Archbishop of Canterbury Justin Welby will consecrate the incoming Bishop of Gibraltar in Europe, Canon Dr Robert Innes, at Canterbury Cathedral this Sunday. (Getty)
Show Hide image

Promoted

Weekly round-up: news from Gibraltar

A selection of the best articles about politics, business and life on the Rock from the last seven days.

  1. Spanish ambassador summoned to UK over Gibraltar incursion

BBC reports: “The Foreign Office has summoned the Spanish ambassador over allegations of "provocative" activities by a Spanish naval vessel in waters off Gibraltar. Europe Minister David Lidington said the ship had sought to redirect two other vessels away from the port of Gibraltar - wrongly claiming they were in Spanish territorial waters. He said he was "extremely concerned" by the actions of the Spanish ship.”

  1. New bishop of Gibraltar in Europe will be installed in September on the Rock

Gibraltar Chronicle reports: “Canon Dr Robert Innes, the incoming Bishop of Gibraltar in Europe, is being consecrated this Sunday afternoon at Canterbury Cathedral by the Archbishop of Canterbury Justin Welby. Although Canon Innes will legally become Bishop for Gibraltar in Europe then he will then formally installed in his ‘cathedra’ or bishop’s chair in Gibraltar at the Holy Trinity on Thursday 4 September.”

  1. Isola commission welcomes commission push for gaming standards

Gibraltar Chronicle reports: “The Gibraltar Government has welcomed recommendation of the European Commission on common principles for the protection of consumers using online gambling services and the prevention of underage gambling. The long anticipated measures were announced yesterday in Brussels.”

  1. Gibraltar chief backs Cameron on union

Herald Scotland reports: “The chief minister of Gibraltar has backed ­Downing Street over Scotland's referendum. Fabian Picardo declared his support for David Cameron's stance on Spanish television. Repeatedly asked if he would support Scottish independence on a daytime chat show on the independent Antenna 3 channel, Mr Picardo said: ‘I defend the position of the Prime Minister, David Cameron.’”

  1. Gibraltar port reveals incentives to raise competitiveness

Seatrade Global reports: “Gibraltar Port Authority has revealed a series incentives to enhance the competitiveness of the port, including lower tonnage dues. The port’s new fees include a 75% reduction on tonnage dues for vessels calling at the eastern anchorage whose purpose is conducting provisions, stores, spares and crew changes.”

  1. Gibraltar opens door to insurance “Part VII Transfers” from the UK

Your Gibraltar TV reports: “The Government has today announced that it has received written confirmation from HM Treasury, United Kingdom Government, that Part VII transfers can take place between the United Kingdom and Gibraltar insurers, subject to Court and Regulatory approval. Minister for Financial Services Albert Isola said: “This is superb news for our Insurance Sector who have been seeking to be able to carry out this business for many many years.”

 

 

Photo: Getty
Show Hide image

Promoted

Gibraltar - impact of Brexit

Last week our editor took a general overview of some of the scenarios for Gibraltar if Britain were to leave the Euro. This week, as the atmosphere in the British Conservative Party becomes ever more toxic, Michael Castiel, partner at Hassans lawyers on the Rock, goes into more detail (this piece written before the Iain Duncan Smith resignation and subsequent arguments happened).

However unlikely it may prove, the prospect of Britain's withdrawal from the EU sends shivers through Gibraltar's financial services, gaming and tourism industries, which are at the core of Gibraltar’s economy. For, if Britain leaves the EU, Gibraltar goes too, and, should Brexit occur, it is Gibraltar’s relationship with the UK that as in the past, largely will shape Gibraltar's future.

Gibraltar joined the European Union in 1973 as part of the UK. While rights to freedom of services across borders of EU member states apply between Gibraltar and the rest of the EU, because Gibraltar is not a separate member state (and is in fact part of the UK Member State) those rights do not apply between Gibraltar and the UK. Instead a bilateral agreement, formalised almost two decades ago, gives Gibraltar's financial service companies the equivalent EU passporting rights into the UK. Accordingly and pursuant to such agreement, where EU rights in banking, insurance and other financial services are concerned, the UK treats Gibraltar as if it is a separate member state.

This reliance on the special relationship with the UK is recognised by both the Government and the Opposition in Gibraltar, and when the territory (which in this instance as part of the UK electorate) goes to the polls on 23 June, the vote to remain in the EU is likely to be overwhelming. This may have symbolic significance but realistically seems unlikely to influence the outcome. In actual terms, although some non-EU jurisdictions use Gibraltar and its EU passporting rights as a stepping stone into Europe, almost 80% of Gibraltar’s business dealings are with the UK.

But whether or not Britain maintains the 'special relationship' with Gibraltar, if Brexit becomes a reality, other factors will come into play, with the ever-present Spanish Government’s historic sovereignty claim over Gibraltar topping the list.

Recently Spain's caretaker Foreign Minister Jose Maria Margallo went on record that if the UK voted to leave the EU he would immediately 'raise with the UK the question of Gibraltar.' If this was to come about it could take one or more of several different forms, ranging from a complete closure of the border between Spain and Gibraltar, demanding that Gibraltar passport-holders obtain costly visas to visit or transit Spain, imposing more stringent border controls, or a frontier toll on motorists driving into or out of Gibraltar. The latter idea was in fact floated by the Spanish Government three years ago, but dropped when the EU Commission indicated that any such toll would contravene EU law.

Here, again, imponderables come into play, for much will depend on which political parties will form the next Spanish government. A Spanish government headed by the right wing PP party is likely to take a less accommodating attitude towards Gibraltar (the Foreign Minister having recently indicated that in case of Brexit the Spanish Government may opportunistically push once again for a joint sovereignty deal with the UK over Gibraltar) whereas a left of centre coalition will likely adopt a more pragmatic and cooperative relationship with Gibraltar in the event of EU exit.

The most significant changes to Gibraltar's post-Brexit operation as an international finance centre are likely to be in the sphere of tax, and while Gibraltar has always met its obligations in relation to the relevant EU rules and Directives, it has also been slightly uncomfortable with aspects of the EU's moves towards harmonisation of corporate taxes across member states.

Although it was formed as a free market alliance, since its inception fiscal matters have been at the root of the EU, but Gibraltar's 'special relationship' with Britain has allowed considerable latitude in relation to what taxes it imposes or those it doesn't. However, as is the case with other member states, Gibraltar has increasingly found in recent years its fiscal sovereignty eroded and its latitude on tax matters severely curtailed.

As in Britain, Gibraltar has benefitted from several EU Directives introduced to harmonise and support the freedom of establishment, particularly the Parent-Subsidiary Directive which prohibits withholding taxes on cross-border intra-group interest dividend and royalty payments made within the EU.

As a stepping stone for foreign direct investment, should Brexit come about EU subsidiaries could no longer rely on these Directives to allow tax-free dividend or interest payments to their holding companies based in Gibraltar. In the case of the UK, bilateral double tax treaties will no doubt mitigate the impact of the non-application of any tax related Directives. Gibraltar, however, is not currently a party to any bilateral double tax treaties. Accordingly, Gibraltar would either have to seek from the UK the extension of all or some of the UK’s bilateral tax treaties to Gibraltar (subject of course to the agreement by the relevant counterparties) or it would need to negotiate its own network of bilateral double tax treaties with a whole series of EU and non EU Member States. To say the least, neither of these options would be straightforward to implement at short notice and would need the wholehearted support of the British Government

Whilst Gibraltar’s economy is likely to be adversely affected should Brexit occur, there may be some potential benefits. An EU exit would result in fewer regulations and possibly may provide Gibraltar with greater exposure to emerging economies.

From a tax perspective, an EU exit would probably enable Gibraltar to introduce tax rules and incentives that are contrary to EU tax laws and would provide the Gibraltar Government more freedom to adopt competitive tax regimes that may be considered contrary to EU state aid rules. How possible or effective any such strategy would be is doubtful given the OECD driven anti-tax avoidance climate affecting all reputable jurisdictions whether within or outside the EU.

In this as well as other possible change much will hinge on any post-Brexit relationship with the UK - an issue which the Gibraltar Government addressed recently in a paper sent to Westminster's Foreign Affairs Committee. It stressed not only that 'EU membership has been an important factor in the development of Gibraltar’s economy' but also the importance of 'clarity as to the rights the British Government will protect and defend for Gibraltar in the context of its own negotiations.' 

0800 7318496