TNAG-2947-FCO40-4223-Third-Country-Right-of-Abode-Schemes-for-Hong-Kong-1993 — Page 87

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connection with the Falkland Islands' after any period of residence and so acquire an indefeasible right to enter and remain.

26.

Bossano who recently visited the Falklands may raise the discrepancy between the rights of UK citizens in the Falkland Islands and in Gibraltar. The answer is that, unlike Gibraltar, the Falkland Islands are not part of the EC, thus EC citizens have no right of free movement there.

Spanish Property Tax

27. Bossano may raise. concerned about the fact that Gibraltar companies owning property in Spain have to pay property tax for non-residents. In general, our view is that the Spanish government is entitled to take appropriate measures to collect tax due from non-resident taxpayers provided that these measures do not contravene the Treaty of Rome. The UK/Spanish Double Taxation Agreement does not appear to give British subjects any exemption from this tax, and in any case does not include Gibraltar.

The Government of Gibraltar has been

28. The Spanish Government agreed to allow Gibraltar companies an exemption provided that the companies in question disclosed fully their beneficial ownership. According to the Government of Gibraltar companies who have done so are still being pressed to pay the tax. We were unaware of this development and will investigate.

British Nationality for Hong Kong Residents and other Wealthy Potential Investors

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29.

On behalf of the Gibraltar Government, the Governor's office have been exploring with the Home Office and the FCO over the last 2 years the possibility of attracting investment from wealthy Hong Kong residents in return for a promise of

CONFIDENTIAL