MADRID: Spain will target what it considers to be Gibraltar’s “unjustifiable privileges” on tax in Brexit negotiations, a leaked government report has revealed.
According to Spanish daily El Pais, Madrid will use its veto over the future of Gibraltar in post-Brexit Europe to target “unfair competition” in the British overseas territory, citing an internal government document.
Gibraltar denies being a tax haven, describing itself as a low-tax regime. Corporate tax on the Rock is 10% compared to Spain where companies pay 25%.
The report, written by Spain’s secretary of state for the European Union and entitled “Negotiations over the withdrawal of the United Kingdom from the EU”, points out that Spain “had to accept Gibraltar’s special regime” when the country joined what was then the EEC in 1986.
However, it adds that Gibraltar has “developed its own permissive regime of taxation, customs and company registration, which in practice have made it into a tax haven”, bemoaning that the “situation has become one of unjustifiable privilege”.
Spain will no longer accept a “relationship incompatible with the Spanish position on its territorial claim”, the document added.
Gibraltar has become a bone of contention between the UK and Spain in Brexit negotiations.
Last month, former Conservative leader Michael Howard who told British media that the UK would go to war with Spain to defend Gibraltar after the EU approved Brexit guidelines suggesting that Spain could be given the final say over the future of the Rock.
