Gibraltar Obliged To Share Financial Information With Spain
The
European Court of Justice has obliged Gibraltar to share financial information
with Spain. This is important news for anyone who is resident in Spain and
holds assets in Gibraltar, especially those who indirectly own property in
Spain via corporate or other fiduciary structures resident in Gibraltar.
The
Spanish tax authorities may now easily obtain information relating to such
structures from Gibraltar banks.
This news came amid, though is not specifically related to, a surge in
information exchange agreements, both bilateral between two countries and
multilateral between groups of countries. All this will lead to governments
having much greater information on your assets and wealth, making financial
confidentiality a luxury of the past.
Background
The Spanish government is determined that no-one resident in Spain
should be able to hide assets away from the tax authorities.
It offered a year-long tax amnesty in 2012 for unreported foreign
assets, and then created a new obligation for all Spanish residents, of any
nationality, to report all the assets they own abroad worth over €50,000. You
are obliged to report assets where you are the owner, a beneficiary, an authorised
signatory or have the authority to dispose of the asset. This includes assets
held by a company, a trust or fiduciary. The first deadline was 30th April
2013. Failure to report an asset will attract large penalties.
Gibraltar ruling
In the case of Jyske Bank Gibraltar Ltd v Administracion del Estado
C-212/11, the Spanish tax authorities requested information from a bank in
Gibraltar which would allow them to trace monies used to purchase a Spanish
property.
As yet, the tax information exchange agreement between Spain and Gibraltar has not been signed and formalised. The bank refused to pass over the requested information, citing banking secrecy laws. In response the Spanish tax authorities levied substantial penalties upon the bank to the combined value of €1,700,000.
The case was eventually referred to the European Court of Justice, which ruled that there was no law that prevented the bank from sharing information with the Spanish tax authorities.
As yet, the tax information exchange agreement between Spain and Gibraltar has not been signed and formalised. The bank refused to pass over the requested information, citing banking secrecy laws. In response the Spanish tax authorities levied substantial penalties upon the bank to the combined value of €1,700,000.
The case was eventually referred to the European Court of Justice, which ruled that there was no law that prevented the bank from sharing information with the Spanish tax authorities.
The European Court of Justice ruling found that Spanish law allowing law
enforcement agencies to access financial information did not contradict the EU
directive on money laundering and terrorist financing.
Effect of the ruling
The effect of this ruling is that any Spanish residents who are
concealing assets in Gibraltar, especially by use of corporate wrappers, are
now likely to be exposed to the Spanish tax authorities. Banks in Gibraltar are
not legally protected from any requests for information by those authorities.
Spanish clampdown
Spanish tax authorities have created a special task force which is
charged with scrutinising any tax transactions which arise through Gibraltar.
The task force will pay special attention to companies incorporated in
Gibraltar as well as transfers from Gibraltar banks.
The aim of the task force is to target Gibraltar corporate structures
holding Spanish properties which have been devised to conceal the identity of
the owner of the property.
Attempting to hide assets from the tax authorities is very risky,
because at some point the assets will be discovered. Speak to a wealth
management firm like Blevins Franks, which keeps fully up-to-date on both
Spanish and international tax matters, for advice on compliant, effective and
forward looking tax planning opportunities in Spain.
For the South of Mallorca contact Peter Worthington, Senior Partner at Blevins Franks, on 971 719 181 or peter.worthington@blevinsfranks.com.
For the North contact local Partner Tony Cartwright on 971 867 781 or tony.cartwright@blevinsfranks.com.
For the North contact local Partner Tony Cartwright on 971 867 781 or tony.cartwright@blevinsfranks.com.
Any
statements concerning taxation are based upon our understanding of current
taxation laws and practices which are subject to change. Tax information has
been summarised; an individual should take personalised advice.
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