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Spain eyes clampdown on Gibraltar tax fraud

Spain's tax authorities are looking to put new pressure on companies which set up 'fictitious' bases in Gibraltar to pay less tax.

Published: 22 April 2013 11:32 CEST

Spain eyes clampdown on Gibraltar tax fraud

In Spain, the tax rate for companies is 30 percent while this figure is just 10 percent in Gibraltar. Photo: Scott Wylie

Spain's tax office has set up a special group look at the look at the tax operations of companies in Gibraltar.

The department believes that Spanish businesses avoid paying hundreds of millions of euros in tax every year by conducting translations via Gibraltar, reported Spain's El País newspaper on Monday.

In Spain, company tax is charged at 30 percent, but in Gibraltar, this figure is just 10 percent.

There are no official figures for tax evasion, but some 30,000 companies are 'based' in the tiny UK territory, said the daily.

The new government working group will investigate the creation of firms in Gibraltar as well as the movement of capital between Spain and the territory.

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This group also plans to scrutinize how Spanish companies go about making 'opaque' their assets so that they don't have to pay tax in Spain.

"Gibraltar is no longer a fiscal paradise," Fabian Picardo, Gibraltar's Chief Minister, told El País recently.

"That is an old-fashioned model and has no place in a modern Europe, or in the modern world," said Picardo.

But Picardo acknowledged that governments needed to be aware of the actions taken by SiCAVs, or investment schemes, being run out of countries such as Spain.

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Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance?

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes.

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner.

How did the government agree to change the employment allowance in its coalition deal?

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment allowance to 12.75 percent up to a maximum rebate of 53,600 kroner.

How might this be further increased, according to Børsen?

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance.

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement.

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.

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