In December 2018, the European Commission declared a number of tax exemptions in Gibraltar unlawful and incompatible with state aid rules. The decision concerned Gibraltar’s corporate tax exemption regime for passive interest and royalties applicable between January 1, 2011, and June 30, 2013, and between January 1, 2011, and December 31, 2013, respectively. It also covered five tax rulings granted between 2011 and 2013.
According to the Commission, the exemption regime gave an unfair advantage to some multinational companies. Gibraltar repealed the contentious tax exemptions in 2013 and 2014 but the UK and Gibraltar authorities were required to recover the aid, worth about EUR100m.
In a statement welcoming the EC’s decision, the Gibraltar Government said: “The Government is delighted to note that the European Commission has today announced that it has decided to repeal its decision to open infraction proceedings against the UK … Read More »
Naturally, a great deal of the debate about the United Kingdom’s future in the European is focusing on how a Brexit would affect the UK economy, and, to a lesser extent, the economy of the European Union. However, it is not just the UK and the EU that are facing highly uncertain futures. There are various other territories dotted around northern and western Europe that anxiously await the result of Britain’s EU referendum on June 23, 2016, including the UK’s Crown Dependencies, Guernsey, Jersey, and the Isle of Man, and Gibraltar, which is classified for the purposes of international law as a British Overseas Territory.
Largely self-governing, none of these jurisdictions is fully “in” the EU, but they are inextricably tied to Europe through their strong constitutional links with the UK, which looks after their foreign affairs. Guernsey and Jersey, … Read More »
Gibraltar is a jurisdiction that seems to have been in an almost constant state of conflict with the EU over tax in recent years. And the “Rock” was again fighting its own small corner of Europe last week, sending Chief Minister Fabian Picardo along to brief the European Parliament’s so-called TAXE committee on national tax rulings, with Gibraltar’s regime very much in the EU’s sights. And brief it certainly was, for the Q-and-A session lasted little more than an hour — surely not enough time for an in-depth discussion on what is a complex and technical area of taxation. There are two strands to the EU probe on tax rulings: whether these rulings were granted to certain companies on a selective basis in breach of EU state aid laws; and whether, by granting these companies favorable tax treatment, they eroded … Read More »
Lately, the European Union has been execrated on a regular basis by this column. Some may think this a little unfair, betraying a natural bias against a continent-sized super-state that has done more to stifle innovation and growth in Europe than to promote it, as it was supposed to do. But it’s hard not to dislike this institution when you see just how much European taxpayers’ money is spent on maintaining a vast army of bureaucrats in Brussels, Luxembourg and Strasbourg. The Commission claims that the EUR8.6bn budgeted for administration in 2015 represents good value for money, because it is only about 6 percent of the EU’s overall budget of almost EUR146bn, which itself is only about 1 percent of the GDP of the EU. This may be true, but perhaps this figure could be even lower if Commission officials … Read More »
A bit of a theme this week: how the powerful like to bully the small and the weak. And we start with Spain, which, according to one senior figure in the Spanish Government, is deprived of EUR1bn every year in tax revenue as a result of Gibraltar’s low-tax regime. Gibraltar isn’t exactly a country. In fact its constitutional status confuses many people. Gibraltar is an Overseas Territory of the United Kingdom, but although Britain is responsible for its defense, foreign affairs and internal security, the Rock is self-governing based on a constitution written in the 1960s. It also has a sort of half-in, half-out relationship with the EU which it entered along with the UK while remaining outside of the common external tariff and EU VAT regimes, something which also probably irritates Spain. Essentially though, Gibraltar is a little piece … Read More »
I’m going to give an award to the European Union for its refusal to rise to Spain’s allegations against Gibraltar’s low tax regime, alongside the measured acceptance by an EU delegation of new Spanish border controls, which everyone realizes are a tit-for-tat response to Gibraltar’s dumping of concrete blocks into its harbour, for some obscure purpose which may possibly have something to do with fishing. The EU is the only party to this imbroglio that has shown a modicum of grown-up common sense. Gibraltar, encouraged by the UK, and Spain, seem incapable of rational behaviour on the subject of Gibraltar’s sovereignty. What meaning can be attached to the idea of European unity when this 400-year-old squabble is allowed to smoulder on by two of the EU’s largest member states? Spain’s tax complaint was curious, given that Gibraltar’s tax regime has … Read More »