The Advocate General of the European Court of Justice [ECJ], Niils Jääskinen, has advised the court that it should uphold an earlier ruling which found that Gibraltar’s tax regime did not breach EU rules on state aid.
The opinion by the Advocate General is not binding but the court’s final rulings generally reflect the advice.
Europe’s Court of First Instance had already ruled in Gibraltar’s favour on the crucial issues of regional and material selectivity.
One key question was whether Gibraltar could maintain its independence as a jurisdiction with the ability to set its own taxation rates.
The rulings were appealed by the European Commission and the Spanish Government and this is the case that is currently before the ECJ, and on which the Advocate General is advising.
His opinion supports Gibraltar’s position on the issues of both material and regional selectivity.
The latest development means that Gibraltar continues to edge closer to a final resolution that will lift any lingering doubts about the viability of its new taxation regime.
The new tax framework is seen as vital to the economy and a key element of Gibraltar’s current and future success as an international finance centre within the EU.
An adverse judgement could have crippling consequences for the Rock.
“The Government has throughout asserted its confidence in the legality under EU law of everything that it has proposed and done, and this has previously been confirmed by the lower court and now by the Advocate General in the higher appeal court,” the Gibraltar Government told B2B.
“The Government thus remains confident of the final outcome of the appeal in Gibraltar’s favour.”
Gibraltar continues to attract new and significant business, largely on the back of its new tax regime.
Among the newest entrants is Betfair, which describes itself as “the world’s largest betting community”.
In March, the company said it would move part its operations from the UK to Gibraltar in a bid to cut its tax bill.
Its Betting Exchange is now operating under a Gibraltar licence.
The company is following in the footsteps of rivals Ladbrokes and William Hill, both of which have announced millions of pounds in cost savings since their departure from the UK two years ago.
Betfair said its operational costs would rise in the short term due to running both new and existing data centres, but that this would reduce as its systems consolidation programme is finalised at the end of next year.
It would then see significant tax savings of as much as £20m a year and £10m of underlying earnings.
“As a global, technology-led betting operator, our new operational base in Ireland and the change to our licensing structure provides us with increased flexibility,” said Betfair chief executive David Yu.
“It allows us to locate key technical equipment in more efficient locations, to serve our customers better and to compete on the same basis as the majority of operators in the UK online betting market.

A string of power cuts earlier this year laid bare the strain that Gibraltar’s outdated power generation network is under, focusing attention on the need for a long-term solution to the crucial issue of electricity supply.
The cuts drew accusations of bad planning, although the Gibraltar Electrical Authority argued they were down to unforeseeable circumstances.
Temporary generators were brought in to cover demand in the short term and avoid a similar situation, but the question of long term supply remained.
That long-term solution, in the form of a new power station, is finally becoming reality after two years of delay arising from technical and legal issues.
In March, the Gibraltar Government announced that it had awarded a £122.8m contract for the construction of a diesel power station and related distribution infrastructure.
It is the largest single contract ever awarded by the Gibraltar Government.
Once complete, the new power station will replace Gibraltar’s three existing facilities and ensure sustainable power supply for decades to come.
Getting here has been a tortuous process that started in 2007 and involved major technical work to assess the site and properly evaluate the scheme’s environmental impact.
It was further complicated by a legal challenge by nearby residents concerned about noise, a case that was settled out of court and resulted in further design tweaks.
Chief Minister Peter Caruana, in announcing the contract, made no bones about the difficulties encountered.
“It has been a hugely complex process to get to this stage, but the new power station will ensure a modern and resilient electricity supply to Gibraltar well into the future in the most environmental friendly way that is practical and realistic,” he told B2B.
“It represents a very large investment for our future prosperity as a community both in social and economic terms.”
The contract was awarded to a joint venture between ETDE SA – major power station contractor company subsidiary of French multi- national company Bouygues – and Dutch Civil Engineering Company Volker Stevin Construction Europe B.V.
The new Power Station will initially contain eight Caterpillar Diesel Generating sets each of approximately 7.8 Mega Watts, providing a total installed capacity in 2013 of 62.4 Mega Watts. The scheme will provide room to add further engines in the future should Gibraltar’s power needs expand further.
Central to the project are environmental considerations. The new power station will comply with EU regulations and use best available technology to minimise emissions and pollution.
This includes selection of engines with high efficiency and thus minimised consumption of fossil fuel and thus production of carbon dioxide, use of low sulphur and low ash fuel to minimise levels of particulate emissions and Sulphur Dioxide, use of selective catalytic reduction equipment and engines with fuel injection and valve timing optimised to minimise Nitrogen dioxide emissions.
“The use of leading equipment and best available technology makes an important statement about our commitment as a community to the environment,” Mr Caruana said.
“The closure of Gibraltar’s three existing and ageing power stations will, by itself represent a major environmental gain.”
The Environmental Safety Group, which has long campaigned for cleaner air in Gibraltar and has been highly critical of emissions from existing plants, welcomed the announcement, if with some reservations.
Replacing Gibraltar’s three “ageing and heavily polluting” power stations – Waterport, OESCO and the Ministry of Defence facility – is, for the group, a positive step.
But the fact that the new plant will rely on diesel engines is a source of concern for the ESG.
“The new power station is a critical and important step for immediate environmental and health benefits for the community,” the group said following announcement of the contract.
“Clearly fossil fuel reliance for Gibraltar’s’ energy needs on a long-term basis is not a position supported by the ESG.”
“Once in place, the focus should move towards the sourcing of biofuel such as biodiesel – waste vegetable oil, or natural gas from anaerobic breakdown of sewage and domestic waste – as fuel for the new power station, with which it could operate with little or no changes to its engines depending on the biofuel used.” Other environmental campaigners were less accommodating.
The Gibraltar Ornithological and Natural History Society was among those who objected to the project on a number of fronts.
It was concerned, for example, that construction of the plant would have a huge adverse impact on wildlife and ecology in the south of Gibraltar, one of the last relatively-untouched areas on the Rock.
According to GONHS, the Gibraltar Government’s energy strategy “requires more vision” and focus on renewable sources of power.
Construction of a new fossil fuel power station will leave a damning future legacy for Gibraltar, the group said.
“It has to be assumed that once the power station is built it will be here for decades, with the environmental deterioration of the South District continuing for generations,” GONHS said in a statement last year.
“And generations will regret the decision.”
“Gibraltar is sealing its options and will be anchored firmly in the past at a time when fuel costs will spiral and stocks run out.”
But was there really an alternative?
At a symposium late last year organized by the Gibraltar Group of Professional Engineers, international energy experts suggested that renewable sources of energy were not adequate for Gibraltar’s needs, at least at this stage.
The Rock’s size meant there was insufficient space to use established sources such as wind and solar energy, while others including tidal energy were still in the early stages of development and could not be relied on to meet local demand.
Dr Nigel Burton, president of the Institution of Engineering and Technology in the UK and a veteran of the energy sector, offered a sobering assessment on the scope for green energy in Gibraltar.
For Dr Burton, the future lay in diesel generators powered by renewable sources of bio-diesel, a view in line with that offered by the ESG.
“To my mind, you already have the way forward,” he said.
“If some of the other renewable things help you around the edges, then so much the better.”
“If the target is to introduce renewables in Gibraltar, then it’s going to be a little bit of this, a little bit of that and a little bit of the other,” Dr Burton added.
“It’s not going to be a big bang solution, with the sole exception of perhaps bio fuels.”
There is, of course, another option, but one that few dare mutter openly, let alone support as a viable alternative: buying electricity from Spain.
When the Chamber of Commerce explored this idea in an editorial in this magazine last year, the reaction from many sectors of Gibraltar was sharp.
The widespread view was that, against the background of decades of hostility by Spain, Gibraltar needed to remain energy independent.
But the high cost of the new power station, coupled to concerns about environmental sustainability, prompted the Chamber to ask the difficult question.
“In these days of pan European markets in energy supplies, could we not plug in to the European ‘grid’ and contract with some European Electricity Authority or Energy Company for the supply of power?” the Chamber asked in the editorial.
“Is the price of ‘independence’ on energy terms worth paying, now and for many years to come, particularly in an era when cross border energy supply is a common occurrence?”
As for reducing demand, there is little realistic prospect of progress here either, particularly given Gibraltar’s sustained economic growth. New business, property and infrastructure developments will translate into increased appetite for electricity.
While energy efficiency measures – low consumption light bulbs and the like – will help, Dr Burton made clear at the energy symposium that genuine gains would be hard-earned in this context.
Ultimately, it was down to price.
“It’s only when people have to pay for things that they change their behaviour.” he told B2B.

Shipowners continue to face difficult times and weak freight markets in many trades, prompting concern in the maritime industry about a surge in the number of banks foreclosing on overdue mortgage deals. For Gibraltar though, this means good business.
The Rock is widely regarded as a leading jurisdiction for admiralty arrests, mainly because its UK-based legal system can handle cases swiftly and efficiently.
Resolving ship arrests quickly helps to protect the asset – in this case a ship – and get it back to work.
While a reputation as an arrest port is not something many would wish to flaunt, there is also a general recognition that arrests are a fact of life in the maritime industry.
Lawyers say that resolving the legalities swiftly and with minimum fuss protects the equity in a vessel and enable a speedy return to business or, in the case of older ships, to the scrap beaches of Turkey and Asia.
When the global economic downturn kicked in during 2009, the number of arrests here rose sharply, only to ease off again last year.
Banks in Europe were generally showing patience with loss-making shipowner clients during periods of low rates, agreeing to interest-only payments and other moratoriums to help them through the trough in the shipping cycle.
Increasingly however, banks are getting tough with some owners, encouraged in part because they can obtain healthy prices in the second hand market when seized ships are auctioned.
ICAP Shipping sale and purchase broker Nigel Hollyer, who is the broker for the Admiralty Marshall here, estimated that 14 ships had been arrested or repossessed in 2011, compared to around 14-15 for all of 2009 and 2010.
“I can’t recall seeing so many ships being reported as arrested for quite a long time,” Mr Hollyer told B2B.
“Really the last batch that was of mass arrests was back in the 1998-2002 period.”
“Arrests are on the increase but I’ve not really seen anything terribly sexy, such as the high capital ships. It’s mostly smaller, older ships.”
Bunkering and designation
Recent changes to the EU nature designation of a large swathe of Gibraltar waters are unlikely to impact on plans to open up the east side anchorage to bunkering activity.
Allowing refuelling in this area is seen by the industry as a crucial step to bolster Gibraltar’s position at a time of increased competition from nearby rival ports.
Gibraltar remains the busiest port for this business in the western Mediterranean but is constrained by the limited number of anchorage slots in the Bay of Gibraltar.
The biggest cap on suppliers here is physical space. By allowing refuelling on the east side, the port will radically increase the number of ships that suppliers can handle.
The new nature designation strengthens environmental protection and requires government agencies to coordinate their activities in order to guarantee a holistic approach to the site’s management.
The protected zone stretches from the Bay of Gibraltar, around Europa Point to the East Side and includes an area currently used as an anchorage for merchant ships.
The plan to open up the east side is still undergoing an environmental impact assessment, which will take into account new designations that, in practice, raise the level of environmental protection in these waters.
Port Minister Joe Holliday told reporters recently that the new designations did not preclude commercial activity.
“It just sets a higher standard and whatever we do will have to be within the context of this new scenario,” he said.
In any event, only a small area of the zone where bunkering could take place is within the protected site.
Environmental campaigners are concerned, however.
The Gibraltar Ornithological and Natural History Society, which was closely involved in the process of preparing the scientific studies needed to raise the EU designation of the waters, made public its concern last month in the clearest of terms.
The group questioned whether the refuelling of ships was compatible with the new designation and urged the Gibraltar Government to rethink its plans.
It said a detailed impact assessment was needed in order to evaluate the risk to the site’s ecology.
“Only after these requirements have been met can a decision be taken as to whether or not an activity – commercial or otherwise – can be allowed to occur within the protected area,” GONHS said.

Imagine you’re at 3000 feet, sitting in the front seat of one of the best high performance piston aircraft in the world, you give a thumbs up, and suddenly the G Force indents your cheeks as you fly into a gravity defying, 360 degree ‘loop the loop’ over Gibraltar. Well imagine no more!
The Aerobatic Airline Display Team, THE BLADES, have confirmed that they will be bringing their unique experience to Gibraltar this May, in a weekend set to deliver excitement and unique thrills to the Rock, and for a select few the ultimate in Corporate experiences.
With two spectacular public air displays, the events sponsored by Barclays Wealth, Party Gaming and Ocean Village, will be held over the weekend of 21st May 2011, and will bring some of the world’s best aerobatic pilots to the Rock.
Speaking after approval for the visit was given by the Government of Gibraltar, ‘Blade 1’ Myles Garland said “As a team sponsored by RAFA, the charity dedicated to supporting serving and former RAF personnel and their families, we are really excited about coming to Gibraltar due to its special relationship with the armed forces and strong links to the UK. This event is going to kick off our sixth display season, and we’re looking forward to bringing our little bit of excitement to the people of Gibraltar.” he told B2B.

As a result of an increase in the Luton and Manchester flights by Monarch, along with easyJets’ new route from Liverpool and BA’s use of the larger Airbus 320 instead of a 319, Gibraltar will benefit from extra 50,000 available seats this summer.
Monarch Airlines has announced an increase in the number of flights it is to operate to Gibraltar this summer. From the end of May the airline will be operating a total of 16 weekly flights to the UK (11 to London Luton and five to Manchester). According to press reports the airline cited ‘soaring demand’ on the routes along with the ‘significant factor’ of the opening of the new airport terminal.

Close to 300 professional and amateur chess players from every corner of the world lived 10 days of intense and highly competitive chess, in this year’s Gibraltar international chess festival which again attracted a lot of really top class players.
The 2011 Tradewise International Festival certainly proved a worthy precursor to the tenth edition which has already received the blessing of Judit Polgar, the best female chess player in the world, who will play in Gibraltar next year.
2011 winner, the tournament’s top seeded player GM Vassily  Ivanchuk  played at the top of his game. Seventh in the world, he described the Gibraltar Open as a unique chess event with a “different atmosphere and attitude to the game” urging organisers to make the field stronger so the tournament  can attract more  world champions. Ukranian Ivanchuck won nine out of his 10 rounds and in the final round played against Germany’s Daniel Friedman.
“What an amazing tournament we have had,” commented organiser Brian Callaghan at the prize giving ceremony at the end of the 10 days in the presence Gibraltar’s Minister for Sport Edwin Reyes, sponsors and players. The tournament also received visits from Gibraltar’s Governor Sir Adrian Johns, Deputy Chief Minister Joe Holliday and the Mayor Tony Lombard accompanied by Miss Gibraltar Larissa Dali.

On the final day Mr Callaghan spoke of the impressive field of play which had been lead by Ivanchuck, and the other top names: Fabiano Caruana, Michael Adams, Paco Vallejo and Nigel Short who finished a close second.
The women’s top prize went to Nana Dzagnidze, and the second to Melia Salome, both from Georgia. Mr Callaghan made special mention of the 35 women players who had supported the tournament, and re-affirmed organisers and sponsors would continue to give special support to the women’s game.
“I believe they contribute enormously to our tournament, and help to make this the foremost tournament in the world, and very few people would disagree with that,” he told B2B.
Closing the ceremony President of the English Chess Federation, CJ De Mooi, was well impressed with festival:  “It is an incredible tournament, venue and place. I did not understand why people kept coming back year after year, now I do it is simple to explain, it is the warmth, generosity and genuine friendliness, which surrounds the tournament.”
James Humphreys, chairman of the main sponsor of the tournament Tradewise Insurance, said the comments in the press around the world on the tournament continued to “heap great praise on what has been accomplished for chess” over the years in Gibraltar. He assured that for next year the level of prize money would be higher than in any previous tournament.
Now as emphasis shifts to 2012 already work has begun to make it the best international chess festival yet.