fiscal

Gibraltar and its tax regime: more complexity in the negotiations of the Brexit

Gibraltar and its tax regime: more complexity in the negotiations of the Brexit

Spain and the United Kingdom disagree on where to approach Gibraltar’s future fiscal status, whether within the Brexit negotiations or posteriori on a bilateral basis.

Gibraltar is the most controversial territorial issue of Brexit. It is not yet known what will become of the Rock when Britain leaves the European Union. Although the Treaties will no longer apply in this territory, the future relations of the Rock with Spain and the EU are subject to negotiation.

The tax and customs situation of Gibraltar once the United Kingdom leaves the European Union are in the air. Firstly, within the Brexit negotiations, Spain has a veto right on matters related to Gibraltar. This is, in addition, one of the negotiating directives of the EU with the United Kingdom, obtained by the Spanish diplomacy.

Second, the sovereignty of the Rock. The latest statements by Spanish Foreign Minister Alfonso Dastis point out that Spain prefers to leave this issue outside the negotiations of the Brexit to address it after the British exit, with a clear intention to solve it bilaterally with the United Kingdom, reports Expansión .

Gibraltar’s prime minister, Fabian Picardo, has called for a greater involvement of the British government in defending the interests of the Rock with respect to the positions of Spain and the EU.

Thus, the authorities of gibraltar bet on addressing this issue separately to the negotiations of the Brexit while Spain prefers to assume it after these negotiations.

Gibraltar enjoys the four economic freedoms of the EU, including the movement of people and goods and the rules of the single Community market. However, the rules of the Customs Union are not applied. This has led Gibraltar to have developed a tax, customs and company system of its own, which from Spain is described as a regime of unfair competition and even a tax haven.

In this way, no agreement on Gibraltar can be applied if Spain and the United Kingdom have not previously approved it and this clearly leaves Gibraltar’s future fiscal status in the hands of Spanish and British diplomacy, although it does not appear that both counts in any case with the opinion of the Gibraltarian authorities.

At Del Canto Chambers we specialize in international tax advice and especially between Spain and the United Kingdom. You can contact us at clerk@delcantochambers.com.

Del Canto Chambers’ Editorial Board

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