Disputed Status of Gibraltar - Economy

Economy

The Spanish government argues that Gibraltar's tax schemes harm the Spanish economy. In January 2005, the European Commissioner for Competition requested the UK (responsible for Gibraltar’s external relations) to abolish Gibraltar’s tax-exempt company regime by the end of 2010 (at the latest) on the basis that it constitutes illegal state aid that could distort competition. Unlike other tax havens like Andorra, Gibraltar has not signed a mutual agreement with Spain to exchange fiscal information, although such an agreement has been offered by the Gibraltar Government, but Spain has declined to accept it because does not consider Gibraltar as its diplomatic counterpart. Another concern is that each day thousands of Spaniards buy goods at cheaper prices in Gibraltar due to exchange rates and lack of VAT, contributing to the Gibraltar economy instead of that of Spain.

The Spanish government wants to increase the exchange of fiscal information in order to prevent Gibraltar banks being used for tax evasion and money laundering. The United Kingdom House of Commons Foreign Affairs Select Committee has directed an inquiry that determined that Gibraltar has always complied with all international and EU requirements to prevent such activity.

We conclude that the series of allegations which Spain makes against Gibraltar appear almost wholly to be without substance. In many cases, it is not just the Government of Gibraltar but the British Government as well which is traduced. It is deeply regrettable that allegations are made that cannot be sustained by a basis in fact. If concrete evidence of wrong-doing were produced, the British Government should act promptly to deal with the problem. But so long as allegations are unsubstantiated, the British Government should continue to rebut them promptly and decisively.

Referred to as an International Finance Centre, Gibraltar was among 35 jurisdictions identified by the Organisation for Economic Co-operation and Development (OECD) as a tax haven in June 2000. As a result of having made a commitment in accordance with the OECD's 2001 Progress Report on the OECD's Project on Harmful Tax Practices, Gibraltar was not included in the OECD's list of uncooperative tax havens. However, in its April 2009 progress report, the OCDE listed Gibraltar in the list of jurisdictions which, although committed, had not "substantially implemented" yet the internationally agreed tax standard. Following Gibraltar's signing of 12 additional Tax Information Exchange Agreements (TIEAs), as of October 2009, with jurisdictions including the UK, USA and Germany, Gibraltar was listed in the OECD "white list", and is now considered a jurisdiction that has substantially implemented the tax standard. It therefore shares the same status as OECD member states such as the UK, the USA, Spain or Germany.

Along with the Isle of Man and Cyprus, Gibraltar has been used as an international finance centre by the Russian conglomerate Yukos/Menatep.

Some Spaniards have also mentioned that Gibraltarian motorboats could be engaging in tobacco smuggling. However, since 1996 there has been a law in Gibraltar controlling fast launches licensing their ownership and importation and prohibiting the entry of unlicensed craft into Gibraltar waters.