Gibraltar says talks with Spain over tax deal ‘advanced’

Talks between Gibraltar and Spain over a tax information exchange agreement to make it easier to track down tax evaders are “very advanced”, Gibraltar Chief Minister Peter Caruana said Tuesday.

Gibraltar has signed over 20 such agreements, starting with one reached with Washington in May 2009, as the outbreak of the global financial crisis and several evasion scandals boosted the international drive against tax havens.

But completing an agreement with Madrid is complicated because of Spain’s conflicting claim to sovereignty over the tiny British territory located on the southern tip of Spain at the strategic entrance to the Mediterranean Sea.

“It is one of the packages which we are negotiating and the talks are going very well. The texts are very advanced,” Caruana said during an interview with TV3, the public television station in Spain’s northeastern region of Catalonia.

Caruana, 54, said Gibraltar had “repositioned” itself from tax haven to mainstream European financial services centre with the changes it has made to its tax legalislation over the past 15 years.

“Gibraltar’s financial centre has nothing to do with a tax haven. It is a financial centre that does not depend at all on opacity and a lack of information sharing,” he said, speaking in Spanish.

“Nobody who knows the reality of the situation comes anymore to Gibraltar to hide things,” he added.

Gibraltar ended its tax-free offshore status for companies based in the territory under a new tax code that came into effect in January 2011. All companies now must pay the same 10 percent tax rate.

As recently as early 2009 Gibraltar was reluctant to sign tax information exchange agreements on the grounds that other financial centres like Switzerland and Luxembourg had declined to make the same concessions.

But Caruana said the territory would negotiate an agreement with any country that wants one.

Britain seized Gibraltar in 1704 and it was formally ceded to Britain in the Treaty of Utrecht nine years later.

Spain has retained a constitutional claim should Britain renounce sovereignty — a move that London says will not happen without the consent of the people of Gibraltar.

Relations between Madrid and London over the disputed territory have appeared to thaw since the governments of Spain, Britain and Gibraltar set up a so-called tripartite forum in 2006 which seeks to work together on issues of concern to roughly 30,000 residents of “The Rock”.