Gibraltar Fights To Get Voice Heard In Europe

by Jason Gorringe, Tax-News.com, London

17 June 2004

The governments of the United Kingdom and Gibraltar on June 9 launched separate legal challenges to the European Commission’s decision that Gibraltar’s tax reforms constituted illegal state aid on the basis of regional selectivity.

However, in another twist, it has emerged that the Commission is not recognising the challenge by the Gibraltar government as it is considered a part of the UK. It has also arisen that negotiations are taking place on an interim tax package that will apply until the marathon of legal process has been run in about 2010, according to the Gibraltar Chronicle.

In a statement, the office of Chief Minister Peter Caruana, who met with Commission officials this week to discuss the issue of tax, observed: “Gibraltar’s autonomy in matters of taxation pre-dates the UK’s (and Gibraltar’s) accession to the European Community in 1972.”

The statement continues: “It is the position of both the United Kingdom Government and the Gibraltar Government that the Gibraltar legislature has full power to adopt legislation in the field of taxation. Both Governments believe that the Commission’s decision misapplies the principle of regional selectivity, ignores the factual realities and the historical and constitutional relationship between the United Kingdom and Gibraltar and cannot therefore be accepted.”

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