Spain Discussing Gibraltar Tax Reforms With EU

by Jason Gorringe, Tax-News.com, London

30 May 2003

Media reports from Gibraltar this week have indicated that the Spanish Finance Minister Cristobal Montoro is in discussion with the European Union concerning tax reform proposals tabled by Gibraltar last year, which were objected to by the government of Spain.

Montoro was quoted recently by the Iberia News service as revealing that as part of the EU's investigative process, the Spanish authorities have handed over their list of recommendations to the EU in respect of the Gibraltar tax question.

The controversy over Gibraltar's proposals emerged following criticism from the European Union with regard to the Rock's corporate tax regime, as part of its initiative against 'harmful tax competition'. In response, last July the Gibraltar government unveiled proposals to replace its company profits tax with payroll and business property occupation taxes, to be topped up with profits taxes of 8% and 35% respectively for financial service and utilities companies. However, shortly afterwards, Competition Commissioner, Mario Monti announced that the proposals would need to be investigated on the astonishing grounds that they constituted unfair State aid to 'a part of the UK'.

The Gibaltarian authorities had initially hoped to have the tax reforms in place by July of this year.

Another key concern recently raised by the Spanish finance minister is over proposed changes to banking information procedures due to be implemented in Gibraltar in 2006.

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