The territory of Gibraltar has won its long-running action in the European Court of Justice against an earlier ruling from the European Commission and will be able to carry on charging much lower rates of corporate tax than the UK.
The decision announced late last week reverses a European Commision ruling from 2004 that stated the enclave’s corporate tax scheme constituted unlawful state aid.
Online gambling operators including such giants as PartyGaming, 888 Holdings and Mansion Group employ almost twelve percent of the enclave’s population of 28,800 citizens. Peter Caruana, Chief Minister of Gibraltar, stated that if the case had been lost, it would have resulted ‘in the bulk, if not all, of the finance centre and gambling companies leaving Gibraltar’ with ‘the loss of thousands of jobs throughout our economy’.
The Commission had claimed that tax reform for Gibraltar was ‘regionally selective since it provided for a system under which companies in Gibraltar would be taxed, in general, at a lower rate than those in the United Kingdom’.
In its ruling, the Court found that ‘the competent Gibraltar authorities, which have devised the tax reform have, from a Constitutional point of view, a political and administrative status separate from that of the central government of the United Kingdom’.
The Gibraltar Government stated that the Commission’s case was ‘based on the false proposition that, for European Union State Aid purposes, Gibraltar is merely a region of the UK and thus is not entitled to have its own tax system different to that of the UK’.
”Regional selectivity was the overriding and crucial issue for Gibraltar because without our ability to devise and implement our own tax regime, Gibraltar’s economy, and thus our social and political model, could not have survived,” said Caruana.
“This is a huge and vital victory for Gibraltar. A threat to our economic, social, and thus political well being, has, once again, been successfully seen off.'