Spain and the UK have signed have an international agreement covering taxation and the protection of financial interests in Gibraltar.
The agreement seeks to improve cooperation on tax matters, help resolve disputes over tax residency, and increase transparency and cooperation against tax fraud once the UK officially leaves the EU.
Within the agreement, the UK will act as the state responsible for Gibraltar’s external relations.
Tax residency
The terms of the deal state that an individual will be a tax resident in Spain if they spend over 183 nights in the country, their spouse resides habitually in Spain, their permanent home is in Spain or two thirds of their net assets are located in Spain.
Spanish nationals who move their residency to Gibraltar after the agreement date will continue to be considered tax residents of Spain in all cases.
Non-Spanish nationals who prove they have moved their residency to Gibraltar will stay as tax residents of Spain for the tax period when the change was made and for the next four years, though there is an exemption for those non-Spanish nationals who have spent less than a year in Spain.
Those individuals registered as Gibraltarians (usually British citizens that have resided in Gibraltar for over 10 years) that spend less than four years in Spain are also exempt.
Signing up to Gibraltar’s tax residency schemes for high net worth Individuals (HNWI), Category 2 Individuals, High Executive Possessing Specialist Skills (HEPSS) or any other equivalent scheme “shall not of itself” constitute proof of tax residency in Gibraltar.
The agreement also said that the authorities will eliminate double taxation where relevant and comply with domestic laws of the country individuals reside in.
Cooperation
The two countries have also agreed to exchange information on tax matters regarding administration, enforcement and collection concerning taxes of all kind imposed by the jurisdictions.
After Brexit, both parties will implement EU-equivalent legislation surrounding mutual assistance of tax administration; as well as the EU equivalent to anti-money laundering and transparency rules.
Joint coordination committee
In order to cooperate and supervise tax activities between Spain and Gibraltar, both countries will also create a joint coordination committee formed by the designated authorities, to monitor all of the tax issues mentioned within the agreement.
The committee will look to resolve any difficulties and issues in terms of regarding the interpretation and application of the agreement.
The agreement can be terminated by either party by with a six-month notice six months before any calendar year.
