Brexit Creates Problems for Gibraltar Based Gambling Operators
The historic process of Britain’s exit from the EU has started, and it seems the process will rekindle the tensions between the United Kingdom and Spain over Gibraltar.
The EU allowed Spain to greatly influence the future relations between Brussels and this tiny Overseas Territory, which could lead to serious problems in their relations.
What Will Spain Do?
London issued a statement supporting Gibraltar, an important financial center known for its gambling industry, which could be the biggest casualty of Brexit.
Those familiar with the history of the territorial dispute between the UK and Spain, were frightened when the EU decided no agreement of the future of Gibraltar could be made without the participation of the Spanish side.
This has given Spain the right to veto any decision regarding Gibraltar, including any sort of deal on online gaming and wagering services, offered by the Gibraltar-based casinos. Although a favourite licensing destination now, due to its relaxed tax policy, Gibraltar could easily lose this status once the ties with the EU are cut.
Apart from that, Spain had already announced a much stricter border policy with Gibraltar upon the finalization of Brexit. Whether this was just an empty threat is unclear at this moment, but the consequences could undermine the very profitability of Gibraltar’s gambling industry.
Not the Only Problem Gibraltar is Facing
In the meantime, the Territory’s industry is waiting for a final ruling of the European Court of Justice (ECJ) over the implementation of the Point of Consumption tax, introduced by the UK government back in 2014.
The 15% tax was obligatory for all UK-based operators and the decision was brought to the High Court of Justice. Gibraltar stated its gambling industry should have been treated differently, mainly because of the local tax regime, but the arguments were rejected.
Gibraltar turned to EJC, where their efforts to avoid tax raise suffered a major blow after a ECJ member said Gibraltar and the UK were a single entity and that the issue needed to be resolved outside of the EU.
Bearing in mind the ECJ practice, the final ruling is likely to be similar with Mr Szpunar’s opinion.