Gibraltar Concludes Written Submissions To CFI

by Robin Pilgrim, LawAndTax-News.com, London

05 July 2005

It emerged on Monday that Gibraltar is concluding its written submissions to the European Court of First Instance in a dispute with the EC over whether the jurisdiction should be permitted to offer a more favourable tax regime than the United Kingdom.

Gibraltar was given until 2010 to phase out its exempt company tax regime after the European Commission ruled that the scheme violates EU state aid rules.

However, the Gibraltar government is challenging the commission’s position that for tax purposes, Gibraltar effectively constitutes part of the UK and is therefore not entitled to its own tax system.

Chief Minister, Peter Caruana was quoted by the UK's Telegraph on Monday as observing that:

"The EU Commission case works on the proposition Gibraltar simply is a region of the UK. You do not need to be a scholar to know that Gibraltar is not part of the UK - it has British sovereignty but is not part of the union of the UK."

He went on to warn that if the EC is successful at the European court, the government of Gibraltar would be forced to put in place the same tax laws as the UK.

"We would have to wait for the Chancellor's Budget and do the same. It is an absurd proposition," the Chief Minister observed.

Meanwhile, James Tipping, Director of the Rock's Finance Centre, explained to the Telegraph that:

"We have now embarked on legal action to overturn that initial decision by the Commission. We regard it as ludicrous that Gibraltar can be regarded as a region of the UK. Implications that we should not have a separate corporation tax system is bordering on madness. The UK government is also litigating against the decision. The Gibraltarian government is wholly confident of winning."

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