Gibraltar remains a sensitive topic in Spain’s tax diplomacy. The Ministry of Finance recently approved an order that identifies countries and territories considered non-cooperative or harmful tax regimes. Meanwhile, the British enclave has edged into a different position, not appearing on the European Union’s list in the latest round of deliberations. The ongoing negotiations seek a path to remove the physical barrier along the peninsula and clarify Gibraltar’s future within the European Union after Brexit. If Gibraltar adheres to its commitment to exchange tax information with London, the current timeline could expire four weeks before Spain faces a two-year deadline to upgrade its credit standing.
The latest order updates the catalog of so-called tax havens as required by the 2021 law meant to curb tax evasion. The update reflects new EU and OECD criteria, as indicated by the Treasury, but it does not imply that the lists must mirror Brussels’ own compilation. The European Union does not regard Gibraltar as a tax haven at this moment. The Spanish Treasury reiterates that anti-evasion actions are part of the conditions for receiving European aid, notably component 27 of the Recovery Plan.
The new listing arrives just a month after the related agreement was signed, two years after the signing of the tax information exchange agreement and the framework to avoid double taxation between the United Kingdom and Spain. It is in Gibraltar where these developments will influence the region’s standing with respect to being considered financially cooperative.
“The effective implementation of this agreement forms the basis for removing Gibraltar from the list of tax havens,” stated a former European Union figure in correspondence cited in parliamentary records. The report noted that Spain would take necessary steps within the legal framework so Gibraltar would not be treated as a tax haven under Spanish law, within two years of the agreement’s entry into force. The record included a historical date that underscored the ongoing parliamentary discussion about the process.
Reviewing the tax havens list
Today marks the first complete reassessment of the long-standing list created in 1991. The exercise surfaced eighteen regions or countries, including the United Arab Emirates, and mentioned twenty-four more in related material. Although Brussels has removed Gibraltar from its official list, the International Financial Action Task Force continues to label the jurisdiction as being under increased scrutiny to address gaps in anti-money laundering and tax regimes. Since a high-level agreement with the body in 2022, the region has made progress but has yet to implement targeted measures against tax evasion.
The European Union and the United Kingdom have been negotiating for two years to solidify a new normal between London and Madrid, aiming to resolve lingering issues with Gibraltar after it leaves the EU. After multiple rounds, the core obstacles remain: the presence of Spanish authorities in the port and at Gibraltar’s airport for customs and entry checks into the Schengen area; concerns over British military installations and personnel moving in and out; tobacco smuggling and related tax questions. The discussions have shown fragility, with talks nearly derailed late last year before new momentum was attempted recently without a clear outcome.
The reporting indicates that talks were on shaky ground at year-end. Spanish foreign ministry officials had already presented a treaty proposal and contemplated whether the UK would accept it. Negotiations resumed recently, but no definitive result has been announced yet.
Other British territories under scrutiny
The Treasury’s list of uncooperative jurisdictions and harmful tax regimes includes twenty-four regions spread across multiple continents, including several islands and archipelagos. Many of these are territories of Britain or the United States, or island nations in Oceania. Bahrain stands out as one of the few Arab jurisdictions on the list, reflecting the broader geopolitical mix in play.
The 2021 law expanded the criteria for deeming a region a tax haven. Beyond transparency and information exchange, the regime now emphasizes tax fairness and the identification of places that facilitate offshore company activity. The absence of real economic activity or low or zero taxation contributes to the determination, according to the Treasury. This framework aims to curb the profit motive that counts on secrecy rather than genuine economic work. [Cited policy documents and parliamentary transcripts]