Gibraltar Government's Hands Are Tied Over Savings Tax

by Jason Gorringe, Tax-News.com, London

07 February 2003

Responding to a statement issued by the Opposition Alliance regarding the possibility of Gibraltar being forced to adopt savings tax information exchange as a result of its relationship to the United Kingdom, Gibraltar's government said that if the UK chooses not to defend the Rock's position on the EU savings tax directive, there is little that can be done.

Immediately following the announcement that agreement had been reached on the directive last month, and following revelations that UK dependent territories such as the Channel Islands, the Isle of Man, and the UK's Caribbean territories are to be permitted a choice between information exchange and withholding tax, the Gibraltar authorities revealed that:

'From the outset of this issue, the Gibraltar government has intensely pressed HMG to ensure that Gibraltar enjoys the same choices as the most favourably treated EU member state, and even other Overseas Territories and Crown Dependencies. There is nothing in the language of yesterday's decision that explicitly or implicitly delivers this.'

In a recently released statement, Liberal leader, Dr Joe Garcia quizzed the government as to what it proposed to do about the apparent lack of a level playing field for Gibraltar, a perceived criticism which drew an angry response from the government on Tuesday:

'If despite the government's efforts, HMG continues to decline to...[defend Gibraltar's interests] then the directive will apply to Gibraltar and there is nothing that the Gibraltar government can do about it.'

'At that stage Gibraltar has the choice of either accepting the position or trying to mount a legal challenge to the Directive. Both have collateral implications for the finance centre which government is considering with the Finance Centre Council and the Gibraltar Bankers Association.'

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