Thursday, November 17, 2011

EU court slams UK and Gibraltar

From the European Court of Justice:
A tax system designed in such a way that offshore companies avoid taxation constitutes a State aid scheme that is incompatible with the internal market
The Court has therefore set aside the judgment of the General Court and upheld the Commission’s decision not to authorise the United Kingdom to implement the reform of Gibraltar corporate tax proposed in 2002.
Fantastic that European justice is able to restrain the UK's abusive schemes. Long may these restraints continue. The court release is quite hard to wade through; Agence France-Presse have helpfully provided a guide:
Europe's top court barred Britain on Tuesday from enacting a corporate tax reform in its tiny territory of Gibraltar, ruling the scheme would amount to illegal state aid for offshore companies.

The European Union Court of Justice found that the proposed tax system was "designed in such a way that offshore companies avoid taxation," making it "incompatible with the internal market" rules.
We hope to see much more activism along these lines. The Tax Research headline sums up Gibraltar's (and the UK's) position well:

Gibraltar - just another sordid little tax haven supported by the UK

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