The economic history and advantages of Gibraltar as a Finance Centre

Gibraltar has been a British dependency since 1704, and was ceded by the Kingdom of Spain “in perpetuity” to the British Crown under the terms of the Treaty of Utrecht of 1713.

The 1969 Gibraltar Constitution gives legislative powers to the Governor, who is the Queen’s representative, and the Gibraltar Parliament. Although it is, by definition, a dependent territory, Gibraltar enjoys considerable self-government. The British Foreign Office is directly responsible for Gibraltar’s foreign affairs, defence and security matters, whilst the Government of Gibraltar and Gibraltar’s Members of Parliament, who are answerable to the Gibraltar Parliament, deal with domestic matters. Gibraltar has its own legal system, similar to that of the United Kingdom and based on English Common Law but with its own statutes, termed Ordinances, which are passed by the Gibraltar Parliament. The Gibraltar Parliament consists of the speaker and at least 17 democratically elected members. Usually, elections are held every four years.

Gibraltar joined the European Union in 1973 by virtue of the UK’s accession to the Union under the provisions of Article 227(4) of the Treaty of Rome, which extends the provisions of the Treaty to those “European territories for whose external relations a Member State is responsible.” At the time of Gibraltar’s accession to the Union, the Government of Gibraltar negotiated exemptions from the common external tariff (Customs Union), the common agricultural policy and value added tax (VAT) under Article 28 of the UK’s Act of Accession. Confirmation of Gibraltar’s exclusion from the Customs Union is carried under Article 3 (1) of the Customs Code (as amended).

Gibraltar Company Law is derived from the English Companies Act of 1929 and has evolved independently since that date. The latest consolidated version of the Gibraltar Companies Act 2004 has just been published, and still bears the hallmark of English Company Law.

On the 31st January 2020, Gibraltar left the European Union alongside the United Kingdom despite the local votes in the 2016 Brexit Referendum resulting in a 96% majority in favour of retaining membership of the European Union. Much of Gibraltar’s legislation is already well aligned with that of the EU, and the only anticipated divergence will be in respect of UK/Gibraltar protocols from a Brexit perspective.