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Last summer Gibraltar House in Brussels became the jurisdiction’s second full overseas representative office reflecting EU impact on the economy
“So Brexit need not be immediately a catastrophe, but certainly it will stifle the finance centre’s future,” he concluded.
Concern has been expressed too that property prices and property development may be vulnerable as a result, with anecdotal reports of a slow down in new transactions.
The long-awaited Gibraltar World Trade Center (GWTC) 7-storey office development
next to Ocean Village is planned to open in late September and the project’s marketing and business manager, Pete Burgess, was emphatic: “Only a couple of companies have asked whether there can be a break clause in the event of Brexit.
Little impact seen
“The issue has had very little impact on our development, in part because we tied up contracts earlier.” Some 80% of the 15,000 m2 space at GWTC is under contract or with reservation agreements, including 2,000 m2 for four or five companies new to Gibraltar. Burgess declared: “The biggest issue we face just now is how to accommodate all the other people who have expressed an interest in taking space if they then decide to go ahead.”
Squarestone, a London-based developer, had been expected to start work more than a year ago on a proposed 225-bedroom Marriott Hotel and an adjacent 7,600m2 office block near to Gibraltar’s town centre. The project is “not dead, just a victim of Brexit”, explained spokesman, Jeremy Nicholls. “Investors are waiting on the outcome, as many others are”!
The Gibraltar government has briefed the UK House of Commons Foreign Affairs Committee on the consequences of the referendum and sought help to gain “clarity” as to how the UK will ensure that Gibraltar’s rights are protected in the event of Brexit. Chief Minister Picardo has also lobbied Europe Minister David Lidington, to get a Whitehall ban on ministers and officials discussing anything other than winning the referendum.
Gibraltar’s Deputy Chief Minister, Dr Joseph Garcia who is also Minister for European Affairs, hosted a two-day visit by several assistants to Members of the European Parliament (MEPs) to explain Gibraltar’s issues concerning the frontier, taxation, financial services and aviation that could be made worse in the event of Brexit.
The Spanish government has repeatedly described The Rock as a tax haven even though “Gibraltar has embraced the challenge of compliance with EU regulations and directives”, including those concerning tax information exchange and anti-money laundering, and Spain has also sought to exclude the territory from EU aviation policy.
DTA network needed
Castiel pointed out: “Gibraltar has enjoyed passporting in financial services throughout the EU, including to the UK, but if there is Brexit we will need a network of Double Taxation Agreements (DTAs) and bilateral agreements, because if a country is not a member of the EU as such, we will need those treaties to mitigate the effect and gain entry to markets.” Gibraltar has no DTAs, although the government has for more than a year said the first is imminent.
Franco Ostuni, general manager of the 127-bedroom Caleta Hotel on The Rock’s East side, pointed out: “The insecurity Gibraltar is currently experiencing due to the uncertainty of EU membership should stress the fact that other sectors of Gibraltar’s economy - currently so meaningful to our prosperity - can be volatile and depend on factors often outside of our control. Tourism is one of the few industries in Gibraltar’s economy that offers the opposite scenario and could provide sufficient wealth to Gibraltar should other sectors diminish.” [See ‘a true destination’, p 18]
Around 60% of UK motor policies are provided by Gibraltar-based companies and are unlikely to be affected by Brexit, because a UK bilateral agreement with Gibraltar “that for the purposes of EU rights in insurance,
banking and financial services, Gibraltar would be treated as if it was a separate member state to the UK”, Hassans partner, Nigel Feetham explains in a Brexit briefing note.
“The prevailing view is that the UK would continue with the existing bilateral trading relationship with Gibraltar” by extending the current rights of Gibraltar insurers to continue to write UK business, but outside of the existing EU framework”, he declares.
However, those Gibraltar and UK insurance companies or captive that do EU (non-UK) business - say, writing German and French risks – would no longer have a right to passport services into the EU, says Feetham, who was involved in advising on the practical implementation of the EU passport in Gibraltar around 1997 (when the current arrangements were put in place).
No application slowdown for licences There has been no slowdown in the number of applications for licences from the Gibraltar Financial Service Commission; since April last year ten have been for insurance entities - four new to the jurisdiction and the others for extensions to their activities. Moneycorp applied for a banking licence to provide consumers and corporate customers with multi currency deposit accounts and foreign exchange currency business by telephone and on-line, which launched in April.
Some members of the All-party parliamentary group for Gibraltar in London are understood to back the ‘No’ campaign, including the present chairman, Conservative MP Jack Lopresti. The Grassroots Out (GO) campaign made a two-day visit to the Rock in April, and held a public rally in Casemates Square.
The government says it has “the deepest respect for the democratic rights of all people in Britain and Gibraltar to vote as they see fit”, but nevertheless feels there still needs to be “clarity as to the rights the British Government will protect and defend for Gibraltar” during the 2-year post vote period of negotiations with the EU.
Picardo has also emphasised that Gibraltar in any event will still have an international airport and a port with the largest ship bunkering operation in the Mediterranean, with plans to add Liquid Natural Gas (LNG) to its ship refueling arsenal.
Ray Spencer
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Gibraltar International
www.gibraltarinternational.com