The European Commission decided on Friday 19 March to refer the United Kingdom to the Court of Justice of the European Union for failing to fully recover illegal State aid of up to around €100 million, granted as a tax exemption for passive interest and royalties in Gibraltar (see EUROPE 12163/3).
This case relates to events prior to the UK’s withdrawal from the EU.
At the end of 2018, the Commission adopted a Decision regarding Gibraltar’s corporate tax exemption regime for passive interest and royalties applicable between 1 January 2011 and 30 June 2013 and between 1 January 2011 and 31 December 2013 respectively, as well as five tax rulings granted between 2011 and 2013.
These measures were declared to be unlawful and incompatible with State aid rules. Therefore, the aid must be recovered from the beneficiaries.
Margrethe Vestager, the Commission’s executive vice-president in charge of competition policy, said that “more than 2 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”.
The deadline for the Gibraltar authorities to implement the Commission’s decision and recover all illegal aid was 23 April 2019.
“While the unlawful aid has not been fully recovered, the beneficiaries continue to enjoy an illegal competitive advantage, and recovery should therefore take place as soon as possible”, says a statement from the institution.
Nearly 100 cases still open against the UK
With Brexit effective as of the end of January 2020, 94 cases are still open against the UK. 74 cases are at the stage of a letter of formal notice, 13 at the stage of a reasoned opinion and 7 at the stage of referral to the Court. (Original version in French by Lionel Changeur with Mathieu Bion)