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EU state aid case withdrawn against Gibraltar – 722/2021

By October 6, 2021 No Comments

The Government is delighted to note that the European Commission has today announced that it has decided to repeal its decision to open infraction proceedings against the UK Government for the failure by the Gibraltar Government to recover illegal aid granted under the Income Tax Act 2010 to two multi-national companies.

This is further to a state aid decision taken by the European Commission on 19 December 2018 finding that Gibraltar’s corporate tax exemption regime for passive interest and royalties, as well as five specific tax rulings, were illegal under EU State aid rules.

The Gibraltar Government had already recovered the aid from all the companies concerned by the decision except two companies.

However, by 14 July 2021, the Income Tax Office completed the recovery from those two outstanding companies. This has led the European Commission to today’s announcement to repeal its decision to refer the United Kingdom to the Court.

The Chief Minister, the Hon Fabian Picardo QC MP, said: “I am delighted with the result announced today. I would like to express my thanks to the Income Tax Office for having vigorously pursued the recovery from the two outstanding companies. The timing of today’s decision, just when we are about to embark on negotiations on our future relationship with the EU, is also most welcome”.