The European Commission announced on 6 October 2021 that it has withdrawn (repealed) its decision to refer the UK to the Court of Justice of the European Union (CJEU) for failing to fully recover illegal State aid granted as a tax exemption for passive interest and royalties in Gibraltar, which predated the UK's withdrawal from the EU. Although the UK is no longer an EU Member State, it was still required to fully recover the illegal aid granted and could be referred to the CJEU since the obligation derived from a Commission decision adopted when the UK was part of the EU.
State aid: Commission decides to repeal its decision to refer the United Kingdom to the Court of Justice for failure to recover illegal aid granted by Gibraltar to several multinational companies
Following the confirmation by the United Kingdom that the full recovery of the illegal State aid granted by Gibraltar to several multinational companies has been finalised, the Commission has today decided to repeal its decision to launch a Court action against the United Kingdom for failure to implement the recovery order. On 19 December 2018, the Commission adopted a State aid decision finding that Gibraltar's corporate tax exemption regime for passive interest and royalties, as well as five tax rulings, were illegal under EU State aid rules. The Commission therefore ordered the United Kingdom to recover the around €100 million of illegal aid from the beneficiaries.
The deadline for the United Kingdom to implement the Commission decision and recover the illegal aid was 23 April 2019. By 19 March 2021, Gibraltar had only recovered aid from two out of four aid beneficiaries of these illegal measures. Consequently, in view of the delay in recovery, in line with standard practice and on the basis of the Withdrawal Agreement, the Commission decided to refer the United Kingdom to the European Court of Justice for failure to fully recover the illegal State aid granted. Following this decision, Gibraltar continued working towards the full recovery of the unlawful advantage. By 14 July 2021, Gibraltar completed the recovery of the aid, also from the two outstanding beneficiaries. Therefore, the Commission has decided to repeal its decision to refer the United Kingdom to the Court.