| Gibraltar is a British overseas territory located near the southernmost tip of the Iberian Peninsula and overlooking the Strait of Gibraltar, sharing a border with Spain to the north. It is part of the EU, having joined the European Economic Community with the United Kingdom in 1973. Article 355(3) (ex Article 299(4)) applies the treaty to "the European territories for whose external relations a Member State is responsible", a provision which in practice only applies to Gibraltar. Notwithstanding its being part of the EU, Gibraltar is outside the customs union and VAT area and is exempted from the Common Agricultural Policy.[29] As a separate jurisdiction to the UK the Gibraltar Parliament transposes EU directives into local law. |  |
European Withholding Tax
European Union withholding tax is a withholding tax which is deducted from interest earned by European Union residents on their investments made in another member state, by the state in which the investment is held. (The European Union has no taxation powers, so the name is strictly a misnomer). The aim of the tax is to ensure that citizens of one member state do not evade taxation by depositing funds outside the jurisdiction of residence and so distort the single market. The tax is withheld at source and passed on to the EU Country of residence. All but three member states disclose the recipient of the interest concerned. (Most EU states already apply a withholding tax to savings and investment income earned by their nationals on deposits and investments in their own states. The Directive seeks to bring inter-state income into the same arrangement, under the Single Market policy).
Gibraltar is deemed to be part of the UK for the purposes of the EU Savings Directive and thus will exchange information with other EU countries such as Spain and the UK. Residents of Gibraltar will either suffer withholding tax on interest arising overseas, or have that income reported to the UK who will pass it on to Gibraltar authorities.
