Trust Bloomberg Tax for the international news and analysis to navigate the complex tax treaty networks and global business regulations.
By Joe Kirwin
EU member nations and the European Parliament will use the second phase of Brexit negotiations, due to begin in 2018, to ensure the U.K. adheres to tax policies that don’t distort single market competition.
At the same time, member nations and Parliament are expected to exert Brexit pressure to regulate Gibraltar and crack down on U.K. overseas territories and crown dependencies, according to EU officials.
European Parliament member Molly Scott-Cato told Bloomberg Tax that Brexit gives the EU political leverage when it comes to tax issues. She spoke after EU leaders agreed Dec. 15 to move onto the second-phase of Brexit talks that will focus on the transition arrangements and the permanent trading agreement between the two bodies.
“It is a priority for the EU 27 that once the U.K is operating as a third country, that the U.K. does not damage the EU single market,” said Scott-Cato, a U.K. member of the European Green Party, in a Dec. 15 email. She added that if the U.K. stays in the EU single market, the London inner-city finance sector must adhere to EU rules on tax matters.
Scott-Cato said the future free trade agreement—which will be signed after the a yet-to-be-determined Brexit transition period—“will give the European Commission a chance to exert additional pressure on the U.K” when it comes to overseas territories and crown dependencies.
Ensuring that this happens will be a key goal of the European Green Party as well as other political groups in the European Parliament, which has veto powers over any final Brexit agreement. In November, the European Green Party released a report, “ Tax Justice for the Brexit Negotiations,” detailing the steps it wants the EU to take. These include:
However, Scott-Cato and other European parliament members also said demands on the U.K. in the Brexit talks will only be successful if the EU forces member nations to reform harmful tax practices.
“For the EU, it would be important for the U.K. to stop playing to be a space for fiscal dumping ,” said Miguel Urban, a Spanish member of the European Parliament with the European United Left political group. “But the EU must also be an example by asking its own tax havens to take steps to stop competing by playing the same game.”
Concerning Gibraltar, Spanish officials, who earlier in the year declared the British independent territory to be a “tax haven,” made it clear that any agreement in the second and subsequent phases will have to include tax policy restrictions.
“There needs to be a serious tax policy clean-up of Gibraltar,” a Spanish diplomat told journalists at the EU Dec. 14-15 summit. “As we have stated from outset of the Brexit process, we will demand this. Nothing less. That has not changed.”
A spokesperson with the U.K., speaking on the condition of anonymity, told Bloomberg Tax the U.K. government was confident tax issues won’t be a problem for concluding a transitional and final EU-U.K. political and trade agreement, whether it be EU crown dependencies, overseas territories or Gibraltar.
To contact the reporter on this story: Joe Kirwin in Brussels at firstname.lastname@example.org
To contact the editor on this story: Penny Sukhraj in London at email@example.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)