Gibraltar Once Again Cut Out Of The Loop By The EC

by Jason Gorringe, for LawAndTax-News.com, London

23 March 2005

In a move likely to anger the government of Gibraltar, the European Commission announced on Monday that it has sent a formal request to the United Kingdom "for information on the measures that the United Kingdom has adopted to implement Council Directive 2003/49/EC of 3 June 2003 in Gibraltar".

The Directive covers a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States, and should have been implemented in all Member States by January 1, 2004.

The European legislation prohibits the application of tax on interest and royalty payments in the Member State in which these payments arise, where the payments are made by a company to an associated company in another Member State.

Bypassing the Gibraltar authorities once again, the EC stated that:

"The United Kingdom has notified the implementing measures that it has adopted with regard to Great Britain and Northern Ireland, but it has not done so in respect of Gibraltar. The Commission must therefore assume that the United Kingdom has not yet implemented the Directive in Gibraltar."

It went on to threaten that:

"If the United Kingdom fails to notify the requested measure within two months of receiving the reasoned opinion, the Commission may refer the matter to the European Court of Justice."

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