• Spain's news in English

Booming Gibraltar fights 'blue-collar tax haven' tag

AFP · 13 Aug 2013, 08:25

Published: 13 Aug 2013 08:25 GMT+02:00

Facebook Twitter Google+ reddit

"The UK and Spain both face sluggish growth for many years to come and it feels at times that Gibraltar is stuck in an economic time warp," the Gibraltar chamber of commerce said in its annual report.

Gibraltar — whose British sovereignty Spain disputes — saw its gross domestic product (GDP) expand by 7.8 percent last year to 1.2 billion pounds (1.4 billion euros).

By contrast Britain posted sluggish growth of 0.2 percent while Spain's economy shrank by 1.4 percent as it continued to reel from the collapse of a property bubble in 2008.

Check out The Local's list of ten things you didn't know about Gibraltar.

"The international economic crisis seems hardly to have affected Gibraltar," said Gibraltar government spokesman Stuart Green.

The internally self-governing British overseas territory, measuring just 6.8 square kilometres (2.6 square miles) and home to about 30,000 people, has one of the highest GDP per capita ratios in the world.

Its unemployment rate stands at just 2.5 percent while in Spain it is more than ten times higher at 26.3 percent -- and in the region of Andalucia adjacent to the British outpost it is 35.8 percent.

Roughly 10,000 Spaniards cross the border into Gibraltar to work everyday and they now find themselves caught up in a diplomatic row over the disputed waters around the territory.

Spain at the end of July tightened its vehicle checks at its border with Gibraltar — causing tailbacks of several hours — after Gibraltar dropped 70 concrete blocks into the waters off its coast with the aim of creating an artificial reef.

The row over the reef follows long-standing tensions over the fiscal policies that have fuelled Gibraltar's economic success, with Madrid accusing the territory of being a tax haven that allows Spanish firms to avoid paying taxes.

'We are clearly not a tax haven'

Gibraltar has no sales tax and in January 2011 it abolished its "exempt status tax regime" under which some companies avoided taxes and replaced it with a single 10 percent levy, far lower than Spain's rate of 30 percent.

The territory's favourable tax policies have helped build up its banking and financial services sector, which along with tourism and its port accounts for 25–30 percent of its GDP. The online gambling sector accounts for about 15 percent of GDP.

"I have studied the Gibraltar economy for the past 35 years and I have seen it grow from an economy that provided support to Britain's Ministry of Defence and was very much a blue collar economy into an economy with a high proportion of well qualified professionals," said John Fletcher, a professor at Britain's Bournemouth University.

Britain has sharply reduced its military presence in Gibraltar and it now accounts for just 6.0 percent of the local economy, down from 60 percent in the early 1980s.

"Gibraltar's taxes on the financial system attract money, so even it is not a tax haven it looks like one," said Pedro Aznar, a professor at Spain's ESADE business school.

There are about 18,000 companies officially registered in Gibraltar, known as "the Rock", which enjoy its low tax rates.

Gibraltar's tax advantages are unfair competition for Spain, said Jesus Lizcano, the head of the Spanish branch of anti-corruption watchdog Transparency International.

Story continues below…

"It is not very favourable since it is close to Spain and can channel certain business and investments," he said.

"Britain has many tax havens under its jurisdiction, like the Isle of Jersey, the Isle of Man, the islands of Bermudas and Gibraltar," he added.

Gibraltar roundly rejects the claim that it is a tax haven.

"We are clearly not a tax haven, we conform to all EU rules and regulations," said Green, the Gibraltar government spokesman, adding income and corporate taxes are "slightly lower" in the territory than in many other EU nations.

Gibraltar points out that it has signed 26 information exchange agreements with 26 countries, including France, Germany and the United States and is on the OECD's "white list" of jurisdictions that comply with global tax rules.

"I can tell you people do pay taxes here, they pay income tax, they pay social insurance and companies pay corporation tax so its completely misleading to say we don't pay any tax," said Gibraltar Chamber of Commerce head Edward Macquisten.

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
Man attacked by racist thug in UK street for talking Spanish

Tomas Gil, 27, from Valencia in eastern Spain was talking to his girlfriend in their native language after a night out in the British seaside town of Poole when he was set upon by a racist thug.

Malaga: Police probe bizarre 'sex death' of homeless Brit
The man was found near Malaga airport. Photo: Dennis Howlett / Flickr

A British homeless man was found dead tied to a bench near Malaga airport with his trousers down and his genitals in a can of tuna.

Clock ticking as Spain races to avoid third elections
Third elections could now be avoided. Photo: AFP

Spain's Socialists voted on Sunday to allow the conservatives to take power, likely averting a third election for Spaniards tired of going to the polls.

Spain worries about tourism future
Photo: Josep Lago / AFP file picture

After basking in its best tourist summer season in 15 years, Spain now sees dark clouds on the horizon as popular destinations reach saturation point and holidaymakers are more thrifty, industry experts say.

Spain's Socialists lift veto on Rajoy to break deadlock
The Socialists have decided to lift their veto on the minority conservative government or not. Photo: Gerard Julien/ AFP

Spain's embattled Socialists on Sunday voted to lift a long-standing veto that has prevented the conservatives from forming a minority government, in what should finally end a ten-month political impasse.

Spain's 'Napflix' aims to bore viewers to sleep
Photo: Screengrab/ Napflix

A Spanish video platform called Napflix, designed to put people to sleep with dull content, was launched this week and its founders are on the lookout for more "monotony and repetition."

Recipe: How to make fabada - traditional Asturian bean stew
Photo: Flavio Lorenzo Sánchez/Flickr

The hearty Asturian dish is a perfect lunch on a cold day... and don't forget the crusty bread and cider!

Brit 'paedo' held on Costa del Sol after Most Wanted appeal

One of Britain's most wanted fugitives was arrested on the Costa Del Sol following a tip-off from an expat just hours after his face appeared on a public appeal.

Spain's parliament approves deficit reduction measures
Photo: Images Money/Flickr

Spanish lawmakers approved on Thursday measures to reduce the public deficit and keep it under the target agreed with the European Union.

'Cubism and War' show opens at Barcelona Picasso Museum
Pablo Picasso Harlequin and Woman with a Necklace. Photo: MP

Barcelona's Picasso Museum unveiled an exhibition on "Cubism and War" on Thursday depicting how one of the most influential artistic styles of the 20th century survived the First World War.

Hunt launched for ten most wanted Brit fugitives hiding out in Spain
Sponsored Article
Last chance to vote absentee in the US elections
Napflix: Spaniards launch very boring TV channel for siestas
Madrid parish church faces fine over 'too noisy' bells
Celebrate expat life at Madrid’s THRIVE convention
Fury after kids told to bring their own loo roll to school
Disney announces plans for Don Quixote action movie
Activist tells 8-yr-old matador wannabe with cancer 'just die'
King to make last minute push to avoid third vote in Spain
Amazing photos of Catalonia's 'human tower' contest
What's on in Spain: October 2016
'No way, Jose! You'll never get your hands on our Rock'
Recipe: How to make a classic Spanish tortilla de patatas
Chorizo in paella? Go back to cooking school Jamie Oliver
Spain in eye of a perfect storm after 10 months without govt
Thousands share clips of life for 'Spain in a Day' film
Ten incredible Spain locations for Game of Thrones season 7
Analysis & Opinion
Why moving to Spain could be the best decision of your life
Seven reasons why autumn is the very best season in Spain
Spanish study finds four types of personality. Which are you?
New search underway for civil war grave of poet Lorca
Bison found decapitated on Valencia nature reserve
Forgotten Voices: What Brits in Spain think about Brexit
One dead and 14 injured in blast at Spanish resort
jobs available