Spain to target Gibraltar’s low-tax biz model in Brexit talks: report

Spain plans to use the pending Brexit negotiations between Britain and the EU “to attack Gibraltar’s low-tax economic model, which Madrid sees as a ‘tax haven’ that engages in ‘unfair competition’, the Financial Times has reported.

The report, which includes a reference to an “unpublished” Spanish foreign ministry document seen by the FT, notes that the decision to target Gibraltar’s low-tax regime “comes as the EU hardens its position towards the UK government, and tensions grow between Brussels and London”.

Gibraltar chief minister Fabian Picardo responded that the Spanish government was clearly preparing to “use Brexit to take narrow advantage” and that Gibraltar, “as ever [will] continue to seek dialogue over Spanish vetoes and will seek cooperation and friendship over Spanish aggression and belligerence”.

In a statement he also warned that the “main victims” of Spain’s hard-line Gibraltar policies ultimately would be “the Spanish workers in this region of high unemployment”, many of whom work in Gibraltar.

Media reports today detail how British prime minister Theresa May has accused European politicians and officials of ramping up tensions in relations between the UK and the EU, and looking to sabotage her re-election bid.

Ever since British citizens voted last June to leave the European Union, Spanish politicians have been indicating their interest in using Britain’s exit from the bloc as a device for securing what they see as Spain’s “natural” claim to Gibraltar,  a 6.7sq km (2.6 sq mi) British overseas territory that extends into the sea off the southernmost coast of Spain.

The UK has run Gibraltar since 1713, but Spain’s determination to possess it has long been an issue in the region, and in relations between the UK and Spain.

That Spain has veto power over any future EU-UK trade deal that could affect the tiny UK overseas territory is seen as giving the matter special significance.

Now, the FT report says, “Madrid has given the clearest signal yet as to how it will use that veto power — by targeting fiscal and legal incentives that have made Gibraltar a magnet for gambling companies, the insurance industry and other financial services providers”.

The FT report credits the Spanish daily, El País, with having first reported the news of the proposed strategy focusing on Gibraltar’s low-tax, business-friendly model.

To read the FT’s story on its website, which has a paywall, click here.

ABOUT THE AUTHOR
Helen Burggraf
Helen Burggraf is the editor of International Investment. A US-trained journalist, she has worked in Rome, New York City and London, covering everything from the fashion and retailing industries to the global drinking water and water-treatment sector, private equity, and most recently, the international cross-border financial services/advice industry.

Read more from Helen Burggraf

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