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.