From today's Wall Street Journal:
The European Union's anti-trust authority said Wednesday it has opened an investigation into whether Gibraltar's new corporate tax regime breaches EU state aid rules.
The European Commission, the EU's executive arm, will examine whether the tax system in the tiny British territory--introduced under a 2010 law--favors certain types of companies. In particular, it will look at an exemption from corporate tax for passive income such as royalties and interest.
"At this stage, the commission considers that the tax exemption for passive interest and royalty income may involve state aid, because it departs from the general corporation tax system," the commission said in a statement.
Under the new tax system, all corporate activities deriving from or accrued in Gibraltar are taxed, but passive income isn't taxed in Gibraltar regardless of where the source of the income is located.
If the investigation confirms that some companies received favorable treatment, the commission might demand the return of aid money "that may have been granted illegally," an EU spokesman said Wednesday.