EU takes legal action against UK over Gibraltar tax

WION Web Team
New DelhiUpdated: Mar 19, 2021, 05:44 PM IST
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Most voters not satisfied with how Brexit turned out; only 14% say it was better than expected Photograph:(Reuters)

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This can potentially be a start of big legal fight

In what can potentially be a major start of a post-Brexit legal battle between the European Union and UK, the EU has announced that it will take legal action against UK over Gibraltar tax. The legal action has been launched to force Britain to recover 100 million euros ($120 million) in tax exemptions for multinational firms operating in Gibraltar.

European Commission vice-president Margrethe Vestager said the UK had failed to claw back the sum despite the EU deeming the tax breaks "illegal state aid".

The sum, equivalent to $119 million, is small relative to many EU state subsidy cases, but the case is the latest in a string of spats between the EU and post-Brexit Britain.

"The aid granted by Gibraltar in the form of corporate tax exemption for passive interest and royalties gave an unfair advantage to some multinational companies," Vestager said.

"More than two years after the Commission adopted this decision, the aid has still not been recovered in full and sufficient progress has not been made in restoring competition," she said. 

"That is why we have decided to refer the United Kingdom to the Court of Justice for failing to implement this decision."

The United Kingdom left the European Union last year, but the case dates back to a period before Brexit over which Brussels says the European Court of Justice still has jurisdiction.

(With AFP inputs)