Brussels, 31 October 2022
The European Commission has extended the scope of its ongoing in-depth inquiry into Gibraltar’s corporate tax regime to reassess the compatibility with State aid rules of a 2012 tax ruling granted to MJN Holdings Gibraltar Limited (‘MJN GibCo’), on which the Commission had adopted a decision, subsequently annulled by the General Court. In December 2018, the Commission found that Gibraltar’s corporate tax exemption regime for interest and royalties, as well as five tax rulings (including a 2012 tax ruling in favour of MJN GibCo), were illegal under EU State aid rules. In April 2022, the General Court partially annulled the Commission’s decision. In particular, the Court found that the 2014 Commission’s decision opening proceedings was not sufficiently precise as to the measure in favour of MJN GibCo. At the same time, the Court confirmed the Commission’s decision on the tax exemption regime (the Commission’s findings on the other four tax rulings were not challenged before the Court and are final). Following the partial annulment, the Commission has decided to extend the scope of its original investigation to specify further the measure in favour of MJN GibCo, in line with the Court’s indications, and reassess the information submitted by the UK in relation to MJN GibCo 2012 tax ruling. MJN GibCo is a subsidiary of the infant and child nutrition products manufacturer Mead Johnson Nutrition group. The 2012 tax ruling exempted MJN GibCo from income taxation on the royalties received from a Dutch limited partnership, of which MJN GibCo was the main shareholder. Whereas royalties were not taxable in Gibraltar in 2012, the ruling in favour of MJN GibCo continued to apply and exempt royalties after a 2013 legislative amendment that brought such income within the scope of taxation in Gibraltar as from 1 January 2014. The extension of the in-depth investigation gives Gibraltar as well as all interested third parties an opportunity to submit comments on the measures subject to the extension. It does not prejudge the outcome of the investigation. In accordance with Article 92 of the Agreement on the Withdrawal of the UK from the EU, the Commission is competent for administrative procedures that were initiated before the end of the transition period on 31 December 2020. The non-confidential version of the decision will be made available under the case number SA.34914 in the State aid register on the Commission’s competition website.
Source – EU Commission