Madrid en Londen botsen over Gibraltar inzake belastingen en stemrecht bewoners bij EU-verkiezingen - Main contents

The European Court of Justice's grand chamber became on Tuesday (5 July) the stage for a heated legal battle between Spain and the UK over the EU voting rights of commonwealth citizens living in Gibraltar.

The case was originally brought to the court by the Spanish authorities in March 2004, who claim that only EU citizens can vote in European parliamentary elections.

"This [position] would affect a handful of people in Gibraltar, but it could potentially disenfranchise a million people living in the UK", UK conservative MEP Neil Parish said today.

Should Spain win the case, around a million commonwealth citizens living permanently in Britain, mainly Indians, Pakistanis and Bangladeshis, could be denied the right to vote or to stand in EU parliamentary elections, Mr Parish explained.

The UK has so far allowed Gibraltarians to vote for MEPs as part of, and on the same terms as, the British constituency - Bridgewater - which Mr Parish represents.

The European Commission is supporting the UK's position.

But according to arguments presented by the Spanish legal team, accepting the UK's competence to confer such rights implies "a breach of the union's citizenship", which would "open the door to similar claims in other member states".

A court source said the team of 13 judges (which includes one Spanish and one UK judge) is likely to examine both sides of the argument over the next six to ten months before arriving at a verdict.

Tax row brews

Meanwhile Gibraltar itself is set to take the European Commission to court over the right to control is own corporate tax system.

The British territory is seeking to make its tax regime more favourable for corporate subjects but Brussels has warned that taxes should not be lower than in the UK, or risk being regarded as a form of state aid.

Gibraltar's finance centre director James Tipping told the Telegraph that it is "ludicrous" for Gibraltar to be regarded as a region of the UK. "Implications that we should not have a separate corporation tax system are bordering on madness", he added.

Although Gibraltar is a territory under British sovereignty, it does not formally constitute a part of the UK.

Corporate tax in the UK and Gibraltar currently stands at 30 percent of a company's taxable profits above €2.2 million.

Gibraltar sought to push down its tax rates in 2002 but the European Commission blocked the move in 2004.

The territory is now taking the case to the European Court of First Instance, but no hearing date has been set so far.