Gibraltar Brexit row: Spain urged to clarify how laws and tax rules will be upheld

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Ciudadanos, a centre-right political party in Spain, has called on Madrid to give answers to questions swirling in political circles in light of the expiration of the Brexit transition period on December 31. Gibraltar, a British overseas territory with a population of around 34,000, was left out of the trade deal signed between London and Brussels.

Just hours before the UK’s transition period ended, negotiators struck an agreement with Spain to allow for free movement between Gibraltar and much of the EU.

During a speech in the Spanish congress last week, foreign minister Arancha Gonzalez Laya failed to lay out clearly the terms of the agreement, in particular regarding compliance with the law and tax matters.

This led to Ciudadanos posing a series of questions to the government, Europa Press reported.

In a question to the government presented in the congress of deputies, the party demanded to know what mechanisms will be available to “guarantee that the Gibraltarian authorities comply with the fiscal harmonisation they must carry out, both in VAT and special taxes and in companies or personal income tax, and what consequences or corrective measures a possible breach in this regard will have.”

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Likewise, Ciudadanos wants the government to clarify the measures envisaged to “ensure compliance with the law by the Gibraltar authorities, especially with regard to environmental protection and respect for Spanish sovereignty over the surrounding territorial waters.”

Ms González Laya appeared on Wednesday before the Joint Commission for the EU to provide some clarity.

She sought to explain to the parliamentary groups the principle of the agreement sealed between the UK and Spain.

The pact is expected to serve as a framework for an agreement between Britain and the EU on the Rock.

A deal is expected to be struck in the next six months.

Once reached, it would make this territory become part of Schengen zone.

Ciudadanos believes the minister “left unanswered some matters that are of special relevance to avoid unfair competition between Gibraltar and the Andalusian region of Campo de Gibraltar.”

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The party wants the legislation that applies to the movement of people and goods to be clarified while the agreement between the EU and the UK is negotiated and therefore “the necessary requirements of the Schengen Area are met.”

The group have also touched on possible “obstacles” expected to arise in the coming months.

They expressed concern about checks a the border affecting “Andalusians who have to cross it every day to go to work”.

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In her intervention, the minister said that during this period, controls will be more flexible, within the law, but “avoiding a traumatic situation.”

Meanwhile, eurozone business activity has shrunk as lockdowns hit services.

Economic activity in the eurozone shrank markedly in January as stringent lockdowns to contain the coronavirus pandemic hit the bloc’s dominant service industry hard.

With hospitality and entertainment venues forced to remain closed across much of the continent, surveys on Friday highlighted sharp contractions in the services industry but also showed manufacturing remained strong as factories largely kept working.

IHS Markit’s flash composite purchasing managers’ index (PMI) for the eurozone, seen as a good guide to economic health, fell further below the 50 mark separating growth from contraction to 47.5 in January from December’s 49.1.

Tomas Dvorak at Oxford Economics said: “The flash PMIs point to a looming contraction in eurozone GDP in Q1. We don’t expect any meaningful economic recovery before the pandemic is brought under control.”

Additional reporting Maria Ortega.

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