Spain has published a royal decree providing no-deal Brexit contingency measures for entities that provide services in Spain but are domiciled in Gibraltar and the UK.
Published on 1 March, the decree adopts contingency measures in the event of the UK leaving the EU without a withdrawal agreement on 29 March 2019.
It includes a nine-month transition period, in which contracts for the provision of banking, securities, insurance, and other financial services in which an entity provides services in Spain but domiciled in the Gibraltar and UK will remain in effect.
The decree comes a number of days after European Insurance and Occupational Pensions Authority (EIOPA) called on European regulatorsto take action on contract continuity ahead of Brexit.
Nigel Feetham, partner at Hassans International Law Firm who has been an advocate of Brexit contingency plans involving Spain, the UK, and Gibraltar, commented: “This is a welcome transition period in the event of a ‘no-deal’ Hard Brexit.”
“You may recall that EIOPA Recommendations called on EU member states to take positive action on ‘contract continuity’.”
“The Spanish Royal Decree includes all potential areas affected by Brexit including financial services, rights of residency for British nationals living in Spain, access to healthcare and cross-frontier workers.”
Additionally, Gibraltar Broadcasting Corporation, Gibraltar’s public service broadcaster, reported on 3 March that Gibraltar and Spain have agreed on the text of the tax treaty that will form part of the package of measures once it leaves the EU with the UK in Brexit.
The agreement could increase the validity of particular post-Brexit solutions in Gibraltar for insurers.
Feetham, who has publicly championed a double taxation agreement (DTA) between Spain and Gibraltar for years, said: “Without a DTA any Gibraltar company that undertakes a cross border economic activity in Spain or with Spanish residents could be subject to a penal withholding tax (for example, a withholding tax on premiums paid to a Gibraltar insurer).”
“This also severely restricted inward investment by Gibraltar companies in Spain. This was because there was no DTA between Spain and Gibraltar and as a result, Gibraltar was blacklisted by Spain as a ‘tax haven’ even though Gibraltar was not a tax haven properly so-called.”
