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Gibraltar and Spain

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5 Jun. 2013

Governments are increasing efforts to fight tax evasion and money laundering and Spanish Government has its own and particular war on tax havens with Gibraltar.

Last year, Spain offered the possibility to disclose unreported incomes and assets, at a reduced cost of 10% on unreported incomes within the 4 years statute of limitation period.

This year, tax residents (national or foreigners) are obliged to report on assets and rights held abroad in 2012, with substantial penalties and dramatic consequences in case of failure or avoidance.

This week, Spain has gone further and the circle may be completed.

Europe allows Spain to get banking information from Gibraltar.

EU law does not preclude Spanish legislation which requires credit institutions, operating in Spain without being established there, to forward directly to the Spanish authorities information necessary for combating money laundering and terrorist financing.

Where there is no effective mechanism ensuring full and complete cooperation between the Member States which would allow those crimes to be combated effectively, Spanish legislation is proportionate and complies with the freedom to provide services.

Spain requested a Gibraltar Bank to provide certain information to identify the owner of property acquired in Spain using a Gibraltar corporate structure and the origin of the monies used. The Bank refused relying on banking secrecy rules applicable in Gibraltar and Spanish Council of Ministers imposed on it two public reprimands and two substantial penalties.

The Bank brought an action before the Supreme Court in Spain, which decided to refer a question to the Court of Justice of the EU. In judgment dated yesterday – Thursday 25 -, the Court declared that the directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing does not expressly preclude the possibility of requiring credit institutions carrying out activities in Spain under the freedom to provide services, to forward the required information.

Spanish Tax Office set up a group to focus on Gibraltar.

Gibraltar has signed exchange of information agreements with several countries and has introduced changes in its fiscal system to get out of the black list, but not with Spain that still considers Gibraltar as a Tax Haven.

Spanish Tax Authorities have created a specific group to check the taxation on transactions made thru Gibraltar, incorporation of corporate structures and financial movements related to those transactions.

The group will work on the incorporation of Companies in Gibraltar, bank transfers from Gibraltar entities, firms and Banks participating, incorporation of Spanish Companies with shareholders supposedly resident in Gibraltar.

The main target is to uncover fiduciary structures holding real estate properties in Spain.

 

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