Spain Removes Gibraltar From It’s Tax Haven List After Treaty Enters Force.
Spain has finally removed Gibraltar from it’s tax haven list, the rock is no longer a tax hideaway after the agreement struck between Spain and the United Kingdom came into force in March 2021.
The treaty aims to eliminate tax fraud and the detrimental effects of a tax system that allowed people to pay corporate tax only on the profits they made in Gibraltar.
The Agreement itself was actually signed back in March 4, 2019, and is the first international treaty signed by Spain and the United Kingdom on Gibraltar since the Utrecht Treaty of 1715, when Gibraltar was ceded to the UK.
“The agreement resolves the fiscal sovereignty of the area and ends an anachronistic and tremendously damaging situation for Spain without weakening its position on the sovereignty of the Rock,” said the Minister of Foreign Affairs, Arancha González Laya, in Congress.
The new treaty establishes clear rules on tax and residence and prevents people who are resident in Spain from taking advantage of Gibraltar’s tax system.
Legal tax residence will be determined by several factors: the location of the majority of a person’s assets, where most of their income is generated and whether the majority of owners or managers are tax residents in Spain, making it an effective tool in the fight against tax evasion.
The new treaty also establishes an increase in Administrative cooperation and reinforces cooperation through a liaison body and a joint coordination committee. Foreign sources have assured that the Agreement does not imply any change with respect to the Spanish or British position regarding sovereignty and jurisdiction in relation to Gibraltar.
The goal of this unprecedented treaty was to ensure that Gibraltar applies EU-equivalent legislation in terms of tax transparency and the fight against money laundering following Britain’s exit from the EU.
Source: El Pais