Spanish individuals and companies may not transfer their fiscal residency to the British Overseas Territory. Gibraltar will provide information on workers and assets to Spain and so is removed from tax haven list.
Following an agreement with the UK on tax cooperation, Spain will no longer consider Gibraltar a tax haven. The British Overseas Territory was no longer on the EU or the Organisation for Economic Cooperation and Development (OECD)’s lists of non-cooperative jurisdictions, however it did feature on Spain’s own blacklist.
Published in Spain’s Official Gazette on Saturday, the treaty will ensure Gibraltar applies EU-equivalent legislation in terms of tax transparency and the fight against money laundering. Following BREXIT, Spain wants to reinforce cooperation and information exchange. It fears Gibraltar would otherwise become an attractive proposition for Spanish tax evaders.
Two years after Spain and Britain signed the agreement, it came into force on March 4th. Within the agreement are clear rules on when a person should be considered a tax resident in Spain.
Spanish tax residency
There are a number of instances for when natural persons will be considered tax resident only in Spain. These include: when they spend over 183 overnight stays of the calendar year in Spain; and when their spouse (from whom they are not legally separated) or the natural person with whom a similar relationship has been established, as well as any dependent ascendants or descendants, reside habitually in Spain.
The full treaty can be read in English, here.
Gibraltar will give Spanish tax authorities “annual information on workers registered in Gibraltar as residents in Spain, fully identifying every aspect of the underlying employment relationship or any trade, business, profession or vocation carried on or exercised by these workers, including details of duration, economic terms and employer.”
Gibraltar will also give Spanish tax authorities information on vessels, aircraft and motor vehicles registered in Gibraltar relating to Spanish tax residents. The governments will exchange information every six months. However, the first exchange will take place within the next four months covering the period from January 2014.
On December 31st, Gibraltar joined the Schengen space – though details are still being hammered out. Spanish sources believe the new agreement complements this. The goal is to align Gibraltar’s tax legislation with that of Spain’s, El Pais reported.
Does not affect Gibraltar’s sovereignty
The preamble to the treaty states the treaty “does not imply any modification of the respective legal positions of the Kingdom of Spain or of the United Kingdom with regard to sovereignty and jurisdiction in relation to Gibraltar.”
Gibraltar was ceded to Britain in 1713, though its sovereignty remains an issue to this day.