Spain welcomes the decision by the European Commission to open an investigation of Gibraltar's corporate tax regime as "magnificent news," Spanish Foreign Minister Jose Manuel Garcia-Margallo said Wednesday.
The European Commission announced on Wednesday the launching of a thorough investigation of the British enclave's corporate tax structure, saying that exemptions from certain taxes for various companies could violate community regulations for state aid after a complaint presented by Spain.
"It's magnificent news that is going to reward the efforts that Spanish diplomacy has been making in this area for a long time," Garcia-Margallo told reporters before traveling to Panama for the 23rd Ibero-American Summit.
The minister added that he expects the investigation "to end with violation proceedings, that is for Gibraltar to be warned to do away with a regime that is clearly unfair and clearly prejudicial to Spanish firms."
Spanish companies have to pay the tax "when they receive interest, dividends and fees," while Gibraltarian firms do not pay when they receive those same payments, Garcia-Margallo said.
"This is a comparative advantage that influences companies to choose Gibraltar (instead of) Spain, causing harm to the Treasury and to Spanish workers," the foreign minister said, noting that the tax structure enables firms to shift income to Gibraltar to evade Spanish taxes.
Garcia-Margallo also noted the investigation opened by the European Union into tobacco smuggling and environmental damage in Gibraltar, including the supplying of fuel on floating platforms and the depositing of huge blocks of concrete into Spanish waters by authorities of The Rock to make an artificial reef. EFE