In sadness, EU leaders approve Brexit deal

Yahoo – AFP, Alice Ritchie and Dave Clark, November 25, 2018

Theresa May met European Commission President Jean-Claude Juncker on the
eve of a summit to approve a historic Brexit deal (AFP Photo/Philippe LOPEZ)

Brussels (AFP) - European Union leaders on Sunday approved a historic Brexit deal with British Prime Minister Theresa May, and together warned rebellious MPs in London this was the best and only option available.

Leaders meeting at a special Brussels summit expressed sadness at the "tragic" end of four decades of British EU membership, but said the terms of the withdrawal were now set.

"This is the best deal possible for Britain, this is the best deal possible for Europe," European Commission President Jean-Claude Juncker said after the agreement was approved.

Juncker emphasised that, after 17 months of gruelling negotiations, "this is the only deal possible", warning: "Those who think by rejecting the deal, they will have a better deal, will be disappointed."

The agreement prepares for Britain's smooth exit on March 29, 2019, and sets out a vision for "as close as possible a partnership " afterwards.

But May faces a major battle to get the agreement through the House of Commons, with a vote planned for next month.

MPs of all parties -- including her own Conservatives -- say they will oppose it, with many holding out hope of a better alternative.

"It will certainly not be renegotiated and there will be no further room for manoeuvre," said Austrian Chancellor Sebastian Kurz, whose country holds the rotating EU presidency.

May herself repeated this, telling reporters in Brussels: "This is the best possible deal, it's the only possible deal."

The divorce deal took 17 months to negotiate (AFP Photo/Emmanuel DUNAND)

'Sad day'

Irish Prime Minister Leo Varadkar said the 27 leaders had made a "conscious decision" not to discuss what might happen if MPs reject the deal.

"There is no plan B," said Dutch Prime Minister Mark Rutte, adding: "This is the max that we can all do."

He was among several EU leaders to express their sadness that Britain was now a step closer to leaving the bloc.

"This is a historic summit and also historic day that evokes ambivalent feelings," said German Chancellor Angela Merkel.

"It is tragic that Great Britain is leaving the EU after 45 years."

Asked if she was also sad, May -- who joined the other 27 for closed-door talks after they approved the deal -- replied: "No, but I recognise that others do."

She added: "I am full of optimism about the future."

'Time to move on'

The withdrawal agreement covers financial matters, citizens' rights, provisions to keep open Britain's border with Ireland and arrangements for a 21-month post-Brexit transition phase.

It is accompanied by a short political declaration setting out hopes for future ties, including security, trade and migration.

But, until it passes the British and the European parliaments, all sides are still planning for the potentially disastrous possibility that Britain leaves the EU with no new arrangements in place.

European Parliament president Antonio Tajani said a "large majority" of MEPs were in favour of the deal.

The special summit was almost derailed by a row over Gibraltar (AFP Photo/

JORGE GUERRERO)

But in London, eurosceptic Conservatives and their Northern Irish allies have vowed to reject a deal they says keeps Britain too close to the EU.

DUP leader Arlene Foster said Sunday that if it passed, her party would "review" its support May's government, instead calling for "a third way, a different way, a better way".

But May repeated that it her deal delivered on the 2016 referendum vote to leave the EU and said it was "in the national interest for everyone to get behind it".

"The British people don't want to spend any more time arguing about Brexit," she told reporters, adding: "It's time for our country to move on."

Tensions on fishing

The summit risked being derailed by a late objection to the deal by Spain over the British territory of Gibraltar.

The impasse was resolved when Britain promised to continue bilateral talks with Madrid after Brexit.

There are also concerns in EU states such as France, Spain, Portugal and the Netherlands over fishing rights once Britain leaves the bloc's Common Fisheries Policy after the transition, which ends in December 2020.

In an annex to the summit conclusions, the 27 EU leaders says a fishing deal based on "reciprocal access and existing quotas" should be agreed as a priority after Brexit.

The divorce deal approved by Britain and the EU sets the stage for the end of a nearly 46-year marriage of convenience, built on prudence rather than shared dreams https://t.co/9zTpZJk0kS pic.twitter.com/GWIaiaTIaM

— AFP news agency (@AFP) November 25, 2018

The Brexit deal marks a clear victory for Ireland -- one no-one in Britain saw coming and one which has raised the Irish government's standing at home and abroad https://t.co/iW15r9k9en

— AFP news agency (@AFP) November 25, 2018

Spain insists on Gibraltar veto in Brexit deal

Yahoo – AFP, November 19, 2018

Spain has a long-standing claim on Gibraltar, which was ceded to the British
crown in the 1713 Treaty of Utrecht (AFP Photo/JORGE GUERRERO)

Brussels (AFP) - Spain warned Monday it could yet derail the Brexit deal agreed between London and Brussels if it does not guarantee Madrid's veto over Gibraltar's future status.

Madrid has a long-standing claim on Gibraltar, which was ceded to the British crown in the 1713 Treaty of Utrecht.

Britain's Prime Minister Theresa May is due to sign a treaty with European Union leaders to leave the bloc on Sunday, if Spain does not stand in the way.

But Spain's Foreign Minister Josep Borrell warned on Monday after a meeting of EU ministers that the draft deal does not spell out how Gibraltar should be handled.

He said the text does not make it clear that future negotiations on ties between Brussels and post-Brexit Britain are separate from the Gibraltar issue.

"Future negotiations on Gibraltar are separate negotiations. And that is what needs to be made clear," Borrell said.

"Until it is clear ... we will not be able to give our agreement", he warned.

According to Article 184 of the draft divorce deal, "the EU and the United Kingdom shall make every effort, in good faith and with full respect for their respective legal systems, to adopt the measures necessary to negotiate rapidly the agreements governing their future relationship."

These agreements will be negotiated between Brexit day on March 29 and December 2020 -- extendable once -- and will enter into force at the end of the period.

But Spain wants to retain what it sees as its right to negotiate the future on Gibraltar with Britain on a bilateral basis, giving it an effective veto.

Although the legal service of the EU Council has tried to reassure Spain that the text does not preclude this, Madrid is seeking further clarification.

"Until we have the future declaration and we know what it says, whether we agree or not, we are not going to approve the withdrawal agreement either," Borrell said.

In London, May's spokesman said: "The draft withdrawal agreement agreed last week covers Gibraltar.

"The PM has been clear that we will not exclude Gibraltar, and the other overseas territories and the crown dependences from our negotiations on the future relationship. We will get a deal that works for the whole UK family."

Gibraltar Chief Minister Fabian Picardo said the position adopted by Madrid "does little to build mutual confidence and trust going forward."

Over the weekend, European diplomats said they did not expect Spain's concerns to derail the agreement.

#UPDATE "I have just announced to the King of Spain that we have an agreement on Gibraltar," Spanish PM Pedro Sanchez says in a televised address. "Spain... will vote in favour of Brexit." pic.twitter.com/hJ64BhsdiZ

— AFP news agency (@AFP) November 24, 2018

EU leaders agree tough Brexit stance

Yahoo – AFP, Danny KEMP, Alex PIGMAN, 29 April 2017

EU President Donald Tusk in Brussels at the HQ of the European Council,
on April 29, 2017 for a summit on Brexit negotiating guidelines

EU leaders unanimously backed a tough Brexit strategy at a summit on Saturday, demanding a "serious response" from Britain on the rights of European citizens before trade talks can start.

In a show of togetherness the 27 leaders agreed the negotiating guidelines within minutes and applauded as they met in Brussels without British Prime Minister Theresa May.

EU President Donald Tusk hailed the "outstanding unity" in an often fractious club, saying it was a "firm and fair political mandate" for the Brexit negotiations.

"After four minutes we were ready, it's very promising," former Polish premier Tusk told a news conference.

Britain swiftly warned that the talks could be "confrontational".

The summit was the first since May one month ago formally triggered the two-year process of untangling Britain from the European Union after four decades of membership.

The EU guidelines say talks on a future relationship with Britain can only start once London agrees divorce terms on citizens' rights, its exit bill and the border in Northern Ireland.

But Tusk said the fate of three million EU nationals living in Britain and one million Britons on the continent was the number one priority.

"We need a serious British response," Tusk said."I want to assure you that as soon as Britain gives real guarantees for our citizens, we will find a solution rapidly."

EU President Donald Tusk (R) said that before talks with Britain over Brexit
 "we must first sort out our past" and resolve the key divorce issues of
"people, money and Ireland"

'Underestimate difficulties'

European Commission head Jean-Claude Juncker said May had repeatedly urged him to be "patient" when they had dinner in London this week, but said Britain now needed to get serious on the issue.

"I have the impression sometimes that our British friends, not all of them, do underestimate the technical difficulties we have to face," the former Luxembourg premier said.

Brexit has offered the EU a fresh chance at unity after years of bitter internal divisions over the eurozone debt crisis and migration, plus growing euroscepticism.

May, who has called elections in Britain in June in a bid to shore up her mandate for negotiations, this week accused the EU 27 of ganging up on London.

Her comments were partly in response to German Chancellor Angela Merkel, who said Britain had "illusions" about the talks.

Britain's Brexit minister David Davis said while London wanted good relations with the EU, the talks were "the most complex the UK has faced in our lifetimes. They will be tough and, at times even confrontational."

But Merkel insisted on Saturday that "no one is allied" against London and that the EU was merely protecting its interests following Britain's historic vote to leave last June.

Merkel said the 27 leaders had given a round of applause after "very quickly" adopting the guidelines.

French President Francois Hollande meanwhile praised their common position and said there would "inevitably be a price and a cost for Britain."

The EU 27 have considerably toughened the Brexit strategy since Tusk first unveiled it a month ago.

The guidelines say that trade talks can begin only when EU leaders unanimously decide "sufficient progress" has been made on divorce issues.

Merkel said EU Brexit negotiator Michel Barnier told the leaders he hoped for agreement on the divorce phase by autumn, so the talks can move onto a trade deal.

However, Britain says it wants to discuss the divorce and a trade deal in parallel.

40-60 billion euro bill

In a further move that will rile London, the EU 27 also backed automatic membership for Northern Ireland if it reunifies with Ireland, and called for Spain to have a say over any deal that affects Gibraltar.

Spanish Prime Minister Mariano Rajoy insisted he had "no red lines" on Gibraltar, a rocky outcrop off southern Spain that has been a British territory for 300 years.

The leaders discussed for the first time the spoils of Brexit -- the relocation of EU medical and banking agencies currently based in London.

While the EU says citizens' rights is a priority, the most touchy issue of all is likely to be Britain's exit bill.

Luxembourg Prime Minister Xavier Bettel said this was estimated at 40-60 billion euros ($42-65 billion), which mainly covers financial commitments made by the bloc while Britain was a member.

The bill is politically toxic for May in election campaign season.

But it also risks causing divisions among EU states -- split between those that make an overall contribution, and those that are net recipients -- as they debate how to plug any holes in the EU's budget.

"There are some who don't want to pay more and those who don't want to receive less. That is going to be a real debate," Juncker said.

Actual Brexit negotiations are not expected to begin until after the British election, although the EU is set to give an official mandate to Barnier on May 22.

Spain must have a say in Gibraltar's future post-Brexit: EU

Yahoo – AFP, Marianne BARRIAUX, March 31, 2017

Tensions with Gibraltar have heightened under Spain's conservative government,
which has made claims to the UK's small overseas territory (AFP Photo/
JORGE GUERRERO)

Madrid (AFP) - Spain must have a say over whether any post-Brexit deal applies to Gibraltar, the EU said Friday, angering the British overseas territory which fears that Madrid will seek sovereignty over the Rock.

The proposal is part of draft Brexit guidelines setting out the EU's position in upcoming negotiations with Britain over its exit from the bloc, and is likely to add fuel to an ongoing sovereignty row between London and Madrid over Gibraltar.

Gibraltar's leader Fabian Picardo hit out at the EU proposal, branding it "unnecessary" and "discriminatory."

The idea is also likely to face a fierce backlash from London, which has pledged to stand by the tiny rocky overseas territory on Spain's southern tip that was ceded to Britain in 1713.

EU 'pursuing' Spain interests

"After the United Kingdom leaves the union, no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom," the EU's draft negotiating guidelines read.

This means that Madrid could potentially block Gibraltar's access to any trade deal Britain negotiates with the EU, opposition politicians in the Rock claim.

It also shows that the European Union is putting Spain -- its member state -- first.

A senior EU official said the issue of Gibraltar was included in the guidelines as it is one of a number that involve joint or contested jurisdictions, and that "the EU is naturally pursuing the interests of the remaining 27 member states."

Spain's conservative government, which has been particularly vocal about getting Gibraltar back, welcomed the latest development.

"EU recognition of the legal-political situation defended by Spain satisfies us entirely," government spokesman Inigo Mendez de Vigo told reporters.

But Picardo said it was "a disgraceful attempt by Spain to manipulate the European Council for its own, narrow, political interests."

A Union Jack flag (Down), the flag of Gibraltar (C) and the European Union flag

fly in Gibraltar on March 28, 2017 (AFP Photo/JORGE GUERRERO)

Bad neighbourly relations

Relations between Spain and Gibraltar have ebbed and flowed over the decades.

Tensions have heightened under Spain's conservative government, which apart from sovereignty claims also bristles at tobacco smuggling across the border and accuses Gibraltar of being a corporate tax haven.

In 2013, for instance, the EU was forced to step in and ease one particularly belligerent row over disputed waters that saw Spanish authorities up checks on their land border with Gibraltar, creating hours-long logjams.

Fearing that this type of disruption could happen again without EU protection, Gibraltarians voted by 96 percent to stay in the bloc in last year's referendum.

Sensing an opportunity after the outcome, Spain proposed shared sovereignty, arguing it would allow Gibraltar -- whose economy largely depends on the EU single market -- to remain in the bloc.

Having already rejected such a proposal in a 2002 referendum, Gibraltarians still appear set on remaining British after the vote, even if it means exiting the European Union.

"The whole world and the whole EU should know: this changes nothing in respect of our continued, exclusive British sovereignty," Picardo said Friday.

Gibraltar leader Fabian Picardo has vowed to fight any attempt by Spain to gain

 more control over "the Rock" during Brexit negotiations (AFP Photo/

Daniel LEAL-OLIVAS)

'So Spain want Gibraltar?'

British Prime Minister Theresa May has pledged her support for Gibraltar.

"We have been firm in our commitment never to enter arrangements under which the people of Gibraltar would pass under the sovereignty of another state against their wishes, nor to enter into a process of sovereignty negotiations with which Gibraltar is not content," she told parliament Wednesday.

But British lawmakers and activists reacted with concern and defiance on Friday.

Liberal Democrat MP Tom Brake said the EU proposal "shows just how damaging the government's hard Brexit will be on this strategically-important British territory."

"Theresa May must urgently produce a plan that protects the citizens of Gibraltar, including their businesses and communities."

Meanwhile Brexit campaign group Leave.EU tweeted a picture of thousands of Spaniards marching in support of independence for the northeastern region of Catalonia, a sore issue for Madrid.

"So Spain wants Gibraltar?," it read. "Perhaps we should recognise Catalonia..."

Tory minister accused of tax avoidance via offshore company in Gibraltar

Conservative Stephen Hammond reportedly avoided capital gains tax by using firm to buy his holiday villa in Portugal

theguardian.com, Conal Urquhart, Saturday 2 November 2013

Conservative minister Stephen Hammond is accused of using a Gibraltar-based
company to buy his villa in Algarve. Photograph: Rex Features

A Tory minister avoided paying tax by using an offshore company to buy his holiday home, the Daily Telegraph has claimed.

Stephen Hammond, a junior transport minister, used a company based in Gibraltar to buy his family's £500,000 villa in Portugal.

By not owning the villa directly, he reduced his tax bill in both Britain and Portugal.

A tax specialist told the Daily Telegraph that Hammond would have been able to avoid a "big hit of capital gains tax".

The prime minister has attacked tax avoidance and George Osborne, the chancellor, described the practice as "morally repugnant".

The Telegraph said Hammond bought a villa in Algarve through a company called Peal Gas Ltd. The minister told the paper he was behind the offshore firm that owns the family's second home.

A spokesman for Hammond said in a statement: "Mr Hammond has always paid the correct amount of tax in the UK. Mr Hammond has had no personal tax liability overseas."

Peal Gas was set up in Gibraltar in April 1997. Hammond bought the company, which already owned the property, in 2002. In 2005, Portugal changed its tax rules so that the annual property tax for homes owned through companies registered in Gibraltar rose to 5%.

If Hammond has transferred the property into his own name at this point he would have been liable for capital gains tax on the increase on the value of the property since it would technically have been classed as a sale.

Instead, in December 2005, he moved the company to Delaware, a US state not covered by the Portuguese rules.

Experts estimate this decision could have saved him about £20,000 in British tax because such villas rose in value by about £100,000 during this period.

Peal Gas was registered in Gibraltar until the new company was set up in Delaware. The company's registered agent is the Corporation Trust Company in Wilmington, where more than 285,000 separate businesses are registered. The Telegraph believes this allowed Hammond to avoid capital gains tax in Britain, which would be levied at 28%.

Hammond was elected MP for Wimbledon in 2005 and became a minister last year. His villa in Vale de Lobo has four bedrooms and a swimming pool. It can be rented out for up to £,2425 per month.

Related Article:

MPs' expenses claims included '£200,000 to heat second homes'

Cameron calls in tax havens ahead of G8 summit in June

Leaders of overseas territories, including Bermuda and Jersey, summoned to London in move to tackle tax evasion

The Guardian, Patrick Wintour, political editor, Tuesday 4 June 2013

Jersey, in the Channel Islands, is among overseas territories being asked by
 the government in Westminster to share tax information. Photograph: Chris Coe

David Cameron has asked the senior ministers of all Britain's overseas territories – including Bermuda, Jersey and the British Virgin Islands – to London on the eve of this month's G8 summit to urge them to root out the multibillion-pound evasion industry by signing up to agreements to share tax information.

Britain has made a clampdown on corporate and individual tax avoidance the central theme of its chairmanship of the G8 summit in Northern Ireland on 17 and 18 June, and Cameron has decided that he cannot be a credible chair of the summit if he is not seen to be trying to put Britain's own house in order.

The intensity of the pressure that Cameron will place on the 10 crown dependencies and overseas territories to be more co-operative has, however, not yet been determined, amid signs there are some disputes between Downing Street and the Treasury on what to demand, and whether excessive public pressure will lead them to refuse to co-operate.

Cameron wants British offshore havens to sign an OECD convention to give mutual assistance in tax matters, which provides for the sharing of information between countries, seen as key to ending evasion.

Some of the British havens have agreed to the automatic exchange of information with some western economies, but not as widely as prescribed by the convention.

The prime minister plans to chair a tax and transparency conference alongside Nick Clegg on the weekend before the G8 summit itself. Cameron is looking at the possibility of the UK dependencies and overseas territories formally signing the OECD convention in the cabinet room on Saturday, but government sources said the plan could yet unravel in the face of hostility from the overseas territories.

The precise constitutional relationship between the UK and the overseas territories is a matter of dispute, but some aid agencies claim the UK can in effect force the crown dependencies to close down the tax loopholes.

Cameron wrote to the crown dependencies and overseas territories in May saying he wanted the G8 to "knock down the walls of company secrecy" to reveal who really owns and controls firms.

The letter calling for action on tax information exchange and beneficial ownership was sent to leaders in Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Anguilla, Montserrat, the Turks and Caicos Islands, Jersey, Guernsey and the Isle of Man.

Many of them are furious at being labelled tax havens, and fear the basis of their economies is being threatened, and that they will be put at a competitive disadvantage.

ActionAid claims nearly one in every two dollars of large corporate investment in developing countries was routed through a tax haven. It claims 98 of the FTSE 100 multinational groups have companies in tax havens.

Melanie Ward, head of advocacy at ActionAid UK, said: "It is perfectly possible to achieve a G8 deal to tackle tax dodging that works in the interests of rich and poor countries alike. The prime minister has said that he will do this, but the question is whether he has the clout to achieve it.

"The first test is in the UK's own backyard, and is whether he will pull all 10 of the UK's own tax havens – the overseas territories and crown dependencies – into line.

"At the pre-G8 tax and transparency event on 15 June, David Cameron must ensure that all 10 sign up to the existing multilateral convention on tax information exchange."

Brenda Cox, spokesman for the If campaign, a coalition of 200 groups campaigning in the run-up to the G8, said: "Cameron has to walk the walk, as well as talk the talk. By getting the UK house in order, he will have the opportunity to make a wider breakthrough at the summit itself on the issue of beneficial ownership, the way to get behind the anonymous shell companies."

Cameron and the chancellor, George Osborne, are still gauging how far to push the G8 on measures to make it easy to establish the real owners of companies and assets, in the face of hostility primarily from America and Canada.

Osborne is also facing a push-back from business about imposing excessive regulatory burdens on companies to report their profits on a country by country basis.

Ahead of the summit, Cameron will meet the European commission president, José Barroso, this week, prior to a nutrition summit this weekend.

In the week running up to the G8 summit itself, Cameron will set out his vision of Britain's role in the world and the continuing relevance of the G8.

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Peninsula launches campaign weeks after David Cameron asks overseas territories to 'get houses in order' over tax

The Guardian, Rupert Neate in Gibraltar, Sunday 2 June 2013

Gibraltar is home to 150 hedge funds, managing £3bn of assets.
Photograph: Design Pics Inc/Rex Features

Gibraltar is launching a campaign to persuade hedge funds to ditch their plush Mayfair offices for the low taxes of "the Rock".

Fabian Picardo, chief minister of the British overseas territory, said multimillionaire hedge fund managers should quit London for Gibraltar because it's "much cheaper", while promotional material promises they are "unlikely to be liable for corporation tax".

Picardo, who has made attracting hedge funds a key aim of his administration, last week invited hedge fund managers to the peninsula where they were told income tax could be limited to £30,000 a year no matter how many millions they earned.

Gibraltar also boasts no VAT and social security payments of just £120 per family a month. In the UK the top rate of income tax is 45%, VAT is 20% and national insurance is levied at 14% of weekly earnings above £797.

Gibraltar's campaign to attract hedge funds by means of low taxes comes just weeks after David Cameron wrote to Britain's crown dependencies and overseas territories ordering them to "get our own houses in order" as he pushes for international action to tackle "staggering" losses from tax avoidance.

Picardo denied Gibraltar was a tax haven and said the territory complied with all European Union tax and transparency regulations. He said he was delighted the UK was "finally going to crack down on tax evasion", which he said was good for Gibraltar which already has "the toughest regulation".

However, promotional material given to hedge fund managers said: "Gibraltar's tax laws are central to its position as a thriving fund domicile.

"The profits of any branch or permanent establishment of the investment manager are not subject to tax in Gibraltar, to the extent that those activities are undertaken outside Gibraltar." Corporation tax on activities undertaken on the rock is levied at 10%, compared with 24% in the UK.

Hedge fund managers were told their income tax bill could be reduced still further if they were granted "special tax status" as a "high executive possessing special skills". Such a status caps an individual's tax bill at £30,000 no matter how much they earn. The territory was unable to say how many hedge fund managers have the status.

Picardo, who was partner at the local tax specialist law firm Hassans until he was elected chief minister in 2011 and will return to the firm when he leaves politics, has been on a road show of hedge funds in London's Mayfair and Knightsbridge to promote Gibraltar's "low-cost efficiency".

As well as holding the territory's first Gibraltar Funds and Investments Association black-tie dinner last week, Picardo has thrown a promotional party for hedge fund managers at Merchant Taylors' Hall, down the road from the Bank of England in the City.

The chief executive and chairman of one of London's leading PR firms have also been engaged to promote Gibraltar to London's fund managers.

Picardo said the recruitment drive was going well with "a number of people that used to operate out of Mayfair now in Gibraltar" and "a number more" in discussions with the government. "This is a process that is going to continue. Gibraltar presents a serious advantage in the interest of shareholders," he said. "At the end of the day it is in the interest of shareholders that hedge funds maximise revenue."

Philip van den Berg, managing director of Taler Asset Management, said he chose to relocate to the rock after 13 years in the City because "Gibraltar came out the best for tax and compliance [with regulations]".

"I used to go on holiday to Spain. One day I thought I could live here, I like it," he said. "And it's cheaper."

The number of funds on the 6 sq km peninsula has grown from 20 in 2006 to 150 today, managing £3bn of assets.

Gibraltar's latest available budget shows financial services is, jointly with tourism, the territory's biggest source of income, accounting for 33% of GDP.

Spain has accused Gibraltar, which has been British since the signing of the treaty of Utrecht in 1713, of being a tax haven that allows companies and citizens to avoid hundreds of millions of pounds of tax a year.

Picardo said Gibraltar complied with all EU regulations and "does not want to be associated with money that stems from tax evasion, fraud, money laundering or from any other source that is not absolutely acceptable".

He said Spain "really needs to buck up its ideas if it's going to prove those allegations". He accused Madrid of taking a "very belligerent" approach to Gibraltar and "annoying Gibraltarians on an almost daily basis". He said Gibraltar's reputation as a tax haven was "attributed to us by people that want to politically destabilise us".

However, hedge fund managers were told: "Ultimately, these investment funds are unlikely to be liable for corporate tax as Gibraltar levies tax on a territorial basis on income accruing in Gibraltar, whereas the fund's investments will ordinarily be located outside the jurisdiction."

Picardo said that even without the tax advantages, Gibraltar was still a "much cheaper place to work". Its zero VAT on products or services means hedge funds can engage lawyers and accountants for at least 20% less than they would be charged in London.

"Why come here?" Picardo asked in his palatial office in 6 Convent Place, the Gibraltarian equivalent of 10 Downing Street. "Turn around and look outside – that's one of the 300 days a year of constant sunshine.

"We're linked to the place that most people in London spend 340 days a year saving up to spend the remaining days enjoying a round of golf in the sunshine."

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