MEPs query Gibraltar and Channel Islands post-Brexit plans

Following Brexit, MEPs in the European Parliament could demand restrictions on access to the single market by Gibraltar and the Channel Islands if they fail to reform their tax systems, an MEP has said

The suggestion was raised during, at times, heated exchanges between the European Parliament committee on money laundering, tax avoidance and tax evasion, and officials from Gibraltar, the Channel Islands and Madeira when the representative from Gibraltar told MEPs the territory was preparing for a hard Brexit.

Ernest Urtasun, a Green party alliance MEP from Spain, accused Gibraltar and the Channel Islands of having aggressive tax regimes which threatened to the EU.

During the debate Urtasun said: ‘In light of Brexit, many members will ask for restrictions on [your] free access to the single market.  Are you ready to change?’

Colin Powell, adviser on international affairs to the chief minister, Jersey said the territory was expecting the EU to act in its own best interests and reminded the committee that the Channel Islands attracted capital from all over the world, which then flowed into Europe.

‘We look forward to a relationship with an EU which is fair and makes evidence-based decisions,’ he said.

James Tipping, finance director for Gibraltar said the territory was planning for a ‘worst case’ hard Brexit. ‘We are resigned to the fact. Why? Because we contemplate no concessions,” he said.

Tipping said the Rock did not expect to obtain a ‘special status’ after Brexit but said its financial services model would not have to change.

‘Indeed, it brings opportunity as we will be the only territory in Europe with automatic access to the UK in banking, insurance, investment services and any other similar area where cross-border directives currently apply,’ he said.

Tipping indicated Gibraltar would continue to apply existing commitments on exchange of information, anti-money laundering and financial supervision during Brexit negotiations, but once the UK left, it would choose whether to voluntarily apply any further new EU legislation or to adopt international standards which have the same effect.

There was also intense debate earlier during the hearing, when MEPs, including some within the same political grouping, expressed sharply contrasting views on the status of the Portuguese territory of Madeira which has been accused of being a tax haven for its low tax regime.

However Rui Gonçalves, regional secretary for finance for Madeira said the island’s tax regime was fully transparent and compliant with EU and international standards on taxation. Its special status was justified under EU regulation as it was an underdeveloped region, on the edges of Europe.  ‘If you want to crack down on low tax regions, don’t start with the outermost regions,’ he said.

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