The Constitutional Authority Of Gibraltar As It Is Stated In Their 1969 Constitution With Regard To Taxation, Is Upheld By European Court Ruling

There was great news and a real reason for celebrating for Gibraltar based companies that are involved with gambling, when news was received that the court in Europe had taken away a threat of increased taxation by their upholding of the self-governing territory’s autonomy and its right to control its own taxation as stated under its Constitution of 1969.

The publication, Accountancy Age has reported that companies that deal in online gambling are all defined as dotcom businesses, making it easier for them to set up headquarters in such low tax locales as Gibraltar.  Because of this the companies have attained a significant advantage with regard to other sectors because of their not having to pay UK corporate tax, which is as high as 30 percent.  This has led to the creation of large savings for their shareholders.

The European Union however, has been attempting to change this situation with regard to tax benefits through their working to remove the exempt company status of those companies in Gibraltar with regard to taxes.  In April 2004 it was stated by the European Commission, that it was their opinion that the tax regulations as established in Gibraltar made it possible for companies that set up their homes there to gain an unfair advantage.

According to the EC, this was a case of “regional selectivity”.  They're also against the fact that the taxation structure in Gibraltar, was established with regard to payrolls and the work done by business on the business premise.  The result of this was that businesses there are unlikely to pay any taxes.

Therefore the commission stated that by the year 2010 Gibraltar would have to remove its exempt company tax regime setup and put in its place a replacement tax regime instead.  Because of this the possibility arose that online gaming groups situated in Gibraltar might find themselves having to pay a corporate tax as high as 30 percent.

Fears that arose because of this statement were slightly appeased by a recent European Court ruling.  It was decided that the 1969 Constitution established by Gibraltar made available to that territory fiscal autonomy and that the region should be allowed to go on providing their home domiciled companies with the very attractive tax regime scheme that they had been making available.

Martin Weigold, who is the group financing director of PartyGaming's group, has said that the this online company which is based in the Gibraltar territory felt that the current ruling removed the risks that PartyGaming and other companies that are also based in Gibraltar, felt that they would have, if they had to pay the full UK tax rate of 30 percent.

Weingold said that the removal of the risk associated with a replacement of the tax regime, set to take effect in 2010, was accomplished by this ruling.  He said that their company expected that a low tax regime would be developed that would be non-discriminatory, and that it would replace the current scheme as it was phased out.

Back to Online Gambling News - September 2006
Online Casino Latest News
Online Casino News Archive