Spain and Great Britain continue their ongoing tensions about an artificial reef made of 70 concrete blocks that is blocking prime Spanish fishing grounds. The conflict could end up affecting online gambling, which is one of the main revenue sources for the British territory. The Guardia Civil knows that dozens of illegal companies are running their businesses from Gibraltar, some of which are connected to money laundering schemes related to arms and drug trafficking.
But illegal business is only one factor. Many legal businesses use Gibraltar as a tax domicile even though they do the bulk of their business in other countries with higher tax rates. Distinguishing between business types is significant becuase Foreign Affairs Minister José Manuel García Margallo has said recently that he wants to introduce changes to Spain's gambling laws that the government approved in 2011.
First, the changes would require companies to pay taxes in all countries where they do business. This decision makes no sense. Becuase customers access online gambling using internet connections around the world, this change to the law would force companies to pay taxes in dozens of countries. The government has already tried a tax move like this, but failed miserably to execute it when Minister of Culture Ángeles González Sinde wanted to limit internet downloads.
Gibraltar is a tax haven for gambling companies, and the EU has allowed this to happen for years even though the laws are still somewhat murky. Margallo's intention to change the law will likely divert attention away from more serious probles in Gibraltar.
