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Margrethe Vestager, vice president of the European Commission responsible for competition, said Britain had not recovered the amount, despite the fact that the EU considered the tax breaks as “illegal state aid”.
This amount is small compared to many cases of EU state subsidies, but this dispute complements a series of disagreements between the Community and the United Kingdom that have left the bloc during the Brexit process.
“The aid given to Gibraltar’s passive income tax and royalty exemption has given some multinationals an unfair advantage,” Vestager said.
“More than two years after the Commission’s decision, this aid has not yet fully recovered and not enough progress has been made to restore competitiveness,” he added.
“That is why we decided to take the UK to the Court of Justice, because this decision has not been carried out,” said the European Commissioner.
The UK withdrew from the European Union last year, but the dispute dates back to Brexit, and Brussels says the European Court of Justice still has jurisdiction to rule on the matter.
Gibraltar is a British overseas estate that borders southern Spain. EU members have long expressed concern about possible unfair tax regimes in the area.
In December 2018, the European Commission ruled that some of the corporate tax breaks granted to multinational companies in Gibraltar between 2011 and 2013 violated EU rules on state subsidies.
Brussels has ordered the UK to recover unpaid taxes from four companies, but the process has only been completed against two companies and others have challenged the order.
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