The European Commission has taken the UK to CJEU regarding tax exemptions in Gibraltar

Under standard procedures, the deadline for Gibraltar authorities to comply with the decision was April 23, 2019

The European Commission referred the United Kingdom to the European Union’s Court of Justice due to its inability to recover all illegal aid in the form of a tax break of around 100 million euros in Gibraltar.

On 19 December 2018, the European Commission decided on the corporate tax exemption system in Gibraltar, applicable from January 1, 2011 to June 30, 2013 and from January 1, 2011 to December 31, 2013, in addition to five individual interpretations issued in 2011-2013.

The decision considers that these actions are illegal and illegal under the government aid rules, and therefore the aid must be recovered from the beneficiaries. In essence, EU state aid rules require the recovery of illegal state aid to remove the distortion of competition caused by aid.

An unfair advantage for multinational companies

Aid granted by Gibraltar in the form of a corporate tax exemption in exchange for interest and royalties gave an unfair advantage to some multinationals and had to be recovered by the UK and Gibraltar authorities. However, more than two years after this decision was adopted by the Commission, aid has not yet been fully repaid and there has been insufficient progress in restoring competition. That is why we decided to refer the case against Great Britain to the Court of Justice for not implementing this decision – said Vice President of the European Commission Margaret Westager, responsible for competition policy.

See: Gibraltar will be in the Schengen area but remain British territory

Under standard procedures, the deadline for the Gibraltar authorities to implement the European Commission decision and recover any unlawful assistance was April 23, 2019. As long as the illegal aid is not fully recovered, the beneficiaries continue to benefit from an illegal competitive advantage, so the assistance must be reinstated as soon as Possible time, says the European Commission.

According to art. 95 seconds. 1 and art. 87 seconds. 2 of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, and the European Commission is empowered to sue the United Kingdom before the European Union Court of Justice for failure to comply with the European Commission decision taken before the end of the transitional period, that is, before December 31, 2020.