EU ends legal challenge over Gibraltar state aid

The European Commission has ended its legal challenge against the UK over state aid granted by Gibraltar to multinational companies after Britain said the support had been fully recovered.

The EU executive said in a statement on Wednesday that it had repealed its decision to refer the UK to the European Court of Justice (ECJ).

The Commission found in December 2018 that Gibraltar's corporate tax exemption regime for passive interest and royalties, as well as five specific tax rulings, were illegal under EU state aid rules and ordered the recovery of around 100 million euros by April 2019.

By March 2021, Gibraltar had only recovered aid from two out of four beneficiaries, prompting the Commission to refer Britain to the ECJ.

However, the Commission said that Gibraltar had completed the recovery of state aid by July 14.

The decision was welcomed by the Gibraltar Government.

“I am delighted with the result announced today,” said Chief Minister Fabian Picardo.

“I would like to express my thanks to the Income Tax Office for having vigorously pursued the recovery from the two outstanding companies.”

“The timing of today’s decision, just when we are about to embark on negotiations on our future relationship with the EU, is also most welcome.”