EU Ruling On Gibraltar Tax Status Imminent?

by Ulrika Lomas, Tax-News.com, Brussels

05 November 2001

According to a recent report in the Times, the long-awaited EU ruling on tax concessions for offshore finance companies in Gibraltar is imminent.

In September, EU Competition Commissioner Mario Monti announced that he was launching a formal investigation into 'unfair' tax practices being committed by member countries, and despite the fact that Gibraltar is not a full member of the Union, the jurisdiction was included in the list by merit of association with the United Kingdom.

Gibraltar has been anticipating (if somewhat less than eagerly) a verdict from Mr Monti for some time now, and a number of pre-emptive tax reforms have been considered in order to rescue the financial centre, which many fear will fail if the tax breaks are ruled 'illegal'.

If the Competition Commissioner does decide that Gibraltar acted unlawfully in not notifying the Commission of the tax concessions offered on offshore finance companies, the resulting liability could run into billions of pounds. This would be a blow not only for the Rock, but for the UK which is still ultimately responsible for the jurisdiction, and encouraged it to develop its offshore industry.

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