European Commission investigates unfair tax competition in Gibraltar

The extension comes at a time when the EU is stepping up its campaign against what some of its member states consider to be unfair tax competition and the facilitations of corporate tax avoidance by some countries in Europe.

Gibraltar has become a popular base for online gambling companies, many of which have relocated to the British Overseas Territory in order to take advantage of relaxed tax regulations.

The Commission said it has so far assessed 165 tax rulings granted by the Gibraltar tax authorities to different companies in 2011, 2012 and up to August 2013, adding that it has concerns that all these rulings may contain state aid.

In October 2013, the Commission opened an in-depth investigation into another aspect of Gibraltar's corporate tax regime, an exemption for passive income including royalties and interest from corporate tax.

The investigation was opened after neighbouring Spain in 2012 issued a complaint to the Commission about Gibraltar's income tax act, stating that it would grant a selective advantage to offshore companies.

The extension of the investigation also comes shortly after the Gibraltar Betting and Gaming Association launched a legal challenge against the UK government of the new Point of Consumption licensing system.