) the following information for each of the five Gibraltar companies that received aid on the basis of the tax rulings referred to in Article 2 and for each relevant tax year: the amount of profits achieved (indicating separately the profits achieved from royalty income and the profits achieved from passive interest income), the tax basis, the applicable income tax rate, the amount of income tax paid and the amount of the tax foregone, the total amount of aid received; (d) the total amount (principal and recovery interests) to be recovered from each beneficiary (for all tax years subject to recovery); (e) a detailed description of the measures already taken, and of those planned, in order to comply with this Decision; (f) documents demonstrating that the beneficiaries have been ordered to repay the aid.

2 The United Kingdom shall keep the Commission informed of the progress of the national measures taken to implement this Decision until recovery of the aid in accordance with Article 5 has been completed. On request by the Commission, it shall submit to the Commission information on the national measures already taken, and on those planned, in order to comply with this Decision.

This Decision is addressed to the United Kingdom of Great Britain and Northern Ireland.