Government of Gibraltar
Press Office

No.6 Convent Place, Gibraltar                Tel: 70071     Fax: 74524

Press Release
No: 33/2005
Date: 18 February 2005
crestlogo.jpg (45837 bytes) Office of the Chief Minister
No.6 Convent Place
Gibraltar
Tel: 70071 Fax: 74524
Exempt Status changes

On 21 January 2005, the EC Commission announced its view in relation to Gibraltar’s Exempt Status Company under state aid rules and also terms for the continuation of the Exempt Status Company under certain conditions leading to its phasing out by 31 December 2010. These terms have been the subject matter of intensive negotiations and agreement with the EC Commission. The Gibraltar Government has therefore accepted these terms and has requested the UK Government (as the Member State responsible for Gibraltar’s external affairs), on behalf of the Gibraltar Government, to formally notify the EC Commission of the acceptance of the agreed appropriate measures.

The terms of the agreed appropriate measures for the continued operation of the Exempt Status Company are as follows :

1. The total number of exempt companies will be of 8,464.

2. Existing exempt companies will be able to continue to benefit from their tax exempt status until 31 December 2010.

3. Existing exempt companies that change legal or beneficial ownership and/or activity between 19 February 2005 and 30 June 2006 will be able to benefit from their tax exempt status until 31 December 2007.

4. Existing exempt companies that change legal or beneficial ownership and/or activity after 30 June 2006 will lose their tax exempt status.

5. New exempt companies can be formed up to 30 June 2006. This will be on the following basis :

5.1 In 2005, the number of new exempt companies that can be formed shall not exceed 60% of the number of exempt companies leaving the regime in 2005, or in any event 823.

5.2 From 1 January to 30 June 2006, the number of new exempt companies that can be formed shall not exceed 50% of the number of exempt companies leaving the regime during that period, or in any event the number of exempt companies admitted in 2005.

6. New exempt companies will be able to continue to benefit from their tax exempt status until 31 December 2007.

7. Regular reports shall be submitted to the EC Commission certifying compliance with the above.

For the purposes of the foregoing, an existing exempt company is one which enjoys tax exempt status on or before 18 February 2005 and a new exempt company is one that acquires such tax exempt status between 19 February 2005 and 30 June 2006.

The exempt companies legislation will be repealed by 31 December 2010 and will shortly be amended to reflect the above terms. By 31 December 2010 alternative arrangements will be in place.

This public statement is being made in order to comply with a procedural requirement in EC state aid rules