Cinco Días presents the opinion of Bernardo Gómez, associate lawyer in the fiscal area of the Broseta law firm, who has made an exhaustive analysis of the entry into force on March 4th of the International Agreement on taxation and protection of financial interests between Spain and United Kingdom in relation to Gibraltar.
Along these lines, the author highlights that the Autonomous Cities of Ceuta and Melilla can offer a real alternative for the development of business projects in the online gaming industry in Spanish territory thanks to the implementation of a tax regime with numerous incentives.
Next, we share this interesting opinion article:
On March 4th the International Agreement on taxation and protection of financial interests between Spain and the United Kingdom in relation to Gibraltar came into force. The main measures adopted under this document directly affect the rules to resolve conflicts of tax residence, avoid the use of companies subject to the Gibraltar tax regime by tax residents in Spain and the performance of economic activities in our country.
Likewise, it establishes that legal entities incorporated and managed in Gibraltar will have tax residence in Spain when they establish a significant relationship with this country, determined by various aspects such as: the location of most of their assets, the place where most of their assets are obtained and where the partners or executives are tax. It is important to note that, in any case, natural or legal persons who move to Gibraltar from the date the Agreement enters into force will continue to maintain their exclusive tax residence in Spain.
In short, it seems reasonable to affirm that the national investment in Gibraltar will attend with caution to the execution of the fiscal and administrative measures included in the Agreement. The online business stands out since, in practice, numerous companies and operators in the gaming industry and digital banking that were planning to start or move their business to Gibraltar could now seek other alternatives in Spanish territory that, unlike Gibraltar, offer a favorable regulatory framework that does not represent a barrier to entry into the sector.
This is where the Autonomous Cities of Ceuta and Melilla stand out, which, being part of the national territory, offer a real alternative for business development with a comparatively advantageous and efficient tax regime. For example, if we focus our analysis on those companies operating in the online gaming sector, both Ceuta and Melilla offer numerous incentives to locate this activity in their territory.
Among them, the following stand out: (i) taxation reduced to 10% in the Tax on Gaming Activities, which means reducing by half the general rate of 20% that currently applies in the rest of the national territory, (ii) a 50% discount In Corporation Tax, which translates into an effective tax rate of 12.5% compared to the general rate of 25%, (iii) regarding indirect taxation, the Value Added Tax does not apply at the general rate of 21 %, but the Tax on Production, Services and Import, which barely reaches 0.5%.
These incentives that we have just mentioned are even more attractive than those established in territories that have historically been chosen by different operators and large gaming multinationals. Malta serves as an example, since entities incorporated in this country are subject to the general rate of Tax on Gambling Activities of 20%.
In addition to the tax advantages that exist for companies that develop their business in Ceuta or Melilla, those that apply directly to the employees of these companies who carry out their work in these territories also stand out. For example, for the purposes of Personal Income Tax, there is a 60% discount on the income obtained by these employees in said territories.
In short, we can expect a reaction from the private sector (and the online gaming industry in particular) to the entry into force of an International Agreement that, given the foreseeable blockade of Gibraltar as a territory with advantageous taxation, offers as a viable alternative the development of business within the national territory, in places like Ceuta or Melilla that, having similar characteristics, will generate growth and economic development in the area, increased employability and, above all, internal wealth within our borders.
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