Spain and Britain sign Gibraltar tax deal ahead of Brexit

Spain and Britain signed Monday a fiscal treaty on Gibraltar as Brexit nears to fight tax fraud and money laundering via the British overseas territory.

Spain and Britain sign Gibraltar tax deal ahead of Brexit
An agreement has been made over The Rock. Photo: AFP

Hailed as “massively significant” by Gibraltar's leader, it was signed separately by Spanish Foreign Minister Josep Borrell and David Lidington, Prime Minister Theresa May's effective deputy.

It must now be approved by the Spanish cabinet and ratified by the parliaments of both countries.

The treaty was part of a deal sealed in November between London and the European Union (EU) on Brexit, as were four other bilateral deals on the overseas British territory that has long been claimed by Spain.

READ ALSO: Gibraltar after Brexit: why Spain, not Ireland will decide the UK’s fate

For Madrid, it is “essential” that Gibraltar's departure from the EU, planned for March 29 with Britain, takes place “in an orderly way and in keeping with Spanish interests in terms of fighting fraud and tax evasion.”

According to the Spanish foreign ministry, the text stipulates that individuals and other entities in Gibraltar must register their tax residency in Spain if that is where they earn most of their revenue, own most of their assets or if a majority of their owners or managers live there.

Spain welcomed the treaty, saying it set “clear rules to more easily resolve conflicts of tax residence” and allowed for “the reduction and elimination of tax fraud and (other) effects that harm the Spanish Treasury, deriving from the nature of Gibraltar's tax regime.”

Spain has long criticised Gibraltar's low-tax regime, while the tiny territory argues it is a crucial part of its thriving, services-based economy.   

In a statement, Gibraltar's leader Fabian Picardo said the Spanish government had pledged “that the effective implementation of this treaty will lead to Gibraltar being removed from the Spanish blacklist of tax haven 
jurisdictions in the future.”   

He welcomed the treaty as “massively significant” as it also meant “Spain recognises, for the first time in history, the existence of registered Gibraltarians.”

Borrell meanwhile welcomed “the first international agreement signed by Spain and the United Kingdom over Gibraltar since the Treaty of Utrecht,” which dates back to 1713 and saw Spain cede the “Rock” to Britain.

Madrid has a long-standing sovereignty claim on Gibraltar, a small rocky outcrop on Spain's southern tip.

Both are closely interlinked as thousands of residents from neighbouring southern Spain, an area with high unemployment, travel to Gibraltar every day for work.

READ ALSO: Spain guarantees residency for 400,000 Brits even with Hard Brexit

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Brits in Europe won right to vote for life in UK but questions remain

After years of campaigns and promises British citizens living abroad finally won the lifelong right to vote in UK general elections in April 2022. But campaigners say more needs to be done to allow all those Britons abroad to be able cast their votes easily.

Brits in Europe won right to vote for life in UK but questions remain

What’s in the law?

The Elections Act 2022 introduced several changes to the current legislation on electoral participation. Among these, it removed the rule by which British citizens lose their voting rights in the UK if they have lived abroad for more than 15 years

The new rules also abolished the requirement to have been previously registered in the UK electoral roll to become an overseas voter. In addition, the registration in the electoral roll will now last up to three years instead of only one year.

It is estimated that these changes could increase the number of overseas voter registrations by some 3 million. But the way new measures will be applied in practice is still to be defined.

READ ALSO: ‘Mixed feelings’ – British citizens in Europe finally get right to vote for life

Defining the practicalities

Under the new law, Britons living abroad will have to register to vote in the last place they were registered in the UK. This means that people who have never lived in the UK will be ineligible to vote, regardless of how long they have been overseas, while those who left when they were children will be able to use a parent or guardian’s address.

But given that the UK does not require residents to register with local councils, how to prove previous UK residence? “Typical documents accepted as a proof of residence are Council tax or utilities bills, but not everyone will have them or will have kept them in an international move,” says Fiona Godfrey, co-founder of the British in Europe coalition.

Ballot papers are pictured in stacks in a count centre as part of the 2019 UK general election. (Photo by ANDY BUCHANAN / AFP)

Other questions concern how people will effectively cast their ballot. UK citizens overseas will be able to vote by post or by proxy or in person at their polling station if they are in the UK at the time of the election. However, few people are likely to travel to the UK for an election and in the past there have problems and delays with postal voting.

The Electoral Commission has recommended that overseas electors appoint a proxy to vote on their behalf. But who could that be for people who have been away from their constituency for a long time?

New secondary legislation will have to answer these questions, defining how to be included in the electoral roll and how to exercise the voting right in practice.

According to British in Europe, the government should present draft legislation in the first half of the year so that the parliament can adopt it before summer and registrations of overseas voters can start in the autumn.

British in Europe survey

British in Europe are currently running a survey to understand the difficulties UK citizens abroad may face in the registration and voting process, as well as their intention to participate in elections.

The survey asks for instance which documents people can access to prove their previous residence in the UK, what problems they had voting in the past, and if and how they plan to vote in the future.

“We need to get an up-to-date picture of British citizens living around the world and have information to make recommendations to the government, as it prepares secondary legislation,” Godfrey said. “If millions of people will exercise their voting rights, there will be consequences for council registration offices, post office and authorities that will manage the process, among other things” she argued.

The right to vote concerns only UK parliamentary elections and national referendums, not elections in the devolved administrations of Scotland, Wales and Northern Ireland, or at local level.

The survey is open to UK citizens living anywhere in the world and is available at this link.