Low tax regime is not state aid – EU Court Advocate General backs Gibraltar's low tax regime

Tax of Gibraltar: Gibraltar’s low tax regime has been support against claims that it constitutes illegal state aid

The top adviser to the European Court of Justice has recommended that the Court support Gibraltar’s low tax regime, against attempts by the European Commission to say that it constitutes illegal state aid.

Conservative MEP for Gibraltar, Giles Chichester MEP, welcomed the decision and said that the Court’s support for low corporate tax regimes was a breath of fresh air against the ongoing efforts to make other countries – particularly Ireland – raise their corporate tax levels.

In 2004, the Commission warned that the new 2002 tax regime on the Rock was regionally selective because it constituted regional aid within the Single Market. However, today the European Court of Justice’s Advocate General – whose advice is upheld by the Court around 80% of the time – has said that Gibraltar should be seen as its own territorial framework for taxation purposes. 

The Advocate General also ruled that the tax measures constituted fiscal policy rather than state aid.

Giles Chichester said: 

”This is good news for Gibraltar.

“For years Socialists have been trying to equate low corporate taxes with state aid and this opinion says they are wrong. There is no such thing as harmful tax competition in the EU, and Gibraltar must fight against any efforts to harmonise corporate tax regimes.

“Gibraltar, with its low corporate tax regime, is showing the rest of the EU the way forward. Tax competition is one of the best forms of competition in the Single Market and we should encourage it, not harmonise it out of existence.”

(image: Rock of Gibraltar Some rights reserved by Grayskullduggery)