Gibraltar has strong links with the UK including common language, currency and basis of law. It is a convenient location with the EU time zone. Its legislation is published in English and drawing on UK company law, can provide for funds structured as open-ended companies, unit trusts, or limited partnerships. Protected cell company legislation has also been adopted, permitting segregation of liabilities across sub funds within a single legal entity. It is common practice for investment firms to adopt International Financial Reporting Standards for accounting purposes, thereby matching EU standards of the larger EU jurisdictions.
As a small flexible jurisdiction, Gibraltar is better placed to service smaller start–up funds that are difficult for larger jurisdictions to cater for. Its fast track, flexible legislation for Experienced Investor Funds, provides speed to market. EIFs can operate for large hedge funds or specialise in boutique funds from as small as £5m. For control and oversight requirements, administration is restricted to local providers, but otherwise an open platform regime pertains, permitting flexibility of location of resources in respect of custody and investment management.
Gibraltar is also an attractive domicile for overseas funds looking to redomicile to an onshore jurisdiction with an appropriate level of regulation now being demanded by investors. Gibraltar has relatively low set up and operational costs compared to its peers, has a comprehensive existing infrastructure including experienced and highly qualified advisers and experts and audit and legal fees tend to be less than Dublin and Luxembourg equivalents.
Gibraltar is a member of the European Union by virtue of its relationship with the UK. As a member of the EU, Gibraltar benefits from full passporting rights in respect of insurance, investment services and in respect of investment funds under the UCITS and AIFMD directives.
Funds and other companies in Gibraltar benefit from a wide range of tax efficiencies.
- Funds are exempt from income tax on their profits. There is no withholding tax on interest or dividends paid to non-residents.
- There is no capital gains tax on any gains.
- There is no tax on dividends between Gibraltar Companies.
For all other companies, there is a flat rate of corporation tax of 10%. This makes Gibraltar highly competitive and which, together with the other benefits, makes it an increasingly attractive jurisdiction for investment companies and other financial professionals wishing to set up business.
However, far from being an offshore tax haven, Gibraltar is well placed with the OECD since it has focused on signing up with the principal countries of the OECD and having signed numerous tax information exchange agreements to date.
It has an excellent, internationally recognised regulatory regime in the Gibraltar Financial Services Commission (GFSC), which has been established since 1989 and is the single regulator for all financial services business in Gibraltar. The GFSC is modelled on UK regime, but also benefits from the flexibility that a small jurisdiction brings, which facilitates a close and immediate liaison with the Regulator whenever the need arises.
As Gibraltar is within the European Union all EU Directives are transposed into local legislation and regulation. This includes directives such as AIFMD, UCITS, MiFID II, Solvency II and the 4th Anti Money Laundering Directive.
The jurisdiction prides itself on being well regulated with a risk-based supervision programme, but is also flexible in its approach. The GFSC licenses all forms of investment companies, including banks, asset managers, investment advisors and fund administrators.
Gibraltar has also signed up to Moneyval, which is a permanent monitoring body of the Council of Europe entrusted with the task of assessing compliance with the principal international standards to counter money laundering and the financing of terrorism and the effectiveness of their implementation.