An oversight within the legislation sets out Gibraltar as a region of the UK, linked to Cornwall due to its representation by the same Member of European Parliament (MEP).
Gibraltar does not have a bilateral agreement with the UK, as the Isle of Man does, meaning it can circumvent the withholding tax or exchange of information agreements on moneys held for UK residents.
Malcolm Couch, the Isle of Man's tax assessor, said that the current situation was totally unacceptable and a level playing field was critical. He has threatened to suspend any information exchange or retention tax on UK residents' accounts held in the Isle of Man, until the position is resolved.
He said: 'Gibraltar has the capacity to completely derail the savings directive. When the UK joined the European Union, its treaty of accession specifically mentioned the Isle of Man. We are a Crown dependency and subject to certain parameters, but it didn't describe Gibraltar. As a consequence, from the EU perspective, Gibraltar is a region of the UK attached to Cornwall - it's wonderfully perverse but true.'
He added: 'Our relationship with the UK is on the basis of a bi-lateral agreement. That means that, to a greater or lesser degree, there is transparency. If there was no equivalent bi-lateral agreement, we wouldn't be obliged to share information on UK resident accounts. If the UK don't do something about Gibraltar, they will quite openly be creating a tax haven within the EU, which is against everything the directive stands for.'
Mr Couch said his sources had confirmed that Gibraltar was actively taking advantage of the situation by attracting funds to the Island on the basis of its current position outside the directive.
'They are playing a long game - not being particularly helpful to the UK in closing the gap', he said.
'Banks in Gibraltar are saying, "hey, it's good, we are not covered by the directive, bring your money here and sign on this line." The UK issued a statement saying they would close the gap as soon as possible, but this means nothing. The Chief Minister has had conversations with Dawn Primarolo about this not being sufficient. We have put a marker in the sand, saying this is not acceptable because we need a level playing field.
'If the UK government can't sort this and we can't get satisfaction, we will suspend the UK financial agreement.'
He added that the Island felt let down by the UK government and a combined effort from the crown dependencies and other European jurisdictions should put enough pressure on them to close the loophole.
'In the first ECOFIN (European Council of Finance Ministers] meeting where the UK will be president, Gordon Brown will walk into an ambush, because various EU countries feel very uncomfortable about this. The UK has let us down, they didn't deliver on time, what they set out to deliver. It's something (the savings directive] that the UK desperately wanted us to do and now Gibraltar will extract some benefit from compliance.
'Jersey and Guernsey feel exactly the same. Guernsey have a meeting on July 25 to decide on a suspension. That is the date when the directive could live or die.'
standing charge rebate. The capital account standing at £92m will account for £55m of the money.
Allan Bell, treasury minister, said the confirmation of the AAA status was very important for the future success of the Island.
He said: 'There are very few jurisdictions that can say they have the reputation that the Isle of Man has as an international business centre. The Island, together with its regulatory structure and strong economy, is generally very much a beacon for new business. We have attracted business here on the basis of the triple A rating, it has helped with a number of transactions. It has made a major contribution to the economic growth in the last few years.'
Mr Cullinan added: 'The government's overall robust financial position, coupled with close economic and financial ties with the UK, should enable the Isle to weather external shocks or significant changes to its economic environment without major strain on its factor markets or overall economic stability.'
Moody's rating agency will be visiting the Island on July 25, to carry out its assessment. The Isle of Man currently has AAA status with the organisation.