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Booming Gibraltar fights ‘blue-collar tax haven’ tag

With robust growth and nearly no unemployment, the tiny British outpost of Gibraltar on Spain's southern tip is a bubble of prosperity that contrasts with the economic malaise engulfing its neighbour.

Booming Gibraltar fights 'blue-collar tax haven' tag
Gibraltar saw its gross domestic product (GDP) expand by 7.8 percent in 2012 to £1.2 billion pounds (€1.4 billion), Photo: Scott Wylie

"The UK and Spain both face sluggish growth for many years to come and it feels at times that Gibraltar is stuck in an economic time warp," the Gibraltar chamber of commerce said in its annual report.

Gibraltar — whose British sovereignty Spain disputes — saw its gross domestic product (GDP) expand by 7.8 percent last year to 1.2 billion pounds (1.4 billion euros).

By contrast Britain posted sluggish growth of 0.2 percent while Spain's economy shrank by 1.4 percent as it continued to reel from the collapse of a property bubble in 2008.

Check out The Local's list of ten things you didn't know about Gibraltar.

"The international economic crisis seems hardly to have affected Gibraltar," said Gibraltar government spokesman Stuart Green.

The internally self-governing British overseas territory, measuring just 6.8 square kilometres (2.6 square miles) and home to about 30,000 people, has one of the highest GDP per capita ratios in the world.

Its unemployment rate stands at just 2.5 percent while in Spain it is more than ten times higher at 26.3 percent — and in the region of Andalucia adjacent to the British outpost it is 35.8 percent.

Roughly 10,000 Spaniards cross the border into Gibraltar to work everyday and they now find themselves caught up in a diplomatic row over the disputed waters around the territory.

Spain at the end of July tightened its vehicle checks at its border with Gibraltar — causing tailbacks of several hours — after Gibraltar dropped 70 concrete blocks into the waters off its coast with the aim of creating an artificial reef.

The row over the reef follows long-standing tensions over the fiscal policies that have fuelled Gibraltar's economic success, with Madrid accusing the territory of being a tax haven that allows Spanish firms to avoid paying taxes.

'We are clearly not a tax haven'

Gibraltar has no sales tax and in January 2011 it abolished its "exempt status tax regime" under which some companies avoided taxes and replaced it with a single 10 percent levy, far lower than Spain's rate of 30 percent.

The territory's favourable tax policies have helped build up its banking and financial services sector, which along with tourism and its port accounts for 25–30 percent of its GDP. The online gambling sector accounts for about 15 percent of GDP.

"I have studied the Gibraltar economy for the past 35 years and I have seen it grow from an economy that provided support to Britain's Ministry of Defence and was very much a blue collar economy into an economy with a high proportion of well qualified professionals," said John Fletcher, a professor at Britain's Bournemouth University.

Britain has sharply reduced its military presence in Gibraltar and it now accounts for just 6.0 percent of the local economy, down from 60 percent in the early 1980s.

"Gibraltar's taxes on the financial system attract money, so even it is not a tax haven it looks like one," said Pedro Aznar, a professor at Spain's ESADE business school.

There are about 18,000 companies officially registered in Gibraltar, known as "the Rock", which enjoy its low tax rates.

Gibraltar's tax advantages are unfair competition for Spain, said Jesus Lizcano, the head of the Spanish branch of anti-corruption watchdog Transparency International.

"It is not very favourable since it is close to Spain and can channel certain business and investments," he said.

"Britain has many tax havens under its jurisdiction, like the Isle of Jersey, the Isle of Man, the islands of Bermudas and Gibraltar," he added.

Gibraltar roundly rejects the claim that it is a tax haven.

"We are clearly not a tax haven, we conform to all EU rules and regulations," said Green, the Gibraltar government spokesman, adding income and corporate taxes are "slightly lower" in the territory than in many other EU nations.

Gibraltar points out that it has signed 26 information exchange agreements with 26 countries, including France, Germany and the United States and is on the OECD's "white list" of jurisdictions that comply with global tax rules.

"I can tell you people do pay taxes here, they pay income tax, they pay social insurance and companies pay corporation tax so its completely misleading to say we don't pay any tax," said Gibraltar Chamber of Commerce head Edward Macquisten.

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FOOTBALL

‘No exceptions’: Italy and UK warn England fans against travel to Rome for Euro quarter final

The Italian government on Wednesday reminded England fans not to travel to Rome for Saturday's Euro 2020 quarter final match against Ukraine amid ongoing coronavirus travel restrictions.

‘No exceptions’: Italy and UK warn England fans against travel to Rome for Euro quarter final
Photo: Oli Scarff/AFP

Italy is expected to increase checks and strictly enforce its quarantine rules amid concerns that thousands of people could arrive in Rome from the UK for the match despite the country’s travel restrictions.

All arrivals in Italy from the UK have to quarantine for five days and take two coronavirus tests under current health measures – but there are reportedly concerns that some fans will be unaware of the rules.

EXPLAINED: How has Italy changed its rules on travel from the UK? 

“I am clear and unequivocal – the English fans will not be able to come to Italy to watch the match at the Olimpico against Ukraine on July 3rd,” Andrea Costa, a junior Italian health minister, told Radio Kiss Kiss Napoli on Wednesday.

“There are five days of quarantine, the rule must be respected. We cannot take risks. If an English fan leaves today, he won’t see the game. Same for those who left yesterday.”

The Italian Embassy in London also said in posts on its social media channels on Wednesday that “Fans travelling to Euro 2020 matches are not exempted” from Italy’s quarantine rules.

Meanwhile, UK Trade Minister Anne Marie Trevelyan said: “our request is to support the national team from your home, to cheer in front of the TV as loud as you can”.

Italy’s Interior Ministry is reportedly planning to step up police checks at airports and train stations and road checkpoints in case fans attempt to travel, Italian news agency Ansa reports.

Ansa cited government sources who said the quarantine rules “will be enforced to the letter” and “no exceptions will be granted”.

Photo: JUSTIN TALLIS/POOL/AFP
 
England fans living in Italy on Wednesday were scrambling to buy tickets for the match after the FA stated that it aimed to “facilitate as many ticket sales to English residents in Italy as possible” while fans in the UK were unable to travel.

Dozens of readers contacted The Local on Wednesday asking where they could get tickets, after UK media reports stated that the British Embassy would be distributing them.

The FA had stated that it was “working with Uefa and the British embassy in Italy” to facilitate sales.

However, the British Embassy in Rome confirmed to The Local on Wednesday morning that it “is not selling or distributing tickets for the match on Saturday in Rome”.

READ ALSO: Bars, house parties and fan zones: Where and how can you watch Euro 2020 matches in Italy?

The British Embassy said in a statement to The Local: “Under the UK Government’s traffic light system Italy is currently listed as an amber country.

“The UK Government’s travel advice clearly states that fans should not travel to red and amber countries to protect public health in the UK from new Covid variants.

“The Italian authorities are responsible for setting and enforcing the rules for entry into Italy. Its current guidance states that from June 21st, people travelling from the UK or those who have been in the UK in the previous 14 days must self-isolate for 5 days upon arrival in Italy, after which they must take a rapid antigenic or molecular swab test for Covid-19 and test negative for release.

“This means that fans travelling from the UK to Italy after June 28th will not arrive in time to be able to watch the Euro 2020 quarter-final in Rome on July 3rd 2021.”

Britain is experiencing a surge in new coronavirus cases, blamed on the Delta variant that was first detected in India.

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