Press Release: State aid: Commission requests phasing out of tax benefits for Exempt Companies in Gibraltar

The European Commission on 21 January 2005 formally requested the United Kingdom to abolish the Exempt Company tax regime in Gibraltar by the end of 2010 at the latest because the scheme violated the EC Treaty's ban on state aid liable to distort competition. By this request, which took the form of a 'recommendation' and followed extensive negotiations, the Commission intended to put a definitive end to the last offshore tax regime in Gibraltar. Under the regime, an Exempt Company paid no income tax on its profits but instead paid only a low, fixed annual tax.